BEC 5

Question 1

real GDP

Answer 1

(nominal GDP / GDP deflator) * 100

Question 2

multiplier effect

Answer 2

1 / (1 - MPC)

change in real GDP = multiplier * change in spending

Question 3

expenditure approach of measuring GDP

Answer 3

GICE

government spending
investment
consumption expenditures
net exports (exports minus imports)

Question 4

income approach of measuring GDP

Answer 4

I PIRATED

income of proprietors 
profits of corps 
interest 
rental income 
adjustment for foreign net income
taxes 
employee compensation
depreciation

Question 5

CPI

Answer 5

(current cost / base year cost) * 100

Question 6

inflation rate

Answer 6

(CPI new - CPI old / CPI old) * 100

Question 7

real interest rate

Answer 7

nominal interest rate - inflation

Question 8

price elasticity of demand

Answer 8

% change in quantity demanded / % change in price

Question 9

price elasticity

Answer 9

> 1 elastic
= 1 unit elastic
0 perfectly inelastic
< 1 inelastic

Question 10

price elasticity of supply

Answer 10

% change in quantity supplied / % change in price

Question 11

Porters 5 Forced

Answer 11

barriers to entry, market competitiveness, existence of subs, bargaining power of customer, bargaining power of supplier