Chapter Questions
Many have argued that the government should attach a value to homemaking services and include this value in gross domestic product statistics. Do you agree? Why?
Is gross domestic product an accurate measure of the standard of living? Why or why not?
Describe the effect on gross domestic product, employment, and inflation of each of the following: (a) war, (b) elimination of environmental regulations, and (c) cuts in welfare benefits.
Look up the current level of GDP at the Census Bureau's Web site (http://www.census.gov). What is the value of nominal GDP? What is the value of real GDP? What is the base year(s) used in calculating real GDP?
Look up the current unemployment rate at the Bureau of Labor Statistics Web site (http://www.bls.gov). Would you say we currently have full employment?
Conservatives favor a lesser role for government in the economy, whereas liberals favor a greater role. How would each of these groups feel about a fiscal policy that increases government purchases and income transfers? Fiscal policy that reduces taxes? Monetary policy that reduces interest rates?
What is your opinion about the role that government should play in the economy?
Do you believe in the trickle-down philosophy?
Go to the Web site of the president (http://www. whitehouse.gov) and search for a recent speech by the president that focuses on government spending or tax policies. What type of macroeconomic policy is he promoting? Do you agree with him?