Macroeconomics LS2-LS5

Question 1

What is economic growth?

Answer 1

The rate of change of output.

Question 2

What is GDP?

Answer 2

Total value of goods and services produced in a country within a year.

Question 3

What is GNI?

Answer 3

The value of goods and services produced by a country over a period of time plus net overseas payments and dividends

Question 4

What is GND?

Answer 4

Is the value of goods and services produced over a period of time through labour both domestically and overseas.

Question 5

What is PPP?

Answer 5

An exchange rate of one currency for another which compared how much a typical basket of goods in the country costs

Question 6

What are problems of using GDP?

Answer 6

1- Exclusion of real transactions
2- Value of leisure
3- The underground economy
4- Spending 
5- Quality of goods and services
6- Zero- prices goods are excluded

Question 7

What is national happiness?

Answer 7

Read.

Question 8

What is aggregate demand?

Answer 8

Total of all expenditures in an economy at any given price.

Question 9

What is the AD equation?

Answer 9

AD= C + I + G + (x-m)

Question 10

Reasons for movements along the demand curve.

Answer 10

1- The wealth effect
2- The international trade effect
3- The interest rate effect

Question 11

What is disposable income?

Answer 11

Income households devote to consumption and saving, taking into account payments of direct taxes and transfer payments.

Question 12

Factors affecting consumption.

Answer 12

1- changes in consumer confidence
2- changes in interest rate
3- changes in personal income tax
4- changes in household indebtedness

Question 13

Factors affecting investment.

Answer 13

1- changes in business confidence
2- changes in interest rates 
3- improvements in technology
4- changes in business taxes
5- the level of corporate indebtedness

Question 14

Factors affecting gov spending.

Answer 14

1- changes in political priorities

2- changes in economic priorities

Question 15

Factors affecting net trade (x-m)

Answer 15

1- changes in national income abroad
2- changes in exchange rates
3- changes in level of trade protection

Question 16

What are injections into the circular flow of income?

Answer 16

Government spending
Investment
Exports

Question 17

What are withdrawals to the circular flow of income?

Answer 17

Government taxation
Imports
Savings

Question 18

What is aggregate supply?

Answer 18

The volume of goods and services produced within an economy at a given price level.

Question 19

What is the difference between SRAS and LRAS?

Answer 19

SRAS is period of time when at least one FOP is fixed and cannot be changed.
In LRAS, all FOP are variable.

Question 20

Factors affecting SRAS

Answer 20

1- Changes in cost of raw materials and energy
2- Changes in exchange rates
3- Changes in tax rates

Question 21

What is LRAS?

Answer 21

Is a measure of a country potential productive output

Question 22

Factors influencing LRAS:

Answer 22

1- Technological advances 
2- changes in relative productivity 
3- Changes in education and skill
4- Demographic changes and migration 
5- competition policy
6- changes in gov regulations