Econ 102 Quiz 4 UPDATED Actual Exam
Questions and CORRECT Answers
macroeconomics - CORRECT ANSWER✔✔- -study of an entire economy
-less theoretical than micro
-more empirical
-aka business economics
two main goals of macroeconomics - CORRECT ANSWER✔✔- -measure the health of the
overall economy
-fix problems when they arise
three macroeconomic goals that all countries have - CORRECT ANSWER✔✔- -consistent
economic growth (GDP)
-low unemployment
-stable prices (low inflation)
GDP - CORRECT ANSWER✔✔- -the dollar value of all final goods and services produced
within a country's borders in one year
-expenditure = income
final goods - CORRECT ANSWER✔✔- -GDP does not include the value of intermediate
goods, which are goods used in the production of final goods and services
NOT counted for GDP - CORRECT ANSWER✔✔- -intermediate goods
-non-production transactions (buying used backs, an "old" house, stocks/bonds, etc)
-illegal or black market activities
-household production (fixing your sink yourself)
-inventory (counts the year you make the product, not their you sell the product)
Calculating GDP - CORRECT ANSWER✔✔- -expenditure approach
, -income approach
-factor payment approach
expenditure approach - CORRECT ANSWER✔✔- -add up all spending on final goods and
services produced in a year
-CIGXn
income approach - CORRECT ANSWER✔✔- -add up all income earned in a year
-rent, wages, interest, profits
-business taxes, depreciation, and foreign income
-based on the resource/factor market in circular flow model
-not as accurate as the expenditure approach
factor payment approach - CORRECT ANSWER✔✔- -adds up the value of all money
income paid by firms to households (in the form of rents, wages, profits and interest) for
providing firms with land, capital, labor and entrepreneurship
value-added approach - CORRECT ANSWER✔✔- -subtracts the cost of all intermediate
goods that firms buy as inputs
GNP - CORRECT ANSWER✔✔- -gross national product
-total output supplied by the resource owned by people from a country, regardless of where
those resources are located
Net Factor Foreign Income - CORRECT ANSWER✔✔- -payments made from and to the
owners of that factor
-corporate profits earned abroad minus corporate profits earned domestically by foreign
owners
-Remittances by foreign nationals sent abroad minus remittances by domestic nationals
returned to the home country
nominal GDP - CORRECT ANSWER✔✔- -measured in current prices
Questions and CORRECT Answers
macroeconomics - CORRECT ANSWER✔✔- -study of an entire economy
-less theoretical than micro
-more empirical
-aka business economics
two main goals of macroeconomics - CORRECT ANSWER✔✔- -measure the health of the
overall economy
-fix problems when they arise
three macroeconomic goals that all countries have - CORRECT ANSWER✔✔- -consistent
economic growth (GDP)
-low unemployment
-stable prices (low inflation)
GDP - CORRECT ANSWER✔✔- -the dollar value of all final goods and services produced
within a country's borders in one year
-expenditure = income
final goods - CORRECT ANSWER✔✔- -GDP does not include the value of intermediate
goods, which are goods used in the production of final goods and services
NOT counted for GDP - CORRECT ANSWER✔✔- -intermediate goods
-non-production transactions (buying used backs, an "old" house, stocks/bonds, etc)
-illegal or black market activities
-household production (fixing your sink yourself)
-inventory (counts the year you make the product, not their you sell the product)
Calculating GDP - CORRECT ANSWER✔✔- -expenditure approach
, -income approach
-factor payment approach
expenditure approach - CORRECT ANSWER✔✔- -add up all spending on final goods and
services produced in a year
-CIGXn
income approach - CORRECT ANSWER✔✔- -add up all income earned in a year
-rent, wages, interest, profits
-business taxes, depreciation, and foreign income
-based on the resource/factor market in circular flow model
-not as accurate as the expenditure approach
factor payment approach - CORRECT ANSWER✔✔- -adds up the value of all money
income paid by firms to households (in the form of rents, wages, profits and interest) for
providing firms with land, capital, labor and entrepreneurship
value-added approach - CORRECT ANSWER✔✔- -subtracts the cost of all intermediate
goods that firms buy as inputs
GNP - CORRECT ANSWER✔✔- -gross national product
-total output supplied by the resource owned by people from a country, regardless of where
those resources are located
Net Factor Foreign Income - CORRECT ANSWER✔✔- -payments made from and to the
owners of that factor
-corporate profits earned abroad minus corporate profits earned domestically by foreign
owners
-Remittances by foreign nationals sent abroad minus remittances by domestic nationals
returned to the home country
nominal GDP - CORRECT ANSWER✔✔- -measured in current prices
