Midterm

Question 1

Consumer Price Index

Answer 1

dividing the price of the basket of goods and services in a given year (t)

by the price of the same basket in the base year (b)

This ratio is then multiplied by 100

Question 2

GDP

Answer 2

The market value of all final goods and services produced within a country in a given period of time

Question 3

The compnents of GDP

Answer 3

Y = C + I + G + NX

Question 4

Y = C + I + G + NX

Answer 4

Y: GDP
C: Consumption
I: Investment
G: Government purchases
NX: Net export

Question 5

consumption

Answer 5

Spending by households on goods and services, with the exception of purchases of new housing.

Question 6

Investment

Answer 6

Spending on capital equipment, inventories, and structures, including household purchases of new housing

Question 7

Government Purchases

Answer 7

Spending on goods and services by local, territorial, provincial, and federal governments

Question 8

Net exports

Answer 8

The value of a nation’s exports minus the value of its imports; also called the trade balance.

Question 9

Nominal GDP

Answer 9

The production of goods and services valued at current prices

Question 10

Real GDP

Answer 10

The production of goods and services

Question 11

GDP deflator:

Answer 11

Nominal GDP / Real GDP x 100

Question 12

Inflation rate GDP formula

Answer 12

Inflation rate in year 2 = GDP deflator in year 2 - GDP deflaotr in year 1 / GDP deflator in year 1 x 100

Question 13

Nominal GDP

Answer 13

The production of goods and services valued at current prices

Question 14

Consumer price index (CPI)

Answer 14

The overall measure of the cost of the goods and services bought by a typical consumer.

Question 15

Inflation rate CPI formula

Answer 15

inflation rate in year 2= CPI in y2 - CPI in y1 / CPI in y 1 x 100

Question 16

Formula for dollar figures from different times

Answer 16

Amount in today’s dollars = Amount in year T dollars x Price level today / price level in year T

Question 17

Nominal interest rate

Answer 17

The interest rate that is usually reported without a correction for the effects of inflation

Question 18

Real interest rate

Answer 18

The interest rate that is corrected for the effects of inflation

Question 19

Real interest rate formula

Answer 19

Real interest rate = nominal interest rate - inflation rate

Question 20

What are the four basic factors of production?

Answer 20

land, labor, capital, and entrepreneurship

Question 21

Define “nominal GDP”.

Answer 21

value of goods with the price NOW (C+I+G+N)

Question 22

What is the per capita GPD equation?

Answer 22

GPD divided by total population

Question 23

What is the real GDP equation?

Answer 23

Nominal GDP divided by price index x 100

Question 24

What is the price index equation?

Answer 24

100 (base) + % Price Increase divided by 100 (base)

Question 25

Total Market Value

Answer 25

The unit of measure for real domestic output or real GDP is the market value or $

Question 26

Structural Unemployment

Answer 26

associated with the mismatch between jobs and the skills or locations of those unemployed.

Question 27

Frictional Unemployment

Answer 27

"between jobs" associated with people searching for jobs or waiting to take jobs in the near future

Question 28

Cyclical Unemployment

Answer 28

begins with the recessionary phase of the business cycle; caused by a decline in total spending.

Question 29

Discouraged Workers

Answer 29

are people of legal employment age who are not actively seeking employment or who does not find employment after long-term unemployment.

Question 30

National income

Answer 30

the total income earned by a nation's residents both domestically and abroad in the production of goods and services

Question 31

Gross National Product

Answer 31

GDP plus net income earned abroad

Question 32

Natural rate of unemployment

Answer 32

the level of unemployment that consists only frictional and structural

Question 33

Nominal interest rate

Answer 33

interest rate quoted in the market

Question 34

Real interest rate

Answer 34

the nominal interest rate minus the inflation rate

Question 35

Private Savings

Answer 35

(Y-T-C)

Question 36

Public Saving

Answer 36

(T-G)

Question 37

National Saving

Answer 37

(Y−C−G ) | = I