Economics

Question 1

Fisher effect formula?

Answer 1

Fisher = Real interest rate + Expected inflation

Question 2

Compare CPI index formulas:
Laspeyres
Paasche
Fisher

Answer 2

Laspeyres: Change in the basket value using 1st year as base quant
Paasche: Same but using 2nd year base quant
Fisher: (Las x Paa)^0.5

Question 3

Current Account balance formula?

Answer 3

CA = (X-M) + NI + NT

Question 4

How to calc spot rate from forward points?

Answer 4

Spot rate = Forward rate - forward points

Question 5

Neutral rate of interest?

Answer 5

Neutral rate = Real trend rate + LR expected inflation

Question 6

Price elasticity of demand formula?

Answer 6

% change in Q / % change in P

Question 7

What is potential GDP?

Answer 7

Amount able to produce at constant inflation

Question 8

What is a recessionary gap?

Answer 8

Difference between equilibrium GDP and Potential GDP

Question 9

What are indirect taxes?

Answer 9

Taxes levied on spending

Question 10

When is profit maximized in perfect comp & monopoly?

Answer 10

MR = MC

Question 11

What is substitution bias?

Answer 11

Expenditures switching from expensive to cheap products

Question 12

What is money neutrality?

Answer 12

In the LR, changes in money supply just affect price level