PPC
Compared/Absolute Advantage
Unemployment
GDP/Circular Flow Model
Price Indices and Inflation
Real/Nominal GDP
100
What are some of the economic concepts that the PPC demonstrate?
The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions.
100
Define Comparative Advantage
Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners.
100
type of unemployment is caused by a recession?
cyclical
100
The circular flow model illustrates the equality of which of the following?
Total expenditure and total income
100
The consumer price index measures
The change over time of the weighted prices of a particular group of goods and services
100
Define Real GDP
an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year.
200
Draw a PPC with capital goods and consumer goods with increasing opportunity costs.
Bowed out
200
Define Absolute Advantage
the ability of an individual, company, region, or country to produce a greater quantity of a good or service with the same quantity of inputs per unit of time, or to produce the same quantity of a good or service per unit of time using a lesser quantity of inputs, than its competitors.
200
Just graduated from college and is now interviewing for jobs. This would best be described as?
Frictional
200
What is the equation for nominal GDP using the expenditure approach?
GDP = C+I+G+Xn
200
If an economy is experiencing deflation, who is hurt?
People who took a fixed-rate loan become worse off.
200
the nominal gross domestic product (GDP) was $50 billion and the GDP deflator was 200. Thus real GDP was
$25 Billion
300
Draw a PPC with Pizza and Pineapples showing constant opportunity cost
PPC has a straight line
300
Who has an absolute advantage in Cars
Country B
300
The unemployment rate in this economy is
10%
300
What is the equation to find nominal GDP using the income approach?
GDP= R+W+I+P
300
If year 1 is the base year, the consumer price index for year 2 in this economy is
175
300
If in a specified year nominal gross domestic product grew by 11 percent and real gross domestic product grew by 4 percent, inflation for this year would be
7%
400
Draw a PPC for an economy with Capital Goods and Consumer Goods showing the natural rate of unemployment.
Two frontiers. (The outer one represents the 0% unemployment the inner one represents the NRE)
400
Which country has a comparative advantage in cars? And what is that countries opportunity cost
Y = 1 car = 4 Motorcycles
400
the elimination of jobs as a result of technological change
structural
400
The circular-flow model indicates that final goods are produced by
firms and sold in the product markets
400
In an economy, the price index in 2006 was 100 and the real gross domestic product (GDP) was $1,000. In 2010, the price index was 110 and the nominal GDP was $2,200. Based on that information, which of the following can be inferred about the economy’s nominal GDP in 2006 and real GDP in 2010 ?
Nominal GDP in 2006=$1,000; Real GDP in 2010= $2,000
400
What is the equation for Real GDP
Real GDP = (Nominal GDP)/(GDP Deflator)
500
Show what happens in the long run if a country invests in more capital goods than consumer goods on the PPC.
Shifts the Frontier outwards
500
Is 1 Car for 5 Motorcycle an acceptable trade between Country X and Y? What is the terms of trade range?
Yes and the range is 1 Car for 4-6 Motorcycles
500
The natural rate of unemployment is the unemployment rate when
there is no frictional unemployment
500
Calculate Nominal GDP
$220 Billion
500
If the consumer price index increases from 200 to 240 in a one-year period, then the inflation rate is
20%
500
According to the data above, in which year was real gross domestic product (GDP) the largest?
2010