Name that equation
Growth and investment
National economies
True/False
EconoSpeak
100
GDP (Y) - consumption (C) - gov't expenditures (G)
What is national savings (s) or investment (I)? S=I
100
Actors that channel savings from savers to borrowers.
What are financial institutions?
100
The production of goods and services valued at current prices.
What is nominal GDP?
100
The CPI is computed and reported by the Department of Treasury.
False
100
Increase in output generated by an increase in capital < Increase in output generated by previous increases in capital.
What is diminishing returns?
200
Quantity(expenditures) x Price(base year)
What is real GDP? Nominal GDP= Quantity(expenditures) x Price(current year)
200
The bond market, the stock market, banks and mutual funds.
What are types of financial institutions?
200
The method of calculating GDP.
What is C + I + G + NX or Consumption + Investment in Capital + Government Spending + Net Exports?
200
An increase in the price of bread (consumed regularly by a typical consumer) produced in the US would be reflected in both the US GDP Deflator and the US CPI.
FALSE Only CPI continually reflects changing prices. CPI- changing prices at fixed quantities GDP deflator- changing quantities at fixed prices
200
Higher productivity growth in countries with less capital/pp helps them grow faster to per-capita incomes of countries with more capital/pp.
What is the catch up effect?
300
(Nominal GDP/Real GDP) x 100
What is GDP deflator?
300
The four determinants of labor productivity in an economy
What are physical capital, human capital, natural resources and technological knowledge?
300
Pollution, leisure, and drug dealing.
What are economic transactions not included in GDP?
300
The GDP deflator displays new expenditure patterns as people respond (substitute) to changing prices?
TRUE CPI displays substitution bias
300
An increase in the overall price levels.
What is inflation?
400
Price(basket of g&s in current yr)/Price(basket in base yr) x 100
What is CPI?
400
GRAPH BONUS!!! What is the effect of a government deficit?
Supply of loanable funds decreases = Decrease(national savings) & increase(IR)
400
The three main problems that the construction of CPI
What are the substitution bias, new product bias and quality improvement bias?
400
If the real interest rate is 6% and the inflation rate is 2%, then the nominal interest rate is 8%.
TRUE
400
A decrease in investment that results from gov't borrowing
What is crowding out?
500
CPI(2000)-CPI(1999)/CPI(1999) x 100%
What is the inflation rate in 2000.
500
GRAPH BONUS!!! What is the effect of a government policy that creates investment incentives?
Demand for loanable funds increases = Increase(Savings & IR)
500
Apple, a U.S. based company, opens a factory in China. The factory remains owned and operated by Apple.
What is an example of foreign direct investment?
500
Technological knowledge is distinct from human capital.
TRUE Technological knowledge = society's understanding of the best ways to produce goods and services. Human capital MEASURES the RESOURCES expended (years of training, education) transmitting society's technological knowledge to workers.
500
Spending by households on goods and services, except for purchases of new housing.
What is consumption?
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