Midterm

Question 1

Leakages

Answer 1

Savings, Taxes, Imports

Question 2

Injections

Answer 2

Investments, Gov’t Spending, Exports

Question 3

Real GDP per person

Answer 3

RGDP/Population

Question 4

Two Methods of Measuring GDP

Answer 4

Income Method and Aggregate Expenditure Method

Question 5

Aggregate Expenditure Method

Answer 5

AE=C+I+G+EX-IM

Question 6

Disposable Income Calculation

Answer 6

C + S

Question 7

Unemployment Rate

Answer 7

Unemployed/Labour Force * 100

Question 8

Participation Rate

Answer 8

Labour Force/Working Age * 100

Question 9

Frictional Unemployment

Answer 9

Natural Turnover, Laid Off, Just Graduated, Actively Seeking Work

Question 10

Structural Unemployment

Answer 10

Due to a decline in demand for a certain industry

Question 11

Cyclical Unemployment

Answer 11

Due to fluctuations in economy

Question 12

Natural Rate of Unemployment

Answer 12

Frictional + Structural

Question 13

Okun’s Law

Answer 13

Used to find GDP Gap

2.5 * Cyclical Unemployment Rate * Actual GDP

Question 14

GDP Deflator

Answer 14

Nominal GDP/Real GDP * 100

Question 15

Inflation Rate

Answer 15

Xt-Xt-1/Xt-1

Question 16

GDP Gap

Answer 16

Potential GDP-Actual GDP

Question 17

Nominal Interest Rate

Answer 17

Real Interest Rate + Inflation Rate

Question 18

Real Wealth

Answer 18

Nominal Wealth/Price Level

Question 19

Causes for Downward Slope of AD

Answer 19

Real Balance Effect, Interest Rate Effect, Foreign Trade Effect

Question 20

Closed, Private Economy

Answer 20

AE, C, I

Question 21

Autonomous Spending

Answer 21

I, G, Xn

Question 22

Closed Economy

Answer 22

AE, C, I, G

Question 23

Open Economy

Answer 23

AE, C, I, G, Xn

Question 24

Multiplier

Answer 24

1/1-slope