Chapyer 9

Question 1

Macroeconomics is the study of what?

Answer 1

Study of the economy as a whole (big picture)

Question 2

What does macroeconomics measure? PEO

Answer 2

① output
② employment
③ price stability

Question 3

What is GDP ?

Answer 3

Gross domestic product

Question 4

What is the expenditure approach?

Answer 4

It adds up the total spent on all financial goods + services in one year

Question 5

What is GDP formula?

Answer 5

C+ G + I + (X-M)

Question 6

GDP FORMULA: What does the c stand for?

Answer 6

Consumption

Question 7

GDP FORMULA: What does the g stand for?

Answer 7

Government purchases

Question 8

GDP FORMULA: What does the I stand for?

Answer 8

Investments

Question 9

GDP FORMULA: What does the X stand for?

Answer 9

Exports

Question 10

GDP FORMULA: What does the M stand for?

Answer 10

Imports

Question 11

Nominal GDP vs real GDP ?

Answer 11

Nominal: without inflation adjustment
Real: with adjustment for inflation

Question 12

What is this the formula for?

Real GDP year 2 - real GDP year 1 / real GDP yr2

Answer 12

To calculate percentage growth in GDP

Question 13

What on the drawbacks to unemployment: GUP

Answer 13

① PART TIME
Makes employment figure look better than it actually is

②UNDEREMPLOYED
Workers not being utilized to their potential

③GIVEN UP
People who are not actively looking for work

Question 14

What is unemployment rate?

Answer 14

The percentage of the labour force not working

Question 15

What is this:
People willing to work and an actively employed

Answer 15

Labour Force

Question 16

How to calculate unemployment rate?

Answer 16

(# Of unemployed / employed) x 100

Question 17

What are some issues from high unemployment?

Answer 17

Crime, political unrest, employment insurance, social costs

Question 18

What is fictional unemployment? And why can it never be 0?

Answer 18

People moving between jobs + grad students so that is why it can never be 0%

Question 19

What is CPI?

Answer 19

Consumer price index: tool used t track inflation

Question 20

Formula to calculate inflation?

Answer 20

(CPI yr 2 - CPI yr 1 / CPI yr 1

Question 21

What is indexing?

Answer 21

Adjusting wages to affect year to year price changes

Question 22

CPI limitations?

Answer 22

① WEIGHING OF CATEGORIES AND ITEMS IN EACH
Not all household spending reflects CPI weight

② CULTURAL DIVERSITY
Impact of price changes on household varies depending on culture

Question 23

EXPLAIN: Carbon tax

Answer 23

Charges a minimum for fossil fuels → prices reflect environmental costs

Question 24

EXPLAIN: cap and trade

Answer 24

Government sets the cap for pollution for certain industries:
Price driven by supply + demand

Question 25

List ONLY drawbacks to GDP? PUNTED

Answer 25

1.POPULATION SIZE

2. NON MARKET POPDUCTION NOT MEASURED

3.UNDERGROUND ECONOMY

4.TYPES OF GOODS PRODUCED

5.ENVIRONMENTAL DEGRATION

6. DISTRIBUTION OF INCOME