CORRECT WELL DETAILED ANSWERS|LATEST
UPDATE!!!!!!2025/2026|GUARANTEED
Formula for GDP Growth - ANSWER GDP_t=GDP_0(1+r)^t
Real GDP - ANSWER Value of goods & services produced this year valued at prices in a
past year. Shows how economy's overall production changes over time.
GDP Deflator - ANSWER Reflects the prices of goods/services, but not the quantity
produced. Measures current level of prices relative to base year.
GDP Deflator = Nominal GDP/ Real GDP
If quantities produced in economy rise over time but prices remain the same, GDP deflator
would _____ - ANSWER Be constant, since nominal and real would rise together
If prices rise over time but quantities produced stay the same, then nominal gdp _____ and
real gdp _____ , gdp deflator _____ - ANSWER Nominal rises, Real is constant, Deflator
rieses
Intermediate Good. Definition & example - ANSWER Good that's sold by a firm & used
by another firm as an input to produce another good/service. Intermediate goods are
excluded from GDP, to avoid double counting.
Ex: Steel is not an end product. It is bought by a firm from another, and used as an input in
car production.
GDP = - ANSWER C + I + G + NX
1
, Dell Canada sells a laptop from its inventory. What part of GDP would this affect? -
ANSWER Investment (Inventories)
Alberta constructs a new interchange on Queen Elizabeth II Highway. What part of GDP
would this affect? - ANSWER Investment
Net Capital Outflow - ANSWER NCO = Purchase of foreign assets by domestic residents
- Purchase of domestic assets by foreigners
NCO = NX
When a nation is running a trade surplus (NX > 0) then NCO ___ - ANSWER NCO > 0
A nation uses foreign currency it received from net sale of goods/services abroad to buy
foreign assets
When a nation is running a trade deficit (NX < 0) then NCO _____ - ANSWER NCO < 0
How is this nation financing the net purchases of these goods & services in world markets? It
must be selling assets abroad. Capital is flowing into the country.
NX (Net Exports) - ANSWER NX = Exports - Imports
National Savings (S) - Open Economy - ANSWER S=Y-C-G
GDP - Consumption - Government purchases
S = I + NX
S = I + NCO
Nation's savings = domestic investment + net capital outflow.
So a dollar saved can be used to accumulate domestic capital or capital abroad
National Savings (S) - Closed Economy - ANSWER S=I
Since NCO = 0
2
UPDATE!!!!!!2025/2026|GUARANTEED
Formula for GDP Growth - ANSWER GDP_t=GDP_0(1+r)^t
Real GDP - ANSWER Value of goods & services produced this year valued at prices in a
past year. Shows how economy's overall production changes over time.
GDP Deflator - ANSWER Reflects the prices of goods/services, but not the quantity
produced. Measures current level of prices relative to base year.
GDP Deflator = Nominal GDP/ Real GDP
If quantities produced in economy rise over time but prices remain the same, GDP deflator
would _____ - ANSWER Be constant, since nominal and real would rise together
If prices rise over time but quantities produced stay the same, then nominal gdp _____ and
real gdp _____ , gdp deflator _____ - ANSWER Nominal rises, Real is constant, Deflator
rieses
Intermediate Good. Definition & example - ANSWER Good that's sold by a firm & used
by another firm as an input to produce another good/service. Intermediate goods are
excluded from GDP, to avoid double counting.
Ex: Steel is not an end product. It is bought by a firm from another, and used as an input in
car production.
GDP = - ANSWER C + I + G + NX
1
, Dell Canada sells a laptop from its inventory. What part of GDP would this affect? -
ANSWER Investment (Inventories)
Alberta constructs a new interchange on Queen Elizabeth II Highway. What part of GDP
would this affect? - ANSWER Investment
Net Capital Outflow - ANSWER NCO = Purchase of foreign assets by domestic residents
- Purchase of domestic assets by foreigners
NCO = NX
When a nation is running a trade surplus (NX > 0) then NCO ___ - ANSWER NCO > 0
A nation uses foreign currency it received from net sale of goods/services abroad to buy
foreign assets
When a nation is running a trade deficit (NX < 0) then NCO _____ - ANSWER NCO < 0
How is this nation financing the net purchases of these goods & services in world markets? It
must be selling assets abroad. Capital is flowing into the country.
NX (Net Exports) - ANSWER NX = Exports - Imports
National Savings (S) - Open Economy - ANSWER S=Y-C-G
GDP - Consumption - Government purchases
S = I + NX
S = I + NCO
Nation's savings = domestic investment + net capital outflow.
So a dollar saved can be used to accumulate domestic capital or capital abroad
National Savings (S) - Closed Economy - ANSWER S=I
Since NCO = 0
2
