Economics Micro & Macro (CliffsAP)

2. 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