GDP
How do you calculate GDP per capita?
National GDP divided by population
If I'm a used car salesman and I sell a 2020 Ford F-150 that was previously owned, I get paid a $2,000 commission on an $18,000 truck. Does my: commission pay get counted toward GDP
the sale of the used truck
both
neither get counted toward calculating the GDP?
The commission counts (because it is pay for work I did this year) but nothing else does (the truck was not new and GDP only calculates the value of new goods or new work)
The economy loves (blank)-ility because (blank) prices allow households and businesses to plan how to spend their money
Stability, stable
If you're upside down on your mortgage, that means:
The property is worth less now vs. when you bought it. Ex: Bought a house for $300,000 and now it's only worth $250,000
When is your test?
Friday, Nov 6
Does GDP take inflation of the cost of goods/services into account when determining a country's GDP? If not, what statistic does?
No, Real GDP
Merck decided to spend 50 million dollars to upgrade their facilities across the river. Between, the C, I, G, and NX what variable in GDP does Merck's $50M investment qualify as?
Investment, I
If the Kingdom of John has a population of 10 million and a GDP of $500M, and the Democratic People's Republic of Mr. Lee has a population of 5 million and a GDP of $1 Billion, which country probably has the higher standard of living and definitely has the higher GDP per capita?
Democratic Republic of Mr. Lee (higher GDP per capita usually means higher standard of living)
True or false: Inflation is when the price of gas rises
False: It's when the price of everything rises
Heads or tails?
Tails never fails
Mr. Lee-istan is a country with a GDP of $800 Billion and a population of 50 Million people. The Democratic Republic of John has a GDP of $650 Billion and a population of 30 Million people. Which country has the higher GDP per capita AND what are the final numbers?
Mr. Lee-istan GDP per Capita= $16,000
DR John GDP per Capita= $21,666.67
GDP = C + I + G + NX
What does the C, I, G, and NX represent?
C=Consumer spending, I= business investment, G=government spending, NX= Net exports
Which business cycle phase is associated with rising unemployment and falling GDP/production?
Contraction
For a typically stable, healthy economy here in the US, we aim for an unemployment (blank) of 5-6%, a 2% (blank) rate, and a (blank) growth rate of 3-3.5%
Unemployment rate of 5-6%
CPI/Inflation rate of 2%
GDP Growth rate of 3-3.5%
When will Halloween be on a Saturday again?
11 years from now, in 2037
Which two of the following is NOT counted toward calculating GDP?
The sale of a 10 year old house that was bought before
The salary/wages someone is paid for work they've done this year
Government spending
Net exports
Intermediary goods
Intermediary goods and the 10 year old house
If my GDP increased by 7 percent from the previous year, but my inflation rate was 6 percent, at what percentage did my economy actually grow?
1 percent, this is Real GDP because we're taking into account inflation
We're in a recession when we see a decline in GDP for at least two consecutive quarters? How many months are two consecutive quarters?
6 Months
True or False: CPI (Consumer Price Index) measures inflation
True
What day was I not here last week?
Thursday
An intermediary good is any material that gets used to make a final product. (Ex: metal to make a toy car) Does the value of intermediary goods count toward the GDP?
No, intermediary goods don't count toward GDP, just the newly made final product. (Ex: A newly made and sold car counts but the materials used to make the car don't)
What are the 4 phases of the business cycle?
Trough, expansion, peak, and contraction
Which phase of the business cycle has a rise in inflation and low unemployment?
Peak
Creating jobs and raising the standard of living os achieved by sustained economic (blank)
Growth
In Mr. Lee's opinion, there are three undisputed best Christmas movies. Name one of the three best Christmas movies according to Mr. Lee. (Hint, one is a movie shot in black and white, another involves a BB-Gun, and the last one stars Will Ferrell)
It's a Wonderful Life, A Christmas Story, or Elf