GDP Test

Question 1

GDP

Answer 1

All goods and services produced in a country in 1 year (QUANTITY) [Final goods produced within the US]

Question 2

GDP Does not include

Answer 2

Used Products, Transfer payments, stocks/bonds, at home services. intermediate/ foreign services

Question 3

Ways to Measure GDP

Answer 3

Value of PRODUCTION of final goods and services, Value of spending on final goods and services, Factor Income

Question 4

GDP Equation

Answer 4

C (Consumer Spending) + I (Investment Spending) + G (Government Spending) + Xn (Exports - Imports)

Question 5

GDP Faults

Answer 5

It does not measure prosperity or standard of living

Question 6

Umemployed

Answer 6

People not employed but ACTIVELY looking for work

Question 7

Labor Force

Answer 7

Unemployed + Employed

Question 8

Labor Force Participation Rate

Answer 8

(Labor Force/ Population Aged) * 100

Question 9

Unemployment Rate

Answer 9

(# Unemployed/ Labor Force) * 100

Question 10

Discouraged Workers

Answer 10

Not employed and not looking

Question 11

U3

Answer 11

Official Unemployment Rate

Question 12

U6

Answer 12

Unemployment rate + Includes discouraged, marginally attached workers, and half time workers

Question 13

Frictional Unemployment

Answer 13

New opportunities/ Jobs

Question 14

Structural

Answer 14

More people looking then jobs OR obsolete workers/ jobs gone

Question 15

Cyclical

Answer 15

During recessions, layoffs

Question 16

Natural Rate of Unemployment

Answer 16

Frictional + Structural

Question 17

Actual Rate of Unemployment

Answer 17

(Frictional + Structural (Which is Natural)) + Cyclical

Question 18

CPI

Answer 18

Changes in Price

Question 19

Market Basket

Answer 19

(Price * Quantity) Consumer Expenditures

Question 20

CPI Equation

Answer 20

(Market Basket Current Year/ Market Basket Base year) * 100

Question 21

Rate of Change

Answer 21

((New-old)/ Old) * 100

Question 22

Nominal

Answer 22

Not adjusted for inflation

Question 23

Real

Answer 23

Adjusted for inflation

Question 24

Real Value

Answer 24

Nominal Value/ (Price Index/100)

Question 25

CPI of different items

Answer 25

Changes at different rates

Question 26

Substitution Bias

Answer 26

As prices rise, consumers switch goods but it appears as though consumers have lost purchasing power

Question 27

Things CPI doesn't account for

Answer 27

Substitution Bias, Unmeasured quality changes, Prices rising and falling drastically

Question 28

Inflation Rising causes

Answer 28

purchasing power to decrease

Question 29

Nominal GDP =

Answer 29

(Price Level/Index * Real GDP (Y)) OR (Pcy *Qcy) OR (Real GDP *(Aggregate Price Level/100))

Question 30

Nominal GDP measures

Answer 30

How much is spent on output in a given period and the value of aggregate output

Question 31

Real GDP

Answer 31

Measure of how much the value of aggregate output in constant dollars

Question 32

Real GDP =

Answer 32

(Pby * Qcy) OR ((Nominal GDP/ Aggregate Price Level) *100) **Real and Nominal GDP are equal to each other at the base**

Question 33

GDP Deflator is

Answer 33

Changes in prices for all goods and services which show us the aggregate price level

Question 34

GDP Deflator (Implicit price deflator) =

Answer 34

((Nominal GDP/ Real GDP) * 100)

Question 35

Inflation Rate =

Answer 35

((GDP Deflator cy - GDP Deflator by)/GDP Deflator by ) * 100 OR CPI subsitute

Question 36

CPI Deflator

Answer 36

Purchasing Power changing over time ( Changes in Price, Quantity is constant) [Tracking just C]

Question 37

GDP Deflator

Answer 37

Output has changed over time (Price is constant, Quantity is changing) [ Tracking C, I, G and Xn]

Question 38

Output (Increasing on graph)

Answer 38

When output is increasing employment is rising

Question 39

Recession (going down on graph)

Answer 39

Output is decreasing and employment is falling

Question 40

Line diagonal across the graph

Answer 40

The potential output

Question 41

Actual Output = Potential Output

Answer 41

Unemployment Rate = Natural Rate of Unemployment

Question 42

Actual Output < Potential Output

Answer 42

UR > NRU

Question 43

Expenditures

Answer 43

Purchases

Question 44

Expenditure Side of GDP =

Answer 44

Income Side of GDP

Question 45

Income

Answer 45

Who received incomes generated by products.

Question 46

Output Gap

Answer 46

Diff between actual and potential GDP