Quiz 2 for Chapter 10

Question 1

Macroeconomics

Answer 1

Study of economy-wide phenomena, including inflation, unemployment, and economic growth

Question 2

Gross Domestic Product (GDP)

Answer 2

Market value of all final goods and services produced within a country in a given period of time. This measure the flow of money

Question 3

Y=C+|+G+NX

Answer 3

GDP=Consumption +Investment+Government
Purchases+ Net Exports

Question 4

Consumption

Answer 4

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

Question 5

Investment

Answer 5

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

Question 6

Government Purchases

Answer 6

Spending on goods and services by local, state, and federal governments

Question 7

Net Exports

Answer 7

Spending on domestically produced goods by foreigners(exports) minus spending on foreign goods by domestic residents

Question 8

Nominal GDP

Answer 8

Production of goods and services valued at current prices

Question 9

Real GDP

Answer 9

Production of goods and services valued at constant prices

Question 10

Recessions

Answer 10

Upward climb of real GDP that is interrupted by periods of decline

Question 11

Real Interest Rate

Answer 11

The Interest Rate corrected for inflation is called the real interest rate
It tells you how fast the purchasing power of your bank account rises over time

Question 12

During deflation…what is the relationship between the real
interest rate and the nominal interest rate?

Answer 12

It is reversed: the real interest rate exceeds the nominal interest rate

Question 13

Do the real interest rate and the nominal
interest rate move together?

Answer 13

Because inflation is variable, the real interest rate and the nominal interest rate do not always move together