Economic Measures.Indicators

Question 1

What are two methods to measuring GDP?

Answer 1

Expenditure and income approach

Question 2

What are the 4 components of GDP in expenditure approach?

Answer 2

Government spending, Investments, Personal Consumption, and Net exports(exports - imports)

Question 3

What are the components of GDP in income approach?

Answer 3

Income of proprietors, Profits of corporations, Interest(net), Rental income, Adjustments misc. items, Taxes, Employee compensation, and Depreciation

Question 4

Calculation for Net Domestic Product(NDP)

Answer 4

GDP - Depreciation

Question 5

What is the market value of final goods & services produced by residents of a country?

Answer 5

Gross National Product(GNP)

Question 6

Calculation for Disposable Income(DI)

Answer 6

Personal income - personal taxes

Question 7

Calculation for unemployment rate

Answer 7

(# of unemployed(seeking)) / Total labor force(seeking+employed)) x 100

Question 8

What type of unemployment results from workers routinely changing jobs or from workers being temporarily laid off?

Answer 8

Frictional unemployment

Question 9

What type of unemployment occurs when change in technology or doesn’t correspond with skills?

Answer 9

Structural Unemployment

Question 10

What type of unemployment results from declines in real GDP?

Answer 10

Cyclical unemployment

Question 11

What is the employment rate that exists when the economy is at its potential output level?

Answer 11

Natural rate of unemployment

Question 12

What type of employment involves no cyclical unemployment?

Answer 12

Full employment

Question 13

What is a sustained decrease in the general prices of goods?

Answer 13

Deflation

Question 14

What is the change in price levels over time?

Answer 14

Consumer Price Index

Question 15

Calculation of inflation rate

Answer 15

Change in CPI / CPI(last period)

Question 16

What are the causes of inflation & deflation?

Answer 16

Shifts in the AD or AS curves

Question 17

What are the factors of demand-pull inflation factors?

Answer 17

Increases in government spending, wealth, money supply, and decreases in taxes

Question 18

What are the factors of cost-push inflation factors?

Answer 18

Increase in oil prices and nominal wages

Question 19

What type of assets & liabilities are inversely related to price levels?

Answer 19

Monetary Assets & Liabilities

Question 20

What type of assets & liabilities are directly related to price levels?

Answer 20

Non-monetary assets & liabilities

Question 21

What type of curve illustrates trade-off between inflation & unemployment?

Answer 21

Phillips curve

Question 22

What happens in a budget deficit?

Answer 22

Country spends more than it takes in; Spend more, tax less to stimulate demand

Question 23

What happens in a budget surplus?

Answer 23

Country spend less, tax more to reduce demand

Question 24

Calculation for Nominal Interest rate

Answer 24

Real RF(pure time value of money) + Expected inflation rate

Question 25

What is real interest rate?

Answer 25

Supply/demand for loanable funds “money supply”

Question 26

Does nominal interest rates and inflation move together?

Answer 26

Yes

Question 27

What is done in an expansionary phase?

Answer 27

Increase in money supply, Fed purchases government securities

Question 28

What is done in a restrictive phase?

Answer 28

Decrease in money supply, Fed sells government securities

Question 29

Is demand for money inversely or directly related to interest rates?

Answer 29

Inversely