MODULE 1

Question 1

WHAT IS GDP defined as?

Answer 1

the MAARKET VALUE of all final goods + servcies produced in a country within a period of time

Question 2

What does the INCOME of an ECONOMY equal?

Answer 2

INCOME = EXPENDATURES

Question 3

we use WHAT of goods and services in our calculation of GDP?

Answer 3

market prices

Question 4

GDP does not include what types of goods?

Answer 4

Intermediate goods, goods not sold legally

Question 5

what does confining GDP to a specific time interval do?

Answer 5

helps economists + policymakers measure growth across those time intervals

Question 6

what are 2 ways you can compute GDP?

Answer 6

1.) ADD UP TOTAL EXPENDITURES
2.) ADD UP INCOME PAID BY FIRMS

Question 7

WHAT DOES Y = GDP (C+I+G+NX) MEAN?

Answer 7

-consumption
-investment
-governemnt purchases
- Net exports

THIS IS THE SUM of GDP

Question 8

What causes GDP rising from one year to the next?

Answer 8

1.) more goods and services
2.) Higher prices

Question 9

how do ECONOMISTS describe REAL GDP?

Answer 9

VALUE OF PRODUCTION OF GOODS AND SERVICES VALUED AT CONSTANT PRICES

Question 10

how do ECONOMISTS describe NOMINAL GDP?

Answer 10

THE PRODUCTION OF GOODS + SERVICES VALUED AT CURRENT PRICES

Question 11

what is the FORMULA for NOMINAL GDP?

Answer 11

(first box collum $ X 1st Quantity) + (Second box collum $ x 2nd quantity)

Question 12

what is a GDP DEFLATOR?

Answer 12

a statistic that reflects prices of goods and services, but NOT the quantities produced

Question 13

what is INTEREST?

Answer 13

interest represents a payment in the future for a transfer of money in the PAST

Question 14

what are INTEREST RATES?

Answer 14

comparing amounts of money at different points in time

Question 15

what is the INTEREST RATE FORMULA?

Answer 15

real interest rate = nominal interest rate - INFLATION RATE

Question 16

what is INFLATION RATE

Answer 16

percentage change in the CPI for the previous period

Question 17

economists use CPI to measure…

Answer 17

COST of LIVING

Question 18

what is CPI?

Answer 18

a overall measure of the cost and goods and services bought by a typical consumer

Question 19

what is the FORMULA for CPI?

Answer 19

$ price of basket in current year / $ price of basket in BASE YEAR

Question 20

what is the FORMULA for INFLATION RATE in year 2?

Answer 20

CPI 2 - CPI 1 / CPI 1 X 100

Question 20

WHAT DOES CORE INFLATION DO?

Answer 20

removes more voilatile components of CPI to get this “underlying trend”

Question 21

what is the DIFFERENCE between CPI and CPI DEFLATOR

Answer 21

CPI DEFLATOR : measures prices of ALL goods and services
CPI: measures the prices of goods and services bought by a “typical” consumer

Question 22

what defines PRODUCTIVITY?

Answer 22

THE QUANTITY OF GOODS + SERVICES THAT A WORKER CAN PRODUCE FOR EACH UNIT OF A WORKERS TIME

Question 23

what does PRODUCTIVITY NOT refer to?

Answer 23

-work ethic
-dilligence
intuitness
-industriousness

Question 24

what is the PRODUCTIVITY law?

Answer 24

more productivity = higher standard of living

Question 25

what is a ONE PERSON economy called?

Answer 25

Robinson-Cruscoe

Question 26

what are the 4 components of productivity?

Answer 26

-Physical -Human capital -Natural resources -Technological knowledge

Question 27

how do econimits model the components of productivity?

Answer 27

production function

Question 28

what is the PRODUCTION FUNCTION?

Answer 28

demonstrates the relationship between QUANTITY of inputs, and the Quantity of outputs

Question 29

what is the PRODUCTION FUNCTION modeled by?

Answer 29

f(K,H,N) = Y (output) K= Physical capital H= Human Capital N= Natural resources

Question 30

why is PRODUCTIVITY important to us?

Answer 30

because it trends in the same direction as important economic variables, like affordability, and well-being

Question 31

what is ONE WAY to raise future productivity?

Answer 31

through channels of injvestment= C+ I+G+NX

Question 32

for SOCIETY to invest more, this means that..

Answer 32

they need to consume less, and save more

Question 33

what does FOREIGN INVESTMENT lead to?

Answer 33

higher productivity

Question 34

what does BRAIN DRAIN refer to?

Answer 34

the emmegration of high-educated individuals to more developed nations

Question 35

what does FOGEL use the term PHYSIOLOGICAL CAPITAL to refer to?

Answer 35

to describe health as a form of HUMAN CAPITAL

Question 36

what are PROS AND CONS of patents

Answer 36

pros: incentivation of research, cons: that tecghnology doesnt become a public good anymore

Question 37

what does a GROWING POPULATION mean?

Answer 37

- increasing number of workers to produce goods + services (increase in production) - more consumers of goods and services equal an increase in consumption