AP WK 2 – 2.5 The Clayton, Giesbrecht and Guo questions
Order Description
4 full pages; all questions need to be ansered

Provide thorough, in-depth, answers to
each question. The length of your responses will vary, but quality counts more than quantity.

Explain, in your own words the distinction between GDP and GNP.

What agency or organization reports GDP?
What agency or organization reports the turning points for a business cycle?
How is it determined when the economy is in a recession or a recovery?

Explain the makeup of the Index of Industrial Production, including its indicator status and the agency or organization that compiles it. For what is it used?

What agency or organization compiles the Index of Leading Indicators? What are the components of this index, and why do you think they are labeled “leading indicators”?

If the PMI is 51.4, what may this tell us about the economy? If the PMI is 44.9, what may this tell us about the economy? Explain the indicator status of the PMI.

What does the Capacity Utilization Rate tell us about the economy, and for what is it most used?

Explain why the unemployment rate is a “lagging” indicator.

Compare and contrast the CPI with the PPI. How might they be related?

Compare M1 and M2 measures of the money supply. What components are included in M1? In M2? Conceptually, what is the difference between these two categories of the money supply?

Explain the relationships between the Prime Rate, the Discount Rate, the Fed Funds Rate, and the Treasury Bill Rate. Explain how each relates to monetary policy.