ECON 110 MACROECONOMICS
QUESTIONS AND CORRECT
ANSWERS
statistical discrepancy ✅✅CORRECT ANSW-difference between 2 calculations of GDP
consumption ✅✅CORRECT ANSW-spending by households on goods and services, with the
exception of purchases of new housing.
investment ✅✅CORRECT ANSW-the purchase of goods that will be used in the future to produce
more goods and services
govt purchases ✅✅CORRECT ANSW-include spending on goods and services by local, state, and
federal govt
GDP ✅✅CORRECT ANSW-measure of economic prosperity. measure the total income of a nation.
microeconomics ✅✅CORRECT ANSW-the study of how households and firms make decisions and
how they interact in markets
macroeconomics ✅✅CORRECT ANSW-the study of economy-wide phenomena, including
inflation, unemployment, and economic growth
Gross Domestic Product ✅✅CORRECT ANSW-market value of all final goods and services
produced within a country in a given period of time.
transfer payments ✅✅CORRECT ANSW-not made in exchange for a currently produced good or
service
net exports ✅✅CORRECT ANSW-foreign purchases of domestically produced goods (exports) -
domestic purchases of foreign goods (imports)
Nominal GDP ✅✅CORRECT ANSW-the production of goods and services valued at current prices
, Read GDP ✅✅CORRECT ANSW-the production of goods and services valued at constant prices.
Better gauge of economic well-being
GDP deflator ✅✅CORRECT ANSW-a measure of the price level calculated as the ratio of nominal
GDP to real GDP *100
CPI (Consumer Price Index) ✅✅CORRECT ANSW-overall cost of the goods and services bought by
a typical consumer
Inflation Rate ✅✅CORRECT ANSW-the percentage change in the price index from the preceding
period
Producer Price Index (PPI) ✅✅CORRECT ANSW-a measure of the cost of a basket of goods and
services bought by firms
Indexed ✅✅CORRECT ANSW-the automatic correction by law or contract of a dollar amount for
the effects of inflation
Cost-of-Living Allowance ✅✅CORRECT ANSW-partial or complete indexation of the wage to the
consumer price index.
Nominal interest rate ✅✅CORRECT ANSW-the interest rate as usually reported without a
correction for the effects of inflation
Real interest rate ✅✅CORRECT ANSW-the interest rate corrected for the effects of inflation
Natural rate of unemployment ✅✅CORRECT ANSW-the amount of unemployment that the
economy normally experiences
cyclical unemployment ✅✅CORRECT ANSW-refers to the year-to-year fluctuations in
unemployment around its natural rate, and is closely associated with the short-run ups and downs of
economic activity.
QUESTIONS AND CORRECT
ANSWERS
statistical discrepancy ✅✅CORRECT ANSW-difference between 2 calculations of GDP
consumption ✅✅CORRECT ANSW-spending by households on goods and services, with the
exception of purchases of new housing.
investment ✅✅CORRECT ANSW-the purchase of goods that will be used in the future to produce
more goods and services
govt purchases ✅✅CORRECT ANSW-include spending on goods and services by local, state, and
federal govt
GDP ✅✅CORRECT ANSW-measure of economic prosperity. measure the total income of a nation.
microeconomics ✅✅CORRECT ANSW-the study of how households and firms make decisions and
how they interact in markets
macroeconomics ✅✅CORRECT ANSW-the study of economy-wide phenomena, including
inflation, unemployment, and economic growth
Gross Domestic Product ✅✅CORRECT ANSW-market value of all final goods and services
produced within a country in a given period of time.
transfer payments ✅✅CORRECT ANSW-not made in exchange for a currently produced good or
service
net exports ✅✅CORRECT ANSW-foreign purchases of domestically produced goods (exports) -
domestic purchases of foreign goods (imports)
Nominal GDP ✅✅CORRECT ANSW-the production of goods and services valued at current prices
, Read GDP ✅✅CORRECT ANSW-the production of goods and services valued at constant prices.
Better gauge of economic well-being
GDP deflator ✅✅CORRECT ANSW-a measure of the price level calculated as the ratio of nominal
GDP to real GDP *100
CPI (Consumer Price Index) ✅✅CORRECT ANSW-overall cost of the goods and services bought by
a typical consumer
Inflation Rate ✅✅CORRECT ANSW-the percentage change in the price index from the preceding
period
Producer Price Index (PPI) ✅✅CORRECT ANSW-a measure of the cost of a basket of goods and
services bought by firms
Indexed ✅✅CORRECT ANSW-the automatic correction by law or contract of a dollar amount for
the effects of inflation
Cost-of-Living Allowance ✅✅CORRECT ANSW-partial or complete indexation of the wage to the
consumer price index.
Nominal interest rate ✅✅CORRECT ANSW-the interest rate as usually reported without a
correction for the effects of inflation
Real interest rate ✅✅CORRECT ANSW-the interest rate corrected for the effects of inflation
Natural rate of unemployment ✅✅CORRECT ANSW-the amount of unemployment that the
economy normally experiences
cyclical unemployment ✅✅CORRECT ANSW-refers to the year-to-year fluctuations in
unemployment around its natural rate, and is closely associated with the short-run ups and downs of
economic activity.
