Econ 102 UPDATED Actual Exam
Questions and CORRECT Answers
circular flow - CORRECT ANSWER✔✔- aggregate production=aggregate earnings=
aggregate spending
supply= demand at aggregate level
GDP - CORRECT ANSWER✔✔- total market value of all final market goods and services
nationally within a yr. Consumption expenditures, private investment expenditures, gov.
purchases, net exports
Steps from GDP to income - CORRECT ANSWER✔✔- start with national and subtract
corporate profits, subtract all taxes on production imports and social insurance, add any
personal interest income and all transfer payments (not included in GDP), amount of personal
income that is retained after paying income taxes is personal disposable income
Real GDP - CORRECT ANSWER✔✔- real measures for control in prices
calculate GDP using constant prices, use prices from a given base year with the quantities
from the actual year
a measure of GDP that controls for changes in prices, CHAIN-WEIGHTED synonymous,
real = nominal in base year
Nominal GDP - CORRECT ANSWER✔✔- value of GDP in current dollars
Y = C + I + G + NX
hh savings can be negative, taxes are gov income
Phases of business cycle - CORRECT ANSWER✔✔- peaks=start of decline, troughs=start of
prosperity. recession occurs after 6 consecutive months of declining GDP a severe one is
called a depression
GDP measurement of welfare? - CORRECT ANSWER✔✔- overall not very good
measurement
, excludes housework/childcare, leisure, underground markets, and pollution all it measures is
how much stuff per person
Chain-weighted GDP - CORRECT ANSWER✔✔- method of calculating changes in prices
that uses and average of base years from neighboring years, you use the given base year and
prices to calculate
GDP Delfator - CORRECT ANSWER✔✔- used to measure how prices of goods and services
change over time, same equation as aggregate prices
(nominal GDP/real/chain-weighted GDP) 100
Inflation - CORRECT ANSWER✔✔- sustained increases in the average prices of all goods
and services
Gross Domestic Product - CORRECT ANSWER✔✔- the total market value of final goods
and services produced within an economy in a given year
Intermediate Goods - CORRECT ANSWER✔✔- goods used in the production process that
are not final goods and services
economic growth - CORRECT ANSWER✔✔- sustained increases in the real GDP of an
economy over a long period of time, more stuff per person, result of workers have more
capital to work with or technology progress- winners and losers
consumption expenditure - CORRECT ANSWER✔✔- purchases of newly produced goods
and services by households
Private expenditure - CORRECT ANSWER✔✔- purchases of newly produced goods and
services by firms
Gross investment - CORRECT ANSWER✔✔- total new investment expenditures
Questions and CORRECT Answers
circular flow - CORRECT ANSWER✔✔- aggregate production=aggregate earnings=
aggregate spending
supply= demand at aggregate level
GDP - CORRECT ANSWER✔✔- total market value of all final market goods and services
nationally within a yr. Consumption expenditures, private investment expenditures, gov.
purchases, net exports
Steps from GDP to income - CORRECT ANSWER✔✔- start with national and subtract
corporate profits, subtract all taxes on production imports and social insurance, add any
personal interest income and all transfer payments (not included in GDP), amount of personal
income that is retained after paying income taxes is personal disposable income
Real GDP - CORRECT ANSWER✔✔- real measures for control in prices
calculate GDP using constant prices, use prices from a given base year with the quantities
from the actual year
a measure of GDP that controls for changes in prices, CHAIN-WEIGHTED synonymous,
real = nominal in base year
Nominal GDP - CORRECT ANSWER✔✔- value of GDP in current dollars
Y = C + I + G + NX
hh savings can be negative, taxes are gov income
Phases of business cycle - CORRECT ANSWER✔✔- peaks=start of decline, troughs=start of
prosperity. recession occurs after 6 consecutive months of declining GDP a severe one is
called a depression
GDP measurement of welfare? - CORRECT ANSWER✔✔- overall not very good
measurement
, excludes housework/childcare, leisure, underground markets, and pollution all it measures is
how much stuff per person
Chain-weighted GDP - CORRECT ANSWER✔✔- method of calculating changes in prices
that uses and average of base years from neighboring years, you use the given base year and
prices to calculate
GDP Delfator - CORRECT ANSWER✔✔- used to measure how prices of goods and services
change over time, same equation as aggregate prices
(nominal GDP/real/chain-weighted GDP) 100
Inflation - CORRECT ANSWER✔✔- sustained increases in the average prices of all goods
and services
Gross Domestic Product - CORRECT ANSWER✔✔- the total market value of final goods
and services produced within an economy in a given year
Intermediate Goods - CORRECT ANSWER✔✔- goods used in the production process that
are not final goods and services
economic growth - CORRECT ANSWER✔✔- sustained increases in the real GDP of an
economy over a long period of time, more stuff per person, result of workers have more
capital to work with or technology progress- winners and losers
consumption expenditure - CORRECT ANSWER✔✔- purchases of newly produced goods
and services by households
Private expenditure - CORRECT ANSWER✔✔- purchases of newly produced goods and
services by firms
Gross investment - CORRECT ANSWER✔✔- total new investment expenditures
