Macroeconomics, 9/e

Campbell R. McConnell, University of Nebraska, Lincoln
Stanley L. Brue, Pacific Lutheran University
Thomas P. Barbiero, Ryerson University

Measuring Domestic Output and the Price Level

Internet Application Questions


1		Go to: http://oldfraser.lexi.net/publications/books/underground/section_1.html And read the first article by Rolf Mirus and Roger S. Smith. What do economists mean by the term "underground economy"? What are the two methods of measuring GDP, as mentioned in the text? Explain briefly how the existence of the underground economy may affect each measure of GDP. According to the authors of the article, how large is the underground economy estimated to be in Canada? What are some ways in which the size of the underground economy can be reduced?



2		Go to: http://www.statcan.ca/english/econoind/gdpexp.htm and answer the following questions: How is Gross Domestic Product measured, according to the expenditure approach? Include a formula in your answer. Which components of GDP have declined most noticeably from the 1^st quarter of 2001 to the 2^nd quarter of 2001? Are there are any components which have stayed relatively constant, or increased? Explain. Why do you think businesses have drastically reduced their inventories over the past year? Explain. Why do economists expect any upcoming recession to be short-lived? Give evidence from the article.

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