EC140 Midterm 1 questions with accurate answers [verified]

Appreciation - Answer-A fall in the exchange rate—it now takes less units of domestic currency to purchase one unit of foreign currency. Value added - Answer-=sales rev - cost of intermediate goods =wages paid to workers + profits paid to owners Measuring GDP Expenditure Side - Answer-Consumption Investment Expenditure (Inventory, new plant and equipment, new housing) Government Purchases Net Exports Measuring GDP Income Side - Answer-Factor payments: wages + salaries, interest, business profits Non factor payments: depreciation, indirect taxes-subsidies Statistical Discrepancy GDP Deflator Calculation - Answer-Nominal GDP/Real GDP * 100 =Current Q x Current P / Current Q x Base Period P Consumption Function - Closed economy - Answer-C = a + b(Yd) Average Propensity to Consume - Answer-The proportion of disposable income that households want to consume. = C /Yd