ECN 211 MIDTERM 1 FINAL STUDY GUIDE 2026
PRACTICE QUESTIONS ANSWERS
◉ Wealth is measured by ________ Answer: stocks, bonds, houses,
bank accounts
◉ What is GNP? Answer: all things produced by citizens of a country
regardless if they are overseas
◉ Why does GDP rise? Answer: we actually have goods and services
or the price level has gone up
◉ _______ measures what we actually produce and consume Answer:
Real GDP
◉ ______ is how we measure how much we could produce Answer:
Potential GDP
◉ What is the export capital? Answer: Countries that export more
goods than they import must save more money than they invest
◉ Why must the US invest more than it saves? Answer: Low private
savings rate & budget deficits
, ◉ Rising price is _______ Answer: inflation
◉ Falling price is _______ Answer: deflation
◉ To measure price level, we must use _______ & GDP Answer:
Consumer Price Index (CPI)
◉ CPI measures ________ Answer: change in cost of what you buy
◉ What factors can influence CPI? Answer: -Consumers substitute
goods
-Quality of goods change
-New goods introduced
◉ __________ is higher costs for firms lead to firms raising prices
Answer: Cost-push inflation
◉ __________ is more money in people's pockets leads to biding up of
prices Answer: Demand-pull inflation
◉ What is the working definition of inflation? Answer: more money
chasing fewer goods
PRACTICE QUESTIONS ANSWERS
◉ Wealth is measured by ________ Answer: stocks, bonds, houses,
bank accounts
◉ What is GNP? Answer: all things produced by citizens of a country
regardless if they are overseas
◉ Why does GDP rise? Answer: we actually have goods and services
or the price level has gone up
◉ _______ measures what we actually produce and consume Answer:
Real GDP
◉ ______ is how we measure how much we could produce Answer:
Potential GDP
◉ What is the export capital? Answer: Countries that export more
goods than they import must save more money than they invest
◉ Why must the US invest more than it saves? Answer: Low private
savings rate & budget deficits
, ◉ Rising price is _______ Answer: inflation
◉ Falling price is _______ Answer: deflation
◉ To measure price level, we must use _______ & GDP Answer:
Consumer Price Index (CPI)
◉ CPI measures ________ Answer: change in cost of what you buy
◉ What factors can influence CPI? Answer: -Consumers substitute
goods
-Quality of goods change
-New goods introduced
◉ __________ is higher costs for firms lead to firms raising prices
Answer: Cost-push inflation
◉ __________ is more money in people's pockets leads to biding up of
prices Answer: Demand-pull inflation
◉ What is the working definition of inflation? Answer: more money
chasing fewer goods
