ECON 2100 EXAM 4 Questions with precise ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
detailed answers ||\\//||
Microeconomics - correct answer✔✔the study of how individual households and firms make ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
decisions and how they interact with one another in markets ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Macroeconomics - correct answer✔✔the study of the economy as a whole ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Gross Domestic Product - correct answer✔✔measures the total income of everyone in the
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
economy and the total expenditure on the economy's output of goods and services. total ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
income and total expenditure are essentially the same thing. includes all items produced in
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
the economy and sold legally in markets. only includes final goods, not intermediate goods.
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Statistical Discrepency - correct answer✔✔the difference between the two calculations of the ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
GDP
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GDP formula - correct answer✔✔GDP = consumption + investment + government purchases
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+ net exports
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(also Y = C+I+G+NX) ||\\//|| ||\\//|| ||\\//||
Consumption - correct answer✔✔spending by households on goods and services with the ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
exception of purchases of new housing ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Investment - correct answer✔✔the purchase of goods that will be used in the future to ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
produce more goods and services ||\\//|| ||\\//|| ||\\//|| ||\\//||
e.g. housing, inventory, capital equipment structures
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
, Government Purchases - correct answer✔✔spending on goods and services by local, state, ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
and federal governments.
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e.g. salaries of gov't employees
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however, social security is not included in this ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Net Exports - correct answer✔✔the foreign purchases of domestically produced goods minus
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
the domestic purchases of foreign goods
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(exports - imports) ||\\//|| ||\\//||
Real GDP - correct answer✔✔what the value of the goods and services produced during the
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
year would be if they were priced at the prices of a specific year in the past. usually the one
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used by economists because it measures economic growth as the percentage change in real
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
GDP from one period to another.
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Nominal GDP - correct answer✔✔the value of the GDP with this year's prices
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GDP Deflator - correct answer✔✔GDP Deflator = (Nominal GDP / Real GDP) * 100
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
reflects only the prices of goods and services ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
always = 100 for the base year ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Inflation Rate (GDP) - correct answer✔✔(GDP Deflator 2 - GDP Deflator 1) / GDP Deflator 1
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Consumer Price Index - correct answer✔✔measure of the overall cost of goods and services ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
bought by a typical consumer ||\\//|| ||\\//|| ||\\//|| ||\\//||
Inflation Rate - correct answer✔✔percentage change in the price level from the previous
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
period, usually calculated through the CPI. ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
detailed answers ||\\//||
Microeconomics - correct answer✔✔the study of how individual households and firms make ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
decisions and how they interact with one another in markets ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Macroeconomics - correct answer✔✔the study of the economy as a whole ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Gross Domestic Product - correct answer✔✔measures the total income of everyone in the
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
economy and the total expenditure on the economy's output of goods and services. total ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
income and total expenditure are essentially the same thing. includes all items produced in
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
the economy and sold legally in markets. only includes final goods, not intermediate goods.
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Statistical Discrepency - correct answer✔✔the difference between the two calculations of the ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
GDP
||\\//||
GDP formula - correct answer✔✔GDP = consumption + investment + government purchases
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
+ net exports
||\\//|| ||\\//||
(also Y = C+I+G+NX) ||\\//|| ||\\//|| ||\\//||
Consumption - correct answer✔✔spending by households on goods and services with the ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
exception of purchases of new housing ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Investment - correct answer✔✔the purchase of goods that will be used in the future to ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
produce more goods and services ||\\//|| ||\\//|| ||\\//|| ||\\//||
e.g. housing, inventory, capital equipment structures
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
, Government Purchases - correct answer✔✔spending on goods and services by local, state, ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
and federal governments.
||\\//|| ||\\//|| ||\\//||
e.g. salaries of gov't employees
||\\//|| ||\\//|| ||\\//|| ||\\//||
however, social security is not included in this ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Net Exports - correct answer✔✔the foreign purchases of domestically produced goods minus
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
the domestic purchases of foreign goods
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
(exports - imports) ||\\//|| ||\\//||
Real GDP - correct answer✔✔what the value of the goods and services produced during the
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
year would be if they were priced at the prices of a specific year in the past. usually the one
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
used by economists because it measures economic growth as the percentage change in real
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
GDP from one period to another.
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Nominal GDP - correct answer✔✔the value of the GDP with this year's prices
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
GDP Deflator - correct answer✔✔GDP Deflator = (Nominal GDP / Real GDP) * 100
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
reflects only the prices of goods and services ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
always = 100 for the base year ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Inflation Rate (GDP) - correct answer✔✔(GDP Deflator 2 - GDP Deflator 1) / GDP Deflator 1
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Consumer Price Index - correct answer✔✔measure of the overall cost of goods and services ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
bought by a typical consumer ||\\//|| ||\\//|| ||\\//|| ||\\//||
Inflation Rate - correct answer✔✔percentage change in the price level from the previous
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
period, usually calculated through the CPI. ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
