Macroeconomics

GDP

100

What is GDP?

Total production of goods and services in a year in a country

200

What is the formula for GDP?

C+I+G+ (N-X)

300

What is the differences between real GDP and nominal GDP?

Nominal- non-adjusted rate, Real- Adjusted for inflation

400

What is the formula for the GDP Deflator?

(Nominal/real) x 100= deflator

500

What is an example of something the government spends money on that does not count towards GDP?

Unemployment checks, Social Security payments, paying off loans, etc.

ADAS Shifts

100

What contributes to a shift in Aggregate Demand?

Factors of GDP

200

Draw the shift for when consumer income rises

AD Shift Right

300

Which line on the ADAS graph accounts for inflation?

LRAS

400

Draw the shift for when new technology becomes available that automates factory production

LRAS Shift Right

500

What is the shift for when governments increase taxes on businesses

SRAS Shift left

Fiscal/Monetary Policy

100

What is the name of our central banking system?

The Federal Reserve (FED)

200

How does the government influence the economy?

Spending and taxes

300

Why does Fiscal Policy often fail?

Timing, politics

400

If the Fed wants to decrease the money in circulation, what can they do?

Sell Bonds, Increase Interest Rates, Raise Reserve Ratio

500

Calculate the money multiplier if the initial deposit is $300 and the reserve ratio is 15%

$2000

Misc.

100

What is the phase of the business cycle where production is decreasing and unemployment is growing?

Recession

200

What is it called when the value of the dollar decreases

inflation

300

Why is inflation good for loan borrowers who are working?

Easier to pay loan over time (Fixed rate, salary rises)

400

This is a government welfare program

Section 8 housing, SNAP, HeadStart, TANF

500

This is the term that explains why paper money is not worth anything on its own

Fiat