Money
What are the three functions of money?
Store of value, Unit of account, Medium of exchange
Term for a monthly inflation rate of 50%
Hyperinflation
The four components of GDP
C+I+GS+NX
Term that describes the knowledge and skills of workers
Human capital
Bob buys a new robot for his steel production business. What component of GDP does this fall into?
Investment
The term for how easy it is to convert an asset to cash
Liquidity
Suppose you buy a house in 2015 and finance it with a 30-year mortgage that has a 6 percent annual rate of interest. Inflation during 2016 is 4 percent. What is the real rate of interest you pay on your mortgage in 2016?
2%
In 2024, a country's nominal GDP was 2.2 trillion and the GDP deflator was 110 (base year 2015). What was the real GDP in 2024?
2 Trillion
If capital stays the same and the number of workers increase, capital per worker will
Decrease
If the GDP deflator were 140 this year and 138 last year, the inflation rate is
1.45%
A country has $500 billion in currency in circulation, $800 billion in checking account deposits, $1,000 billion in savings account deposits, and $200 billion in money-market funds. What is the value of M2?
2,500 Billion
At the start of 2000, gold cost $9200/kg. The CPI was 169.3. As of September of this year, the CPI was 314.69. In today’s dollars, how much was a kilogram of gold worth in 2000?
$17,100/kg
The complete definition of GDP
The total market value of all final goods and services produced within a country in a given period of time.
Do higher income taxes encourage or discourage economic growth? How?
Discourage because consumption decreases
How does social security payments paid out by the government impact GDP (increase, decrease, no change)?
No change (transfer payment)
In a bank's T-chart, reserves are considered
Assets
What is one of the specific costs of inflation, as discussed in lecture?
Alex wants to measure the nominal 1998 GDP of $993 billion in 2008 dollars. From the data he gathered, he knows the deflator for 1998 is 30 and for 2008, it is 74. What is the value of 1998 GDP in 2008 dollars?
$2.45 Trillion
List all four components of productivity
Human capital, physical capital, natural resources, technological knowledge
When Anders took out his first two-year membership with Maxima Gym in 2004, the fee was $540.00. He renewed his membership three times; in 2006 for $580.00, in 2008, for $600.00, and again in 2010, for $630.00. What is the overall rate of inflation for Anders' gym membership?
16.67%
Is a bar of gold in M1, M2, both, or neither? Is a government savings bond in M1, M2, both, or neither?
Neither, Neither
The index number representing the price level changes from 110 to 115 in one year, and then from 115 to 120 the next year. Since the index number increases by five each year, is five the inflation rate each year? Is the inflation rate the same each year?
No, the inflation rates will not be 5%. The index number tells us the price level, while the inflation rate tells us the percentage change in the price level. Inflation is 4.55% and 4.35%, respectively.
Last year, a small nation with abundant forests cut down $200 worth of trees. It then turned $100 worth of trees into $150 worth of lumber. It used $100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nation's GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?
$400
Last year, the imaginary nation of the United Econs had a population of 2,700 and real GDP of $16,200,000. This year it had a population of 2,500 and real GDP of $14,640,000. What was the growth rate of real GDP per capita between last year and this year?
-2.4%
Ethiopia has a GDP of $8 billion (measured in U.S. dollars) and a population of 55 million. Costa Rica has a GDP of $9 billion (measured in U.S. dollars) and a population of 4 million. Which country would you expect to have a higher standard of living?
Costa Rica