Economic Concepts

Question 1

What is the formula for GDP and what is it?

Answer 1

Personal consumption expenditures 
\+ gross private domestic fixed investment
\+government expenditures 
\+/- net exports
\+/- changes in business inventory

GDP represents the value of goods and services

Question 2

What adjustment would be made during deflation?

Answer 2

Increase the money supply

Question 3

What increases money supply?

Answer 3

Reducing the discount rate to commercial banks

Question 4

What is elasticity?

Answer 4

Change in supply or demand/ change in price.

1> means it is elastic. If price goes up revenue goes down.

1= this means no change in revenue.

1< it’s inelastic. If price goes up rev goes up