Week 1: Intro

Question 1

Macroeconomics

Answer 1

The study of how the interactions of people and firm through markets affect overall economic activity

Question 2

Macroeconomic Models

Answer 2

simplified mathematical representations of the real world

Question 3

What is micro data?

Answer 3

unit-level data obtained from sample surveys, censuses and admin systems

Question 4

Gross Domestic Product (GDP)

Answer 4

the total market value of all final goods and services produced within specific territory in given period

Question 5

What is GDP used for?

Answer 5

as a measure to monitor overall performance of the economy

Question 6

GDP per Capita

Answer 6

GDP divided by midyear population

Question 7

Income measure of GDP (income approach)

Answer 7

measure of all income in the economy

Question 8

Production measure of GDP (production approach)

Answer 8

measure of the number of goods produced in the economy

Question 9

Expenditure measure of GDP (expenditure approach)

Answer 9

measure of total purchases in the economy

Question 10

National Income Accounting Identity (equation)

Answer 10

Y = C + I + G + NX 
Y = GDP 
I = investment 
G = gov purchases 
NX = exports - imports

Question 11

Depreciation

Answer 11

Deterioration of capital stock due to wear and tear

Question 12

Net Domestic Product Equation

Answer 12

GDP - depreciation

Question 13

Net Domestic Product Definition

Answer 13

annual measure of the economic output of a nation that is adjusted to account for depreciation

Question 14

What is the share of GDP between labour and capital?

Answer 14

labour 2/3

capital 1/3

Question 15

Nominal GDP

Answer 15

total value of all goods and services produced in given period of time

Question 16

How to calculate nominal GDP

Answer 16

multiply current year quantity output by the current market price
(add together if multiple years)

Question 17

Real GDP

Answer 17

nominal GDP adjusted for inflation – measures the actual growth of production without any distortion effects from inflation

Question 18

How to calculate real GDP?

Answer 18

Use the base year prices and multiply them by current year quantities

Question 19

Price Level

Answer 19

Average of current prices across the spectrum of good and services produced in an economy

Question 20

Implicit GDP Price Deflator Equation

Answer 20

Nominal GDP/real GDP

Question 21

Consumer Price Index

Answer 21

measure of the average change in prices over time that consumers pay for a basket of goods and services

Question 22

Consumer Price Index Equation

Answer 22

(current price x base year Q) + (base year price x base year Q)

Question 23

Problems with Measuring Real GDP and Price Level (3)

Answer 23

• Relative prices change over time
• Quality of good and services change over time
• New goods and services introduced so others become obsolete

Question 24

What is the income approach to GDP?

Answer 24

Measuring the sum of all income earned in the economy

Question 25

Depreciation

Answer 25

The deterioration of capital stock due to wear and tear

Question 26

Net Domestic Product Equation

Answer 26

GDP - depreciation

Question 27

What is the share of GDP to inputs?

Answer 27

Approx:
Share of labour 2/3
Share of capital 1/3

Question 28

What does Real GDP equal in the base year?

Answer 28

Real GDP = Nominal GDP

Question 29

What does CPI equal in the base year?

Answer 29

1

Question 30

CPI Equation

Answer 30

(current price x base quantity)/(base year price x base quantity)

Question 31

Implicit price deflator equation

Answer 31

Nominal GDP/Real GDP

The ratio of nominal to real GDP