Economics

Question 1

Nominal GDP vs. Real GDP

Answer 1

No inflation adjusted; inflation adjusted (use GDP deflator)

Question 2

Real Calculation

Answer 2

Nominal GDP/GDP Deflator *100

Question 3

Business Cycles

Answer 3

Expansionary, Peak, Contractionary, Trough, Recovery

Question 4

Expansionary Phase

Answer 4

Rising economic activity
Firm profits rising
Increased workforce

Question 5

Peak Phase

Answer 5

Capacity constraints

Highest profits

Question 6

Contractionary Phase

Answer 6

Firm profits falling

Question 7

Trough Phase

Answer 7

Lowest firm profits

Excess capacity

Question 8

Reduction in Aggregate Demand

Answer 8

ADv GDPv Pv

Question 9

Increase in Aggregate Demand

Answer 9

AD^ GDP^ P^

Question 10

Reduction of Supply

Answer 10

SRASv GDPv P^

Question 11

Increase of Supply

Answer 11

SRAS^ GDP^ Pv

Question 12

Increase in Wealth

Answer 12

W^ Spend ^ AD ^ GDP^ P^

Question 13

Increase in Rates

Answer 13

I^ Borrowv Spendv ADv GDPv Pv

Question 14

Economic Outlook

Answer 14

Outlook^ Spend^ AD^ GDP^ P^

Question 15

Appreciated Currencies

Answer 15

Currency^Exportsv Imports^ ADv GDPv Pv

Question 16

Increase Govt Spend

Answer 16

Govt Spend^AD^GDP^P^

Question 17

Increase Consumer Taxes

Answer 17

Taxes^SpendvADvGDPv Pv

Question 18

Expenditure Approach-GDP

Answer 18

Govt purchasas
Iinvestment, private
Consumption, personal
Exports,net

Question 19

Income Approach-GDP

Answer 19

Income of proprietors
Profits of corp
Interest
Rental Income
Adjustments for foreign income
Taxes
Employee wages
Depreciation

Question 20

Unemployment Rate Calculation

Answer 20

Number of unemployed/Total labor force *100

Question 21

What is frictional unemployment?

Answer 21

Result from workers routinely changing jobs

Question 22

What is structural unemployment?

Answer 22

Jobs available do not correpsond to to skills of workforce

Question 23

Consumer Price Calculation

Answer 23

(CPIcurrent-CPIprevious)/CPI previous *100

Question 24

What is nominal int rate?

Answer 24

Rate in current dollars

Question 25

Real Int Rate Calculation

Answer 25

Nominal-inflation

Question 26

What is M1

Answer 26

coin, currency, check deposits

Question 27

What is M2

Answer 27

M1+CD's<100k

Question 28

What is M3

Answer 28

M2+CD's>100k

Question 29

Increase in Money Supply

Answer 29

Expansaionary | Increase^ Spend^ AD^ GDP^P^

Question 30

Raise discount rate

Answer 30

Contractionary | Increase^ BorrowV Spendv ADv GDPv Pv

Question 31

Raise reserve requirements

Answer 31

Contractionary | Increase^ Spendv ADv GDPv Pv

Question 32

Change in Quantity Demanded (price first)

Answer 32

P^ Dv or PvD^

Question 33

Change in Demand (demand first)

Answer 33

D^P^

Question 34

Factors that shift demand cruve

Answer 34

``` Wealth Relared goods Income, consumer Tastes Expectations Nunmbers of buyers ```

Question 35

Change in Quantity Supplied (price first)

Answer 35

P^ S^

Question 36

Change in Supply

Answer 36

S^ Pv

Question 37

Factors that shift supply

Answer 37

``` Exepctations, price Costs, production Other goods change in price/demand Subsidies, taxes Technology, production ```

Question 38

Price Elasticity of Demand

Answer 38

%change in Qd/%change in P Elasticity1=Elastic

Question 39

Pure Competition

Answer 39

Very Competitie No barrier to entry Large number of suppliers/no product differentiation Price takers

Question 40

Monopoly

Answer 40

Price Setter Significant barriers Least competitive No substitute products

Question 41

Monopolistic

Answer 41

Numerours firms with differentiated products Few barriers Significant non price competition

Question 42

Oligopoly

Answer 42

Significant barriers | Few differentiated products

Question 43

Porters 5 Forces

Answer 43

``` Barriers to Entry Market Competitivness Substitute Products Bargpaining power of customer Bargaining Power of Buyer ```

Question 44

Equilibruinr

Answer 44

Qd=Qs

Question 45

GDP

Answer 45

All goods and services produced domestically Foreign COmpany in US

Question 46

GNP

Answer 46

US overseas production included

Question 47

Disposable Income

Answer 47

Personal-Taxes

Question 48

Tariff

Answer 48

Tax on imported goods

Question 49

Quota

Answer 49

Limit on number of imported goods

Question 50

What is political business theory?

Answer 50

Economy heading in right direction as election approaches

Question 51

What is discount rate?

Answer 51

Rate central bank charkes for loans to other banks

Question 52

3 Tools to affect monetary policy

Answer 52

1. Inc/dec money supply 2. Change interest rate 3. Change reserves

Question 53

MPS

Answer 53

1-MPC

Question 54

Call/Put

Answer 54

Call=buy | put=sell

Question 55

MPC

Answer 55

Change in consumption/change in income

Question 56

Call Option | Put Option

Answer 56

Call-expect price to increase | Put-expect price to decrease