ECON 104 Goffe Final Exam
Complete Questions and Guide Answers
100% Verified Graded A+
1. Nominal GDP
Answer the value of final goods and services evaluated at current-year prices
2. How to calculate nominal GDP
Answer C + I + G +NX
3. Real GDP
Answer The value of final goods and services evaluated at base-year prices
4. How to calculate real GDP
Answer P*Q for every good in GDP and add them all together
BASE YEAR
2014 - 100M visits at $50 each 2015 - 103M visits
at $53 10M cars at $20,000 each 11M cars at
$20,500 each
real GDP for 2015 (103M * $50 + 11M * 20,000)
,2015Q(1) * 2014P(1) + 2015Q(2) * 2014 P(2)
5. Monetary Policy
Answer federal reserve's dual mandate (which focuses on max employment, stable prices, and
moderate long-term interest rates)
6. What will result from the Fed increasing the federal rate?
Answer Costs for banks will increase and loan rates for consumers and firms will increase. This
leads to slower growth.
7. Fiscal Policy
Answer Controlled by the president and congress. It is the government budget.
8. GDP Deflator
Answer uses nominal and real GDP to measure the price level (not in dollars)
9. Price level
Answer The average price of all goods and services in an economy
10. How to calculate GDP deflator
Answer (Nominal/Real)*100
11. CPI
Answer used to correct nominal prices and wages over time for the impact of inflation using market
basket prices
, 12. How to calculate CPI
Answer (market base price in current year/ market basket price in base year)*100
13. Limitations of GDP
Answer 1. Doesn't account for change in quality.
2. Doesn't account for underground economy.
3. Doesn't account for 'bads' of economy
4. Doesn't account for non-market production
14. Limitations of CPI
Answer Substitution bias, increase in quality bias, new product bias, outlet bias.
15. Core Inflation
Answer ignores food/energy, as they can be more volatile
16. Headline inflation
Answer takes food and energy in to account when calculating
17. Real prices
Answer what would have been paid for the same good or service in the base year based on inflation
18. Real wages
Answer wages based on the base year
19. Inflation rate (Calculation)
Complete Questions and Guide Answers
100% Verified Graded A+
1. Nominal GDP
Answer the value of final goods and services evaluated at current-year prices
2. How to calculate nominal GDP
Answer C + I + G +NX
3. Real GDP
Answer The value of final goods and services evaluated at base-year prices
4. How to calculate real GDP
Answer P*Q for every good in GDP and add them all together
BASE YEAR
2014 - 100M visits at $50 each 2015 - 103M visits
at $53 10M cars at $20,000 each 11M cars at
$20,500 each
real GDP for 2015 (103M * $50 + 11M * 20,000)
,2015Q(1) * 2014P(1) + 2015Q(2) * 2014 P(2)
5. Monetary Policy
Answer federal reserve's dual mandate (which focuses on max employment, stable prices, and
moderate long-term interest rates)
6. What will result from the Fed increasing the federal rate?
Answer Costs for banks will increase and loan rates for consumers and firms will increase. This
leads to slower growth.
7. Fiscal Policy
Answer Controlled by the president and congress. It is the government budget.
8. GDP Deflator
Answer uses nominal and real GDP to measure the price level (not in dollars)
9. Price level
Answer The average price of all goods and services in an economy
10. How to calculate GDP deflator
Answer (Nominal/Real)*100
11. CPI
Answer used to correct nominal prices and wages over time for the impact of inflation using market
basket prices
, 12. How to calculate CPI
Answer (market base price in current year/ market basket price in base year)*100
13. Limitations of GDP
Answer 1. Doesn't account for change in quality.
2. Doesn't account for underground economy.
3. Doesn't account for 'bads' of economy
4. Doesn't account for non-market production
14. Limitations of CPI
Answer Substitution bias, increase in quality bias, new product bias, outlet bias.
15. Core Inflation
Answer ignores food/energy, as they can be more volatile
16. Headline inflation
Answer takes food and energy in to account when calculating
17. Real prices
Answer what would have been paid for the same good or service in the base year based on inflation
18. Real wages
Answer wages based on the base year
19. Inflation rate (Calculation)
