BEC (Economics)

Question 1

GDP, Nominal GDP and Potential GDP

Answer 1

GDP: The market value of all final goods and services produced within the U.S. during a one-year period. Finished goods but does not matter if its sold or not

Nominal GDP is measured at current prices. Real GDP measures output (GDP) at constant prices, that is, adjusted for changes in the level of prices since a base year.

Finally, potential GDP is a measure of the market value of maximum production of final goods and service that is possible in the economy without putting upward pressure on the level of prices in the economy

Question 2

What does GDP not include?

Answer 2

Financial transacations, 2nd hand sales, imports

Question 3

Natural unemployment

Answer 3

Includes all unemployment but cyclical unemployment

Question 4

Cyclical Unemployment

Answer 4

contraction/downturn in economy causes Cyclical unemployment.

Question 5

Multiplier Effect

Answer 5

Initial Change in Spending x (1/(1 - MPC))

Question 6

Average propensity to consume

Answer 6

percentage of disposable income spent on consumable goods

Question 7

Marginal propensity to consume

Answer 7

change in consumption spending as the percent of change in disposable income

Question 8

Keynesian supply curve

Answer 8

It is horizontal then it kinks or slopes sharply upward

Question 9

Supply curve to left

Answer 9

shifts to the left/inward due to increase in prices (increase in input)

Question 10

Supply curve to right

Answer 10

increase in quantity but decrease in price

Question 11

Increase in export will cause the demand to

Answer 11

increase

Question 12

lagging indicator of a change in the business cycle?

Answer 12

Long unemployment

Question 13

Real GDP

Answer 13

nominal gdp/ gdp deflator %

Question 14

M 1

Answer 14

cash, check writing deposits

Question 15

A put is an option that gives its owner the right to do which of the following?

Answer 15

Sell a specific security at fixed conditions of price and time

Question 16

International Monetary Funds

Answer 16

providing funds to countries in financial crisis, including currency crisis, banking crisis, or debt crisis.

Question 17

What is cosidered foreign direct investment

Answer 17

Foreign direct investment involves investments in non-monetary assets (e.g., property, plant, equipment, etc.) in a foreign location

Question 18

Gross Domestice Product (imports or exports)

Answer 18

Both a country’s imports and exports enter into the determination of that country’s gross domestic product. Specifically, it is net exports (exports minus imports) that enter into the determination of gross domestic product

Question 19

Capital Markets facilitates the trading of stocks or bonds?

Answer 19

Capital markets facilitate the trading of both stocks and bonds.

Question 20

Eurodollars are denominatedin U.S dollars or EEU euros?

Answer 20

Eurodollars are denominated in U.S. dollars, but not in EEU euros

Question 21

Three Michael Porter Strategies

Answer 21

The three generic strategies he identified are cost leadership, differentiation, and focus.

Question 22

Five Forces Framework

Answer 22

The five forces framework developed by Michael Porter is used for determining the nature, operating attractiveness, and probable long-run profitability of a competitive industry.

Question 23

High intensity of rivalry: fixed cost structure and product differentiation

Answer 23

The highest intensity of rivalry should be in an industry with a high fixed cost structure, in which producers seek to operate at full capacity, and a low degree of product differentiation, which results in products having many substitutes.

Question 24

SWOT analysis

Answer 24

SWOT analysis is directly concerned with the relationship between an entity (its strengths and weaknesses) and its environment (the opportunities and threats).