Understanding GDP and Potential GDP

The video introduces the concept of Gross Product of You (GPY) and its relation to GDP, explaining how personal productivity contributes to the economy. It discusses the role of the Federal Reserve in setting monetary policies to align GDP with potential GDP, ensuring maximum employment and price stability. The video also covers potential GDP, economic imbalances, and the Federal Reserve's dual mandate. It concludes with resources for further learning.

What does GPY stand for in the context of the video?

• Gross Potential Yield

• Global Production Year

• General Product Yield

• Gross Product of You

Which of the following is NOT included in the calculation of GDP?

• Manufactured products

• Personal activities like cooking at home

• Goods produced for sale

• Services sold in the market

What is the primary role of the Federal Reserve as mentioned in the video?

• To increase taxes

• To manage public transportation

• To set monetary policies for maximum employment and price stability

• To regulate international trade

What is potential GDP?

• The maximum GDP ever recorded

• The GDP when the economy is overworked

• The value of all things we could produce if working at full potential

• The GDP of the previous year

Which scenario is included in calculating your potential GPY?

• Taking a day off to rest

• Not working due to a broken tool

• Watching a sports game instead of working

• Reduced work hours due to slow business

What happens if GDP is less than potential GDP?

• There is not enough demand to keep everyone employed

• The economy is overworked

• The Federal Reserve increases interest rates

• Prices are rising rapidly

What is the Federal Reserve's dual mandate?

• To promote international trade and reduce taxes

• To ensure maximum employment and stable prices

• To increase GDP and reduce inflation

• To manage public services and infrastructure

What is a potential consequence of GDP exceeding potential GDP?

• Decreased employment

• Stable prices

• Rising prices due to overworked economy

• Increased government spending

Why is measuring potential GDP considered tricky?

• It is subject to frequent debate among economists

• It involves predicting future economic trends

• It depends on historical data only

• It requires international cooperation

Where can you find more resources on GDP and economic topics?

• gdpinfo.net

• economics.com

• frbatlanta.org

• federalreserve.gov