GDP
CPI
Production & Growth
The Monetary System
The Monetary System
Savings and Investment
Unemployment
100
Complete the definition: GDP is the market value of all _________ goods and services produced ______________ in a given _________.
GDP is the market value of all FINAL goods and services produced WITHIN A COUNTRY in a given PERIOD OF TIME.
100
What is the definition of CPI?
measure of the overall cost of the goods and services by a typical consumer
100
What are the 4 factors that go into productivity?
physical capital per worker
human capital per worker
natural resources
technological knowledge
100
T or F: Savings and Investments are equal in a closed economy.
True
100
# employed + # unemployed = ?
labor force
200
What is the GDP equation?
GDP = consumption + investment + government spending + net exports
Y = C + I + G + NX
200
What is the difference between GDP and CPI?
CPI has a fixed basket that is used to measure consumption of ordinary consumers which then measures change in prices.
GDP is a measurement of everything that a nation produces.
200
What would the most liquid asset?
a. bonds
b. cash
c. money in the savings account
d. gold
b. cash
200
Define bonds.
- certificate of indebtedness
- like an IOU
- has a term to maturity
200
A VCR repairman who is currently unemployed is most likely experiencing which type of unemployment?
structural
300
2016: Price = $1, Quantity = 5
2017: Price = $2, Quantity = 5
2018: Price = $2, Quantity = 10
Calculate nominal and real GDP for each year if the base year is 2016.
2016: nominal $5, real $5
2017: nominal $10, real $5
2018: nominal $20, real $10
300
What is the inflation equation based on CPI?
inflation rate = (CPI year 2 - CPI year 1) / (CPI year 1) x 100
300
What kind of money is a regular US dollar?
fiat money
300
How would an increase in the interest rate affect peoples' intent to save and invest?
A higher interest rate would increase savings and decrease investment.
300
What would qualify someone to not be counted in the labor force anymore?
they're not actively looking for a job
400
If nominal GDP = 100 and real GDP = 50, what is the GDP deflator?
GDP deflator = (nominal/real) x 100
GDP deflator = (100/50) x 100 = 200
400
2016: Price = $1, Quantity = 5
2017: Price = $2, Quantity = 10
Calculate CPI if 2016 is the base year.
CPI = (basket P in current year/basket P in base year) x 100
CPI = (20/5) x 100 = 400
400
If the discount rate is lowered, banks choose to borrow:
a. more from the Fed so reserves increase.
b. more from the Fed so reserves decrease.
c. less from the Fed so reserves increase.
d. less from the Fed so reserves decrease.
a. more from the Fed so reserves increase.
400
Output = 500
Consumption = 200
Taxes = 50
Government spending = 200
Calculate private and public savings.
Is there a budget surplus or budget deficit?
private = Y - C - T = 500 - 200 - 50 = 250
public = T - G = 50 - 200 = -150 budget deficit
400
There are 3 people:
1. full-time student
2. recent retiree
3. Susan who is looking for a job after moving to a new city
Calculate the unemployment rate.
unemployment rate = (unemployed/labor force) x 100
UR = (1/1) x 100 = 100%
500
If the reserve ratio is 10 percent, and banks do not hold excess reserves, when the Fed purchases $10 million of government bonds, bank reserves
a. increase by $10 million and the money supply eventually increases by $100 million.
b. decrease by $10 million and the money supply eventually increases by $100 million.
c. increase by $10 million and the money supply eventually decreases by $100 million.
d. decrease by $10 million and the money supply eventually decreases by $100 million.
a. increase by $10 million and the money supply eventually increases by $100 million.
500
Show the Market for Loanable Funds when there is a government budget deficit:
-shift
-interest rate effect
-quantity of loanable funds effect
500
There are 3 people:
1. full-time student
2. recent retiree
3. Susan who is looking for a job after moving to a new city
Calculate the labor force participation rate.
LFPR = (labor force/adult population) x 100
LFPR = (1/3) x 100 = 33%