Exam 1

Question 1

Nominal GDP =

Answer 1

Consumption (C) + Gross Investment (I) + Gov’t Purchases (G) + Net Exports (NX)

Question 2

Consumption =

Answer 2

Durable Goods + Nondurable Goods + Services

Question 3

Net Investment (Inet) =

Answer 3

Investment (I) - Depreciation

Question 4

Net Exports (NX) =

Answer 4

Exports (X) - Imports (M)

Question 5

National Income =

Answer 5

Rent + Wages + Interest + Net Foreign Factor Income

Question 6

GPD Income Approach =

Answer 6

National Income + Indirect Business Taxes + Depreciation + Net Foreign Factor Income

Question 7

Real GDP per Capita =

Answer 7

Real GDP / Population

Question 8

GDP Price Index =

Answer 8

Nominal GDP / Real GDP x 100

Question 9

Percentage Change =

Answer 9

New - Old / Old x 100

Question 10

Rule of 72: Time to Double =

Answer 10

72 / Growth Rate

Question 11

n = r + i means

Answer 11

nominal interest rate = real interest rate + inflation

Question 12

Unemployment Rate =

Answer 12

Unemployed / Labor Force x 100

Question 13

Unemployment Rate =

Answer 13

Unemployed / Employed + Unemployed x100

Question 14

Labor Force Participation Rate =

Answer 14

Labor Force / Population over 16 years x 100

Question 15

Natural Rate of Unemployment =

Answer 15

Frictionally Unemployed + # Structurally Unemployed / Size of Labor Force x 100

Question 16

Consumer Price Index Year 1=

Answer 16

Value of Market Basket Year 1 / Value of Same Basket in Base Year x 100

Question 17

Inflation Rate Year 1 =

Answer 17

CPI Year 1 - CPI Year t-1 / CPI Year t-1 x 100

Question 18

Real Income =

Answer 18

Nominal Income / Consumer Price Index x 100

Question 19

Percent Change Real Income =

Answer 19

Percent Change Nominal Income - Percent Change Prices