- A.Refer to the following illustration:
B.Two ways of calculating GDP are the expenditure approach and the income approach. The expenditure
approach examines the amount spent on all final goods and services produced in a specific year on a nation’s soil.
The income approach examines the amount received from the purchases of all final goods and services produced
in a specific year on a nation’s soil. One examines the amount spent (expenditures), while the other examines the
amount received (income).
C.The determinants of aggregate demand are:
■ Income
■ Taste and preferences
■ Price of complementary product
■ Price of substitute product
■ Future expectation of price
■ Number of consumers
Real GDP
Price
Level
AD^1
Government Spending
AD^2
Goods & Services
Factor Market
Monetary Flow
Monetary Flow
Product Market
Goods & Services
Firms Government Households
Macroeconomics Full-Length Practice Test 2
Macroeconomics Full-Length
Practice Test 2