Changes in economic and business cycle

Question 1

Nominal GDP

Answer 1

measured in todays prices

Question 2

What is Real GDP

Answer 2

meausred in base year prices

(Nominal GDP/ GDP Deflator) x 100

Question 3

What is GDP?

Answer 3

the total market value of all final goods and services produced within the borders of a nation in a particular time peroid

Question 4

What are the business cycles typically compromised of?

Answer 4

E- Expansiorary phase

P- Peak

C- contractionary

T- trough

R- Recovery

Question 5

What are the factors that shift aggregate demand?

Answer 5

T- taxes

W- wealth

I- interest rates

C- consumer confidence

E- exchange rates

G- government spending

Question 6

What is the formula for the multiplier or Marginal propensity to supply?

Answer 6

[1/ (1-MPC)]

Question 7

What are the four components of the expenditure approach for measuring GDP?

Answer 7

G- government pruchases of goods and services

I- gross private domestic investment

C- personal consumption expenditures

E- Net Exports (exprost minue imports) or subtract net imports

Question 8

What are the eight components of the income approach for calculating GDP?

Answer 8

I- income of proprietors

P- Profits of corporations

I- interest

R- rental income

A- adjustments for net foreign income and miscellaneous items

T- taxes (indirect business taxes)

E- employee compensation (wages)

D- depreciation (captial consumption allowance)

Question 9

How do you calculate the unemployement rate?

Answer 9

(number of unemployed/ total labor force) x 100

Question 10

How do you calculate the inflation rate?

Answer 10

CPI- customer price index

[CPI (this period) - CPI (last period)] / CPI (last period)

then multiply by 100

Question 11

What are the factors that shift deman curve?

Answer 11

W- changes in wealth

R- Changes in price of related goods

I- Changes in consumer income

T- changes in consumer tastes or preferences for that product

E- changes in consumer expectations

N- changes in number of buyers served by the market

Question 12

What are the factors that shift supply curves?

Answer 12

E- changes in price expectations of the supply firm

C- changes in production costs

O- changes in price or demand of other goods

S- changes in subsidies or taxes

T- changes in production technology

Question 13

How do you calculate the price elasticity of demand?

Answer 13

% change in quantity demand =
{(new demand- old demand) / old demand}

% change in price

[(new price - old price)/ old price]

Question 14

How do you calculate the income elasticity of demand?

Answer 14

% change in number of units of X demanded

% change in income

Question 15

What is the most important market assumption/ condition?

Answer 15

regardless of the model that represents the industry, the firm will operate best when marginal revenue equals marginal cost (MR=MC)= max profit

Question 16

To assist in strategic planning, what analysis should be used?

Answer 16

SWOT

S- strength

W- weakness

O- oppertunity

T- Threat