Question

1. \gdp measures the market value of the goods, services, and structures produced by the nation’s economy in a particular period. while gdp is used as an indicator of economic activity, it is not a measure of well - being (for example, it does not account for rates of poverty, crime, or literacy).\

\measuring the economy: a primer on gdp and the national income and product accounts\ by stephanie h. mcculla and shelly smith, december 2015
courtesy of the bureau of economic analysis, u.s. department of commerce
why is it important to monitor the gross domestic product? e.2.1
a. it prevents one industry from becoming too strong
b. it helps consumers to choose how to invest their money
c. it allows consumers to compare the relative worth of goods and services

1. how can the federal reserve influence consumers to borrow money to purchase a home during an economic downturn? e.2.1

a. by reducing interest rates on home loans to make consumers more willing to take loans from banks
b. by buying u.s. treasury bonds back from consumers to allow them to have more cash in hand
c. by selling u.s. treasury bonds to strengthen the u.s. economy and gross domestic product

Explanation:

1. GDP quantifies the market value of all domestic production, which enables consumers to assess the relative economic value of different goods, services, and structures in a standardized way. The other options are not core purposes of monitoring GDP.
2. During an economic downturn, lowering home loan interest rates reduces the cost of borrowing, making home purchases more affordable and incentivizing consumers to take out loans. Buying back Treasury bonds is a monetary policy tool but does not directly target home borrowing, while selling bonds contracts the money supply and discourages borrowing.

Answer:

1. c. It allows consumers to compare the relative worth of goods and services
2. a. By reducing interest rates on home loans to make consumers more willing to take loans from banks