GDP TEST

Question 1

What is an intermediate good?

Answer 1

A good that is used in production

Question 2

What things aren’t counted for GDP?

Answer 2

Transfer payments, second hand sales, and security transactions

Question 3

What are public transfer payments?

Answer 3

Social security, welfare, and veteran’s benefit

Question 4

What are private transfer payments?

Answer 4

Gifts or inheritances

Question 5

What are secondhand sales?

Answer 5

The resale of good already counted when new

Question 6

What are security transactions?

Answer 6

Stocks and bonds

Question 7

What is the definition of GDP?

Answer 7

Market value of the total good and services produced within the boundaries of the US

Question 8

Why do we measure GDP?

Answer 8

To create public policy using predictions about the economy, GDP helps us determine where we are in the business cycle

Question 9

What is the GDP formula?

Answer 9

Consumption+gov. Spending+gross domestic investment+net foreign investment

Question 10

How do you calculate net foreign investment?

Answer 10

Exports minus imports

Question 11

What is net investment?

Answer 11

Gross- depreciation

Question 12

What is another term for depreciation?

Answer 12

Consumption of fixed capital

Question 13

How do you calculate NDP?

Answer 13

GDP minus depreciation

Question 14

What is disposable income?

Answer 14

Personal income minus taxes

Question 15

What are the 3 things that companies can do with corporate profits?

Answer 15

Pay income taxes, distribute as dividends, or keep the money and reinvest

Question 16

What is a dividend?

Answer 16

A return in an investment

Question 17

What is value added tax?

Answer 17

The difference between what you payed and what you sold a product for

Question 18

What is disposable income?

Answer 18

Income after taxes

Question 19

What is the only thing transfer payments are included in?

Answer 19

Personal income

Question 20

What is nominal?

Answer 20

The current level or current value

Question 21

What is real?

Answer 21

The value adjusted for inflation

Question 22

What is the real GDP formula?

Answer 22

Base year times output

Question 23

What is real GDP used for?

Answer 23

The measure the standard of living

Question 24

How do you calculate nominal GDP?

Answer 24

Output times price

Question 25

How do you calculate price index?

Answer 25

Base year times price

Question 26

What is the order of the business cycle?

Answer 26

Peak, recession, depression, expansion

Question 27

What is another word for the peak period?

Answer 27

Prosperity

Question 28

What is another word for the recession period?

Answer 28

Contraction

Question 29

What is another word for the expansion period?

Answer 29

Recovery

Question 30

What is the rule of 70 for inflation?

Answer 30

70/the annual percent rate of inflation | It calculates the number of years it takes to double prices

Question 31

What is a final good?

Answer 31

A good that is sold for final use by the consumer

Question 32

What is GDP gap?

Answer 32

Below the line; the higher the unemployment rate the larger the the GDP gap

Question 33

What is negative GDP gap?

Answer 33

When the economy's outputs exceeds its potential; this eventually causes inflation and can't not be sustained

Question 34

What is another term for real GDP?

Answer 34

Real domestic output

Question 35

What is Okun's law?

Answer 35

For every 1% the unemployment rate exceeds the natural rate, a 2% GDP gap occurs

Question 36

What is the lead indicator of a recession?

Answer 36

The sale of durable goods

Question 37

What causes demand pull inflation?

Answer 37

To much money is the economy wanting goods that aren't there, economy seeks more production once it has already reached full unemployment

Question 38

What is phase 1 of demand pull?

Answer 38

The price stays the same while the economy is experiencing growth

Question 39

What happens during phase 2 of demand pull?

Answer 39

Prices go up and the economy is still growing the trade off for growth is moderate inflation

Question 40

What happens durin. The 3rd phase of demand pull?

Answer 40

The demand goes up but can't produce anymore so prices continue to go up

Question 41

What is cost push inflation?

Answer 41

Supply side inflation; prices rise while output and employment are declining; oil is the only product that can cause this

Question 42

What would you rather recieve as a gift during hyperinflation?

Answer 42

Things of value rather than money or checks

Question 43

What happens during the peak of the business cycle?

Answer 43

GDP is up Unemployment is down Price levels go up

Question 44

What happens during recession of the business cycle?

Answer 44

GDP goes down Unemployment goes up Price levels stay the same

Question 45

What happens during depression?

Answer 45

GDP goes down Unemployment goes up And price levels go down

Question 46

What happens during expansion?

Answer 46

GDP goes up Unemployment goes down And price level go up