Unit 2 Pt 2
The nominal GDP of the USA is $150 billion. The GDP deflator is 125. What is the real GDP?
What is $120 billion
What is cyclical unemployment?
What is when economic contractions cause unemployment.
What is the Foreign Trade Effect for Aggregate Demand?
What is when US prices level rises, foreign buyers purchase fewer US goods and Americans buy more foreign goods.
What is the goal of automatic stabilizers?
What is to prevent the recession curves from getting deeper.
What type of unemployment leads to people with higher skills in smaller jobs?
Structural
Frictional
Cyclical
What is frictional.
What is the definition of a Recession?
What is when the GDP has decreased steadily for 6 months.
What is “the goods and services that consumers are willing and able to purchase at different price levels”?
What is aggregate demand
What are static effects on the economy?
What are natural market fluctuations.
Parker buys a used Honda Civic, and Ian buys a brand new Audi from Germany. Which person helped contribute to the US’s GDP?
Parker
Ian
Both
Neither
What is neither
What is the difference between real and nominal analysis?
What is nominal measures in current dollar value, while real adjusts for inflation.
Why does the cost of resources rarely fall?
What is labor contracts, wage decreases resulting in poor worker morale, and firms must pay to change prices.
What is the income approach to calculating GDP?
What is add up all the income that resulted from selling all inputs used in the product market in a given year
The real GDP is $200 billion and the nominal GDP is $300 billion. What is the GDP deflator?
What is 150.
What are the basic questions that each economy must answer?
Who shall consume the goods produced?
How shall goods be produced?
What goods shall be produced?
What is the drawback of expansionary policy in regards to financing the expansion?
What is to finance expansionary fiscal stimulus, governments must borrow money to pay for expenditures that exceed tax revenue.
What is the ratchet effect in regards to Schools of Econ?
What is prices can easily go up, but not down.
What is the following measurement called?:
(Price of market basket in particular year / Price of the same market basket in base year) x 100
What is the CPI Index.
What does CPI show?
What is the change in prices of certain goods over a certain amount of time (inflation)
What is the difference in stickiness of prices when comparing Keynesian and Classical views of economics?
Keynesian: Price of resources is very sticky
Classical: Price of resources are flexible, and not sticky at all
What are the three options for surplus spending?
1. Cut/Refund Taxes
2. National Debt Reduction
3. Increase/finance income transfers