Question 1

How do you calculate annual inflation rate?

Accepted Answer

Inflation rate= (CPI_this period- CPI_last period)/ CPI_last period.

Question 2

By extension, how do you deflate the nominal costs to adjusted amounts?

Accepted Answer

By dividing the base year price index (CPI last period) by the current year price index (CPI this period) and then multiply by current year price/cost.

Question 3

How do you perform deflate calculation in CPI?

Accepted Answer

current cost$100,500x( base year price index 121.3/ current year price index 168.5)=$72,348

Question 4

After adjusting for inflation, how do you calculate percentage change in expenditures?

Accepted Answer

current cost$100,500x(base year price index 121.3/current year price index168.5)= current year indices or current deflated cost$72,348; then take current deflated cost$72,348 less period or base year$72,800= difference ($452), therefore % change is the change of decrease($452)/base last period$72800=.0062 or 0.6%

Question 5

What happen to potential and actual national income during a recessionary period?

Accepted Answer

Potential national income is more than actual national income. This is also cause a decrease in demand of aggregated goods and services.

Question 6

What are the indicators of the recessionary period?

Accepted Answer

Some indicators of recessionary period are potential income more than actual income; increase unemployment rate

Question 7

What is productive-possibility curve ?

Accepted Answer

A productive-possibility curve measures the maximum amount of various goods and services an economy can produce at a given time with available technology and efficient use of all available resources.

Question 8

Gross domestic product (GDP) is a measure of?

Accepted Answer

The market value of all final goods and services produced for exchange in the domestic economy during a year.

Question 9

How is Nominal GDP measure?

Accepted Answer

Nominal GDP is measured at current prices

Question 10

How is Real GDP measure?

Accepted Answer

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

Question 11

How is potential GDP measure?

Accepted Answer

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 12

What are injections in a macroeconomic free flow model?

Accepted Answer

Injections are sources of amount added to the domestic production that do not result from domestic expenditure consumption which consist of government spending; government subsidiaries; investment spending; amount receive from export. However, it exclude amount paid for import.

Question 13

What is leakage in a macroeconomic free market flow model?

Accepted Answer

Leakage occurs when income is used for other purpose other than domestic consumptions. It includes payment of taxes to government and saving income and payment for imports.

Question 14

When could there be official full employment?

Accepted Answer

When there is structural, frictional, and seasonal unemployment. Only cyclical unemployment is consider in the calculation of official measure of full employment.

Question 15

At what age is an individual is considered to be part of the workforce?

Accepted Answer

At age 16 and older

Brainscape's Knowledge GenomeTM

ECONOMIC CONCEPTS Flashcards

Brainscape's Knowledge Genome^TM