ECON 104 Bille Goffe Exam|Brand
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Nominal GDP - Answer✅✅the value of final goods and services evaluated at
current-year prices
How to calculate nominal GDP - Answer✅✅C + I + G +NX
Real GDP - Answer✅✅The value of final goods and services evaluated at base-year
prices
How to calculate real GDP - Answer✅✅P*Q for every good in GDP and add them all
together
BASE YEAR
2014 - 100M visits at $50 each 2015 - 103M visits at $53
10M cars at $20,000 each 11M cars at $20,500 each
, real GDP for 2015: (103M * $50 + 11M * 20,000)
2015Q(1) * 2014P(1) + 2015Q(2) * 2014 P(2)
Monetary Policy - Answer✅✅federal reserve's dual mandate (which focuses on
max employment, stable prices, and moderate long-term interest rates)
What will result from the Fed increasing the federal rate? - Answer✅✅Costs for
banks will increase and loan rates for consumers and firms will increase. This leads to
slower growth.
Fiscal Policy - Answer✅✅Controlled by the president and congress. It is the
government budget.
GDP Deflator - Answer✅✅uses nominal and real GDP to measure the price level
(not in dollars)
Price level - Answer✅✅The average price of all goods and services in an economy
How to calculate GDP deflator - Answer✅✅(Nominal/Real)*100
CPI - Answer✅✅used to correct nominal prices and wages over time for the impact
of inflation using market basket prices
How to calculate CPI - Answer✅✅(market base price in current year/ market basket
price in base year)*100
Limitations of GDP - Answer✅✅1. Doesn't account for change in quality.
2. Doesn't account for underground economy.
3. Doesn't account for 'bads' of economy
4. Doesn't account for non-market production
Limitations of CPI - Answer✅✅Substitution bias, increase in quality bias, new
product bias, outlet bias.
Core Inflation - Answer✅✅ignores food/energy, as they can be more volatile
Headline inflation - Answer✅✅takes food and energy in to account when
calculating
Real prices - Answer✅✅what would have been paid for the same good or service in
the base year based on inflation
Real wages - Answer✅✅wages based on the base year
Inflation rate (Calculation) - Answer✅✅(CPI this year - CPI last year)/ CPI last year
Real interest rate (calculation) - Answer✅✅nominal interest rate - inflation rate
New Expert Exam Questions with
Clear Correct Verified Answers|All
Graded A+|Latest Premium
Update(2025-2026)|100%
Guaranteed Success.
Nominal GDP - Answer✅✅the value of final goods and services evaluated at
current-year prices
How to calculate nominal GDP - Answer✅✅C + I + G +NX
Real GDP - Answer✅✅The value of final goods and services evaluated at base-year
prices
How to calculate real GDP - Answer✅✅P*Q for every good in GDP and add them all
together
BASE YEAR
2014 - 100M visits at $50 each 2015 - 103M visits at $53
10M cars at $20,000 each 11M cars at $20,500 each
, real GDP for 2015: (103M * $50 + 11M * 20,000)
2015Q(1) * 2014P(1) + 2015Q(2) * 2014 P(2)
Monetary Policy - Answer✅✅federal reserve's dual mandate (which focuses on
max employment, stable prices, and moderate long-term interest rates)
What will result from the Fed increasing the federal rate? - Answer✅✅Costs for
banks will increase and loan rates for consumers and firms will increase. This leads to
slower growth.
Fiscal Policy - Answer✅✅Controlled by the president and congress. It is the
government budget.
GDP Deflator - Answer✅✅uses nominal and real GDP to measure the price level
(not in dollars)
Price level - Answer✅✅The average price of all goods and services in an economy
How to calculate GDP deflator - Answer✅✅(Nominal/Real)*100
CPI - Answer✅✅used to correct nominal prices and wages over time for the impact
of inflation using market basket prices
How to calculate CPI - Answer✅✅(market base price in current year/ market basket
price in base year)*100
Limitations of GDP - Answer✅✅1. Doesn't account for change in quality.
2. Doesn't account for underground economy.
3. Doesn't account for 'bads' of economy
4. Doesn't account for non-market production
Limitations of CPI - Answer✅✅Substitution bias, increase in quality bias, new
product bias, outlet bias.
Core Inflation - Answer✅✅ignores food/energy, as they can be more volatile
Headline inflation - Answer✅✅takes food and energy in to account when
calculating
Real prices - Answer✅✅what would have been paid for the same good or service in
the base year based on inflation
Real wages - Answer✅✅wages based on the base year
Inflation rate (Calculation) - Answer✅✅(CPI this year - CPI last year)/ CPI last year
Real interest rate (calculation) - Answer✅✅nominal interest rate - inflation rate
