ECON 1012 Final

Question 1

Open economy equation

Answer 1

Y = C + I + G + Nx

Y - C - G = I +Nx
so… S = Y - C - G

Question 2

National saving

Answer 2

S = Y - C - G

Question 3

Real exchange rate

Answer 3

q = eP/P*

e =nominal exchange rate
P=domestic price
P*=foreign price

Question 4

SRAS equation

Answer 4

P = [ - (1/a) Y(bar) + (1/a) Y

Question 5

MPC

Answer 5

change in C / change in Y

Question 6

Multiplier

Answer 6

change in Y / change in G (positive feedback loop)

Question 7

Gov’t spending multiplier

Answer 7

1/(1-MPC)

Question 8

Savings = investment

Answer 8

s = Y - C - G

Question 9

Disposable income

Answer 9

Y - T

Question 10

Private savings

Answer 10

Sp = Y - T - C

Question 11

Gov’t savings

Answer 11

Sg = T - G

Question 12

Budget surplus

Answer 12

T - G > 0

Question 13

National saving

Answer 13

Sp + Sg

Question 14

Reserve ratio

Answer 14

(R) = reserves/deposits

Question 15

Money multiplier

Answer 15

1/R

Question 16

total reserves

Answer 16

r x total deposits

Question 17

Total deposits

Answer 17

total reserves/R

Question 18

money supply

Answer 18

money multiplier x bank reserves

Question 19

quantity theory

Answer 19

MV = PY

Question 20

fisher effect

Answer 20

r = i - pi

Question 21

GDP

Answer 21

Y = C + I + G + Nx

Question 22

Net exports

Answer 22

exports - imports

Question 23

GDP deflator

Answer 23

(nominal GDP/real GDP) x 100

Question 24

Inflation

Answer 24

(CPI current - CPI base)/CPI base x 100

Question 25

CPI

Answer 25

price of basket of goods in current year/price of basket of goods in base year x 100

Question 26

Real interest rate

Answer 26

nominal interest rate- inflation rate

Question 27

Nominal GDP

Answer 27

sum (P x Q)