【正文】 , what is the change in real GDP over the period both in dollars and in percentage terms?Answer:1. Nominal GDP in 1992 = $ billion. 2. 1998 GDP in 1992 dollars = $ () = $ billion. 3. Increase in dollars: $ = $ billion. Increase in percent: [( ) = .24 or 24%. Although nominal GDP rose by over 40% during the period, the real production of the economy only rose by 24%. Real GDP current period = nominal GDP current period x (GDP deflator base year / GDP deflator current period)f: Discuss the major limitations of GDP.Limitations with using GDP as a measure of economic activity: 1. GDP does not count nonmarket productionspecifically, homemaker services. 2. GDP does not count the underground economyillegal activities and tax evasion. 3. GDP does not measure the value of leisure activities, the standard of living accounted for by a shorter workweek, and changing working conditions. 4. GDP does not measure the changing quality of goods and services. 5. GDP does not measure the cost of pollution and damage to the ecology. g: Describe alternative measures of domestic output and ine, including GDP, GNP, national ine, personal ine, and disposable ine. Changes in real GDP correspond to real or actual changes in production. Therefore, economists attempt to filter out the impact of GDP by calculating GDP measured in terms of prices from some base year. ine, rents, corporate profits, interest ine, indirect business taxes, depreciation, and net ine of foreigners.b: Distinguish between GDP and gross national product (GNP).GNP is the total market value of all final goods and services produced by the citizens of a country no matter where they are residing. Prior to 1991 GNP was used to measure US production.GNP and GDP are closely related concepts. GDP is a measure of the output that is produced domestically, while GNP is a measure of the output produced by the nationals of a country regardless of where they live. GNP is GDP PLUS ine earned by citizens from their work and investments abroad, LESS the ine earned by foreigners from their work and investments within the country.GDP measures output within the borders of a country regardless of the citizenship of the producer. GNP measures the output of the country’s nationals regardless of where they live.c: Explain the difference between real and nominal GDP.An important use of GDP is to pare the level of production over time.四、 Investment Tools: Economics: Macroeconomic Analysis: Preliminary Reading: Taking the Nation39。s Economic Pulsea: Explain the two approaches to measuring gross domestic product (GDP) and calculate GDP using each approach.The expenditure approach is a demandbased concept measured by summing personal consumption, gross private investment, government consumption and gross investment, and net exports of goods and services.Resource cost/ine approach: The resource cost/ine approach is a supply or production oriented approach and measures GDP by summing the following ponents employee pensation, proprietors39。 However, when nominal GDP (GDP measured in terms of current prices) changes from one period to the next, it reflects both changes in production and price changes. This measure is called real GDP. Gross domestic product = the total market value of all final goods produced within a country. National ine = the total ine payments to labor and capital during the year. It includes total earnings (domestic and foreign) of a nation’s citizens. Disposable Ine = personal ine personal taxes. : Preliminary Reading: Economic Fluctuations, Unemployment, and Inflationa: Explain the phases of the business cycle.The business cycle is characterized by fluctuations in economic activity. Real GDP and the rate of unemployment are key variables used when determining the current phase of the cycle.The four phases of the business cycle are:1. Peak, 2. Contraction, 3. Recessionary Trough, and 4. Expansion. As to the length of each phase, recent experience has shown that the contractionary periods are being shorter, and the expansionary periods are being longer in duration. A recession is defined as a period during which real GNP declines for two or more successive quarters. Both the contraction and recessionary trough prise a recession. A depression is a prolonged and very severe recession.b: Describe unemployment statistics and discuss the problems in measuring unemployment.The labor force is defined as those people of working age (+16) who are either employed or seeking employment. The rate of unemployment is the percent of people in the civilian labor force who are unemployed An individual must be actively seeking employment or waiting for another job to be considered unemployed. An individual is said to be unemployed if he/she is actively seeking employment or waiting to begin or return to a job.Workers who have bee discouraged and have given up looking for employment are not counted as unemployed. Because of these measurement problems, some economists feel the proper measure of employment would be the employment/population ratio rather than the rate of unemployment.c: Describe the three types of unemployment.Frictional unemployment is unemployment due to constant changes in the economy that prevent qualified workers from being immediately matched with existing job openings. There are two causes of frictional unemployment:1. Imperfect information. 2. The job search conducted by both employees and employers. Structural unemployment is unemployment due to structural changes in the economy that eliminate some jobs while generating job openings for which unemployed workers are not qualified. Structural unemployment differs from frictional unemployment in that workers do not currently have the skills needed to perform the newly created jobs.Cyclical unemployment is unemployment caused by a change in the general level of economic productivity. When the economy