BADM 7200 ECONOMICS FINAL ACTUAL EXAM WITH
100% VERIFIED ANSWERS 2025
What is the difference between real and nominal GDP? -
answer-Real GDP is the total value of all final goods and
services produced in a country adjusted for inflation to
reflect constant purchasing power while nominal GDP does
not adjust for inflation
What are the takeaways from I, Pencil? - answer-small
processes and "know-hows" of making things are too
abundant and complex for human minds to comprehend;
formations that occur in the absence of control relate to the
Invisible Hand theory; once governments control complex
creative activities, people in that society will believe that
those activities can only be accomplished by structured
government processes instead of free-flow
What two documents were published in 1776? - answer-
Wealth of Nations (Adam Smith), Declaration of
Independence
,What does Friedman argue is the relationship between
economic and political freedom? - answer-economic
freedom is an essential requisite for political freedom
Who wrote 'Free to Choose'? - answer-Milton Friedman
Did Adam Smith and Thomas Jefferson believe that
concentrated government power would allow policy makers
to maximize utility for citizens? - answer-No
What is GDP? - answer-the final value of all goods and
services produced in a given period of time
What federal agency compiles GDP in the US? - answer-the
Bureau of Economic Analysis (BEA)
True or False: GDP can be calculated by either adding up
the final value of all goods and services OR adding up the
value of each step in the production process (e.g. "value
added method"). Both will yield a similar, but not exact,
result. - answer-false; they will yield the same result
,What are the components of GDP? - answer-Consumption
(C), Investment (I), Government purchases (G), Net exports
(NX)
What is the definition for Gross National Product (GNP)? -
answer-the value of final goods and services produced by
residents of the US, even if production takes place outside
of the US
What is the definition for disposable personal income? -
answer-personal income minus personal tax payments
If I mow my lawn, is that included in GDP? - answer-No
If I pay a lawn service to mow my lawn, is that included in
GDP? - answer-Yes
If a factory is built, increasing both GDP and pollution, does
that mean that the society is better off because GDP is
higher? - answer-No because while GDP increases, GDP
does not account for the negative externalities like
pollution, so society may or may not be better off
, If average work hours in a country fall, giving people more
leisure time but causing measured GDP to decline slightly,
does that necessarily mean society is worse off? - answer-
No because while GDP declines, GDP does not account for
the value of increased leisure, so overall welfare could be
higher
How does Paul Krugman describe the magnitude of the
Great Recession? - answer-a human disaster, corrosive for
the present and the future, will do enormous damage to our
nation
What does Krugman argue is the impact of recession on
young people? - answer-this will scar young people's
careers for their entire lives
What theories does Krugman mention people have for poor
economic performance? - answer-corporate tax rates,
entitlements, shortage of very specific high skilled workers
What is the problem according to Krugman? - answer-there
is not enough demand in the economy
100% VERIFIED ANSWERS 2025
What is the difference between real and nominal GDP? -
answer-Real GDP is the total value of all final goods and
services produced in a country adjusted for inflation to
reflect constant purchasing power while nominal GDP does
not adjust for inflation
What are the takeaways from I, Pencil? - answer-small
processes and "know-hows" of making things are too
abundant and complex for human minds to comprehend;
formations that occur in the absence of control relate to the
Invisible Hand theory; once governments control complex
creative activities, people in that society will believe that
those activities can only be accomplished by structured
government processes instead of free-flow
What two documents were published in 1776? - answer-
Wealth of Nations (Adam Smith), Declaration of
Independence
,What does Friedman argue is the relationship between
economic and political freedom? - answer-economic
freedom is an essential requisite for political freedom
Who wrote 'Free to Choose'? - answer-Milton Friedman
Did Adam Smith and Thomas Jefferson believe that
concentrated government power would allow policy makers
to maximize utility for citizens? - answer-No
What is GDP? - answer-the final value of all goods and
services produced in a given period of time
What federal agency compiles GDP in the US? - answer-the
Bureau of Economic Analysis (BEA)
True or False: GDP can be calculated by either adding up
the final value of all goods and services OR adding up the
value of each step in the production process (e.g. "value
added method"). Both will yield a similar, but not exact,
result. - answer-false; they will yield the same result
,What are the components of GDP? - answer-Consumption
(C), Investment (I), Government purchases (G), Net exports
(NX)
What is the definition for Gross National Product (GNP)? -
answer-the value of final goods and services produced by
residents of the US, even if production takes place outside
of the US
What is the definition for disposable personal income? -
answer-personal income minus personal tax payments
If I mow my lawn, is that included in GDP? - answer-No
If I pay a lawn service to mow my lawn, is that included in
GDP? - answer-Yes
If a factory is built, increasing both GDP and pollution, does
that mean that the society is better off because GDP is
higher? - answer-No because while GDP increases, GDP
does not account for the negative externalities like
pollution, so society may or may not be better off
, If average work hours in a country fall, giving people more
leisure time but causing measured GDP to decline slightly,
does that necessarily mean society is worse off? - answer-
No because while GDP declines, GDP does not account for
the value of increased leisure, so overall welfare could be
higher
How does Paul Krugman describe the magnitude of the
Great Recession? - answer-a human disaster, corrosive for
the present and the future, will do enormous damage to our
nation
What does Krugman argue is the impact of recession on
young people? - answer-this will scar young people's
careers for their entire lives
What theories does Krugman mention people have for poor
economic performance? - answer-corporate tax rates,
entitlements, shortage of very specific high skilled workers
What is the problem according to Krugman? - answer-there
is not enough demand in the economy
