Aggregates
Define GDP. Most accurate definition (judged by Mr. Kelly) wins all the points.
Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
What is the target inflation rate in the US?
2% per year
Who controls monetary policy in the US?
What is the interest rate set by the US's central bank?
What is the definition of unemployment?
When a person who wants a job doesn't have one
Output has increased while price levels have not. What will happen to nominal GDP and real GDP?
both nominal and real gdp will increase
Deflation is happening
In contrast to strict free-market economists, this early twentieth century economists advocated for active government influence the economy, especially during recessions.
John Maynard Keynes
The money supply that includes all liquid money and financial assets
M2 Money (M1 is just the liquid assets)
What happens to unemployment when GDP rate is rising?
Unemployment rate falls
Why is LRAS vertical?
It represents an quantity of output (Supply) for a given population. It is not influenced by price levels
CPI in month 1 is 120
CPI in month 2 is 115
CPI in month 3 is 110
Is this economy experiencing inflation or deflation?
Inflation | But the inflation rate is decreasing
Who collects data on the cost of the market basket and unemployment?
The Bureau of Labor Statistics
What is the name of the chairman of the Federal Reserve that presided over the 2008 recession?
Ben Bernanke
How high did unemployment get in the 2 years after the 2008 recession?
10%
How long does GDP need to decline for to be considered a recession?
What is Deflation?
When the inflation rate goes negative
Who has a higher GDP per capita, Sweden or India?
Sweden (2024): $57,213
India (2022): $2,698
What do borrowers do when interest rates are low?
They borrow more and spend more
What are Discouraged / Disenfranchised Workers?
People who give up looking for work, and thus, are not unemployed
What does GPI stand for?
Genuine Progress Indicator
Increase interest rates or reduce the money supply. Examples of contractionary fiscal policy will not be accepted
What does PMI stand for in the context of mortgage lending?
private mortgage insurance
How could a real interest rate be negative?
If inflation rate is higher than interest rate. Real Interest rate = interest rate - inflation rate
How do you caclcuate unemployment rate?
The number of people who are unemployed divided by the labor force times 100