Chapter 2

Question 1

Micro-Economics

Answer 1

Study of how individual households and firms make decisions and interact with other markets

Question 2

Macro-Economics

Answer 2

Study of economics as a whole

Question 3

Gross Domestic Product (GDP)

Answer 3

Measures total income of everyone in the economy - the market value of all goods and services produced within a country in a given period of time

Question 4

Final Goods

Answer 4

Intended for the end user (consumer)

Question 5

Intermediate Goods`

Answer 5

Building blocks of the final product`

Question 6

C = Consumption

Answer 6

Total household spending on goods and services

Question 7

I = Investments Spending

Answer 7

Total business spending…equipment, structures

Question 8

G = Government Spending

Answer 8

Spending from local, territorial, provincial, federal government

Question 9

NX - Net Exports

Answer 9

Foreign spending on the economys goods and services

Question 10

Nominal GDP

Answer 10

Values output using current prices (Not corrected for inflation)

Question 11

Real GDP

Answer 11

Values output using the prices of a base year (corrected for inflation)

Question 12

GDP Deflator

Answer 12

Measures overall level of prices

GDP Deflator = 100 X Nominal GDP Divided by Real GDP