Exam 1 - Quizzes Flashcards
What are the 3 goals of every macroeconomy?
Full employment, price stability, economic growth
What are the indicators of full employment? (3 goals)
Nonfarm payrolls, unemployment rate
What are the indicators of price stability? (3 goals)
CPI, “core” PCE deflator
What are the indicators of economic growth? (3 goals)
Real GDP growth
What is the most recent nonfarm payroll and unemployment rate? Are these indicators good? (3 goals)
142,000, 4.2%
What is the most recent CPI and “core” PCE deflator? Are these indicators good? (3 goals)
2.5%, 2.6%
What is the most recent real GDP growth? Are these indicators good? (3 goals)
3%
How do you calculate CPI? (price indices)
(sum(P_22Q_21))/(sum(P_21Q_21))
How do you calculate rate of inflation? (price indices)
(CPI_22-CPI_21)/(CPI_21)
How do you calculate nominal GDP (aggregate output)? (price indices)
sum(P_22*Q_22)
How do you calculate real GDP (adjusted-for-inflation product level)?
sum(P_21*Q_22)
How do you calculate the GDP deflator (implicit price deflator)? (price indices)
(Nominal GDP)/(Real GDP)
The purchasing power of money…
rises when prices fall.
Which of the following is an example of fiat money?
1.) a cowry shell used as money on a South Pacific island
2.) a gold coin used as money in nineteenth century England
3.) a Federal Reserve Note used as money in the twenty-first century United States
4.) a pound of salt used as money in medieval France
3.) a Federal Reserve Note used as money in the twenty-first century United States
All of the following are characteristics of debit cars EXCEPT:
1.) payments are deferred until a later date
2.) they can be used like checks.
3.) they eliminate the problem of trust since the bank’s computer authorizes the transaction.
4.) when used at a store, the user’s bank instantly credits the store’s account with the amount and deducts it from the user’s account.
1.) payments are deferred until a later date
Bitcoin is a form of…
e-money
Money can BEST be described as…
Anything that is generally accepted as payment for goods and services or in the repayment of debts.
What is the growth rate formula? (Growth rates)
(X_t - X_(t-1))/(X_(t-1)) *100
How do you calculate the real GDP growth rate? (Growth rates)
(RGDP_(2nd,2024) - RGDP(1st,2024))/(RGDP_(1st,2024)) 1004 (annualizing)
How do you calculate the personal consumption expenditures growth rate? (Growth rates)
(RPCE_(2nd,2024) - RPCE_(1st,2024))/(RPCE_(1st,2024)) 1004
How do you calculate the consumption proportion of real GDP in the 4th quarter? (Growth rates)
(RPCE_(2nd,2024))/(RGDP_(2nd,2024)) *100
How do you calculate the CPI growth rate? (Growth rates)
(CPI_(July) - CPI_(June))/(CPI_(June)) *100
How do you calculate the government spending growth rate? (Growth rates)
(G_2 - G_1)/(G_1) 1004
How do you calculate present value? (Present value)
PV = FV*1/((1+r)^n)
In a chart about US tresury quotes, what do each of these column titles mean?
COUPON
ASKED
ASKED YIELD
COUPON - Interest rate
ASKED - Price of the bond
ASKED YIELD - Yield to maturity
How do you calculate current yield? (Current Yields)
C/P_c (coupon payment divided by the price)
A bond’s price and its yield to maturity are inversely related because…
discounting future payments at a higher rate reduces the present value of the payments.
If, while you are holding a coupon bond, its market price falls, you can be sure that…
the interest rate on other similar bonds must have risen.
At an interest rate of 6%, how much will need to be invested today to have $10,000 in 5 years?
(Use PV formula) $7,473
If you deposit $10,000 in a savings account at an annual interest rate of 6%, how much will you have in the account at the end of three years?
(Use compound interest formula: Final amount = P(1+r/n)^(nt)) $11,910
If the real interest rate is 2% and expected inflation is 2%, the nominal interest rate is…
(Nominal interest rate = real interest rate + expected inflation rate) 4%.
