ECON 2020 LATEST EXAM PREP
QUESTIONS AND ANSWERS PDF 2026
▶ GDP equation/ how do you calculate GDP?. Answer: GDP= C+I+G+(X-
M)
(C) Consumption: The amount spent by households on goods and
services. Includes durable (cars, food, clothes, etc) and non-durable
(haircuts, dentist appointments, etc) goods. Makes up 2/3rds of GDP
spending
(I) Investment: Spending by businesses on machinery, factories,
equipment, tools. Spending by households on new homes.
(G) Government: Spending by all levels of government on goods and
services. Includes spending on military, schools, and highways.
(X-M) Net Exports: Spending by people abroad on U.S. goods and services
(exports, or X) MINUS spending by people in the U.S. on foreign goods and
services (imports, or M)
▶ what is a $10 bill worth?. Answer: $10 worth of goods and services
It only has value because we believe it has value
Money is an idea
Money is someone's debt
▶ what type of relationship does GDP and unemployment have?. Answer:
inverse
as GDP increase, unemployment decreases and vice versa
▶ aggregate demand. Answer: The total quantity of goods and services
demanded at different price levels.
-A summary measure of all demand in
the economy
Determinant: spending
▶ aggregate supply. Answer: -The total value of goods and services that
all firms would produce in a specific period of time at various price levels.
, -Shows the effect of changes in the price level on the quantity of goods and
services that firms are able and willing to supply.
▶ what is a recession?. Answer: -A period in time when the economy has
a negative growth rate. When GDP, total production, and employment are
all decreasing. If this occurs for longer than 6 months this is a recession.
-The NBER defines it a little differently, claiming that a recession occurs
when there is a significant decline in economic activity lasting more than a
few months, whereas the traditional definition states this decline must last
for more than 6 months.
-Recessions cause the unemployment rate to increase.
-As firms see sales decline, they begin to reduce production and lay off
workers
▶ who is NBER?. Answer: -National Bureau of Economic Research
-Private, non-profit organization that studies economics, with a large focus
on the US economy.
-On December 1, 2008 the NBER published reports stating that the U.S.
economy had been in recession since December 2007.
-On September 20, 2010 the NBER published reports stating that a trough
in business activity occurred in the U.S. economy in June 2009. The trough
marks the end of the recession that began in December 2007 and the
beginning of an expansion. The recession lasted 18 months, which makes
it the longest of any recession since World War II. Previously the longest
postwar recessions were those of 1973-75 and 1981-82, both of which
lasted 16 months.
▶ The business cycle. Answer: The business cycle shows periods of
expansion and
recession- Economic Activity.
The periodic, but irregular up and down movements in
economic activity, measured by fluctuations in real GDP and other
macroeconomic variables.
▶ Employment Act of 1946. Answer: Through the ability to intervene in the
economy, the federal government committed itself to promote
maximum employment at low rates of inflation.
QUESTIONS AND ANSWERS PDF 2026
▶ GDP equation/ how do you calculate GDP?. Answer: GDP= C+I+G+(X-
M)
(C) Consumption: The amount spent by households on goods and
services. Includes durable (cars, food, clothes, etc) and non-durable
(haircuts, dentist appointments, etc) goods. Makes up 2/3rds of GDP
spending
(I) Investment: Spending by businesses on machinery, factories,
equipment, tools. Spending by households on new homes.
(G) Government: Spending by all levels of government on goods and
services. Includes spending on military, schools, and highways.
(X-M) Net Exports: Spending by people abroad on U.S. goods and services
(exports, or X) MINUS spending by people in the U.S. on foreign goods and
services (imports, or M)
▶ what is a $10 bill worth?. Answer: $10 worth of goods and services
It only has value because we believe it has value
Money is an idea
Money is someone's debt
▶ what type of relationship does GDP and unemployment have?. Answer:
inverse
as GDP increase, unemployment decreases and vice versa
▶ aggregate demand. Answer: The total quantity of goods and services
demanded at different price levels.
-A summary measure of all demand in
the economy
Determinant: spending
▶ aggregate supply. Answer: -The total value of goods and services that
all firms would produce in a specific period of time at various price levels.
, -Shows the effect of changes in the price level on the quantity of goods and
services that firms are able and willing to supply.
▶ what is a recession?. Answer: -A period in time when the economy has
a negative growth rate. When GDP, total production, and employment are
all decreasing. If this occurs for longer than 6 months this is a recession.
-The NBER defines it a little differently, claiming that a recession occurs
when there is a significant decline in economic activity lasting more than a
few months, whereas the traditional definition states this decline must last
for more than 6 months.
-Recessions cause the unemployment rate to increase.
-As firms see sales decline, they begin to reduce production and lay off
workers
▶ who is NBER?. Answer: -National Bureau of Economic Research
-Private, non-profit organization that studies economics, with a large focus
on the US economy.
-On December 1, 2008 the NBER published reports stating that the U.S.
economy had been in recession since December 2007.
-On September 20, 2010 the NBER published reports stating that a trough
in business activity occurred in the U.S. economy in June 2009. The trough
marks the end of the recession that began in December 2007 and the
beginning of an expansion. The recession lasted 18 months, which makes
it the longest of any recession since World War II. Previously the longest
postwar recessions were those of 1973-75 and 1981-82, both of which
lasted 16 months.
▶ The business cycle. Answer: The business cycle shows periods of
expansion and
recession- Economic Activity.
The periodic, but irregular up and down movements in
economic activity, measured by fluctuations in real GDP and other
macroeconomic variables.
▶ Employment Act of 1946. Answer: Through the ability to intervene in the
economy, the federal government committed itself to promote
maximum employment at low rates of inflation.
