2. The circular flow of income and expenditure The income and expenditure approaches to measuring a nation's GDP can be combined using the circular flow model. Categorize each flow in the following table as part of either aggregate demand or national income. Flow Aggregate Demand National Income Government purchases (G) Net exports (X - IM) Consumption (C) Investment spending (I) Disposable income (DI) Net taxes (NT) While national income and domestic product must be equal, income must also equal expenditure for each of the six sectors in the circular flow diagram: firms, consumers, government, financial system, investors, and the "rest of the world." For example, the amount of flowing into the financial system sector must equal the amount of ▼ flowing out of this sector.

GDP is very widely used throughout the world as a measure of Economic health. Come up with your own example, either real or a scenario, that shows a flaw with using GDP as the only indicator of the well being of a society.

Which of the following will likely lead to an increase in real GDP in the U.S.   Group of answer choices   The U.S. begins a new war in the middle east   A massive hurricane destroys homes and infrastructure in the Eastern US   The growing student debt burden forces American households to begin working twice as many hours each week   all of the above   Many people believe that GDP is not a good indicator of economics success or standard of living because   Group of answer choices   GDP doesn't tell us anything about the distribution of income   GDP doesn't include leisure time as a good   GDP does not account for "bads" like pollution   all of the above

GDP is a m diverse collection of goods and services over time. It is not possible to count the number of goods and compare them because the types of goods change over time. It is possible to count the number of goods and attach monetary values to them to reflect their relative worth and then compare the value of the output at different points in time. That is, m_ m to make it possible to compare the relative worth of a is the common denominator for GDP measure.