University of Oregon Econ 202
Midterm 1 Exam with Accurate
Complete Solutions 2025-2026
Updated.
GDP def - Answer Gross Domestic Product-market value of final goods and services produced
within a country in a given time period (4 part def)
Final good/service and intermediate good/serviced - Answer final-item that is bought by its
final user during a specified time period
intermediate- item produced by one firm, bought by another firm, and then used as component
of final good or service. We don't add the intermediate value because it would be double
counting!
Income v. Expenditure approach to calculating gdp - Answer we can measure this either by 1)
total income earned producing GDP or 2) total expenditure on GDP
GDP=aggregate expenditure and equals aggregate income
Y= C+I+G+X-M - Answer GDP= Household consumption expenditures (C)+ firms make
investments (I)+ Governments buy goods and services (G) and rest of world buys net exports (X-
M (value of exports minus value of imports)). Firms pay incomes (y) to households
THIS IS THE EXPENDITURE APPROACH
Real v. Nominal GDP - Answer Real= value of goods and services produced in a given year
when valued at the prices of a reference based year. By comparing the value of production in
the 2 years at the same prices, we reveal the change in production. (RN, we measure using 2005
dollars.)
Nominal= value of final goods and services produced in a given year when valued at prices that
year. This is just a more precise name for GDP
, Potential GDP - Answer max level of real GDP that can be produced while avoiding shortages
of labor, capital, land, ent. ability that would bring inflation
GDP to measure standard of living across countries - Answer 2 issues with using real GDP to
compare living standards across countires:
1) real GDP of one country must be converted to same currency units as other country
2) goods and services in both countries must be valued at same prices
Purchasing power parity - Answer using the same prices for both countries. Example: Big Mac
in Chicago=$3.75 but $2.00 in Shanghai. To compare GDP in China and U.S., me must value
China's Big Macs at $3.75 U.S. price
Limitations of Real GDP - Answer Factors that influence the standard of living and that are not
part of GDP are: Household production, underground economic activity, leisure time,
environmental quality
Why do we care about unemployment? - Answer Results in lost incomes and production AND
lost human capital
Def. of unemployment-population - Answer Pop in 2 groups-working age pop: total number of
people aged 16 yrs and over who are not in jail,hospital, or other institutional care
this is the divided into 2 groups-those in labor force and those not in labor force
labor force in 2 groups-employed and unemployed
to be counted as unelpoyed... - Answer person must be available for work and must be in one
of 3 categories-
1)no job but has tried to get one in last 4 weeks
2)waiting to be called back to job after lay off
3) waiting to start job in 30 days
Census Bureau calculates these 3 indicators of the state of the labor market - Answer 1)
Midterm 1 Exam with Accurate
Complete Solutions 2025-2026
Updated.
GDP def - Answer Gross Domestic Product-market value of final goods and services produced
within a country in a given time period (4 part def)
Final good/service and intermediate good/serviced - Answer final-item that is bought by its
final user during a specified time period
intermediate- item produced by one firm, bought by another firm, and then used as component
of final good or service. We don't add the intermediate value because it would be double
counting!
Income v. Expenditure approach to calculating gdp - Answer we can measure this either by 1)
total income earned producing GDP or 2) total expenditure on GDP
GDP=aggregate expenditure and equals aggregate income
Y= C+I+G+X-M - Answer GDP= Household consumption expenditures (C)+ firms make
investments (I)+ Governments buy goods and services (G) and rest of world buys net exports (X-
M (value of exports minus value of imports)). Firms pay incomes (y) to households
THIS IS THE EXPENDITURE APPROACH
Real v. Nominal GDP - Answer Real= value of goods and services produced in a given year
when valued at the prices of a reference based year. By comparing the value of production in
the 2 years at the same prices, we reveal the change in production. (RN, we measure using 2005
dollars.)
Nominal= value of final goods and services produced in a given year when valued at prices that
year. This is just a more precise name for GDP
, Potential GDP - Answer max level of real GDP that can be produced while avoiding shortages
of labor, capital, land, ent. ability that would bring inflation
GDP to measure standard of living across countries - Answer 2 issues with using real GDP to
compare living standards across countires:
1) real GDP of one country must be converted to same currency units as other country
2) goods and services in both countries must be valued at same prices
Purchasing power parity - Answer using the same prices for both countries. Example: Big Mac
in Chicago=$3.75 but $2.00 in Shanghai. To compare GDP in China and U.S., me must value
China's Big Macs at $3.75 U.S. price
Limitations of Real GDP - Answer Factors that influence the standard of living and that are not
part of GDP are: Household production, underground economic activity, leisure time,
environmental quality
Why do we care about unemployment? - Answer Results in lost incomes and production AND
lost human capital
Def. of unemployment-population - Answer Pop in 2 groups-working age pop: total number of
people aged 16 yrs and over who are not in jail,hospital, or other institutional care
this is the divided into 2 groups-those in labor force and those not in labor force
labor force in 2 groups-employed and unemployed
to be counted as unelpoyed... - Answer person must be available for work and must be in one
of 3 categories-
1)no job but has tried to get one in last 4 weeks
2)waiting to be called back to job after lay off
3) waiting to start job in 30 days
Census Bureau calculates these 3 indicators of the state of the labor market - Answer 1)
