Download macroeconomic review

MACROECONOMIC REVIEW
1)
The section of economics we are currently studying is called ___Measuring economic
performance_____________.
2)
On the circular flow, the two types of markets are ___factor market________________
and the ______product______________ market. The ___product
market_______________ is characterized by the exchanging of finished goods and
services for revenue. The __________factor __________ market is characterized as the
exchange of the factors of production (land, labor, capital, and ideas) for wages, interest,
rent, and profit.
3)
GDP stands for ____Gross Domestic Product______ and measures the value of all
_____new or final________ goods and services produced and sold within the
________country’s______ boundaries over the course of ____1_______ year.
4)
The output-expenditure model of calculating GDP is the sum of ______expenditures
(goods and services bought)_______________ by households, __consume_________
______________ by businesses, _invest in capital__________________ spending, and
the foreign sector (_______exports_________ minus ____imports__________).
5)
The 7 main types of things that are not included in GDP include
a. _______foreign_____________
b. ____________last years________
c. _____intermediate goods____
d. __________used__________
e. ______________illegal______
f. _____________externalities_
g. _________personal use/leisure____
6)
Of the following items, tell me if they are included in GDP and what component of GDP
they will fall under (refer to question 4)
a. A used Tundra I buy
no because its used
b. A new suit purchased by an accountant
yes its new
c. Government buying new police cars
yes govt. buying final good
d. Honda (Japanese owned) building a US Plant
no because the final product is
not ours although an intermediate good(land) was used but it’s not counted.
e. Medicare check from the government
no because these transfer
payments are a way of allocating money to reach social goals
7)
When we look at GDP, we want to use a standard year of prices to compare values across
times (this year is often called the base year). When we adjust for inflation, the new
value is called ______real__________ GDP, while the value calculated by using the
current year’s prices is called _________nominal_____________ GDP.
8)
CPI stands for __________Consumer price index and is used to measure the change in
______price____ of a “market basket” of goods.
9)
The formula to calculate CPI is (nominal GDP divided by real GDP) * 100. Using this
formula, complete the following chart. Also, when you are finding the percentage change
of anything (in this case CPI), the formula to use is
a. % change = (difference in 2 values / the value where you started) * 100
Year
1970
1980
1990
2000
2005
Nominal GDP
560
660
780
964
1025
Real GDP
674
660
745
765
865
CPI
83
100
104
126
118
10)
The current CPI today is ___233.049 (all items unadjusted index dec 2013) __ (you will
have to use the following link: http://www.bls.gov/news.release/cpi.toc.htm (make sure
you are using Table 1)
11)
Using the following link provided, tell me the following
a. The base year
_________1982_________________
b. 3 foods used in the basket
_____Cereals, meat and
dairy_________________________________
c. Which single item has the most relative importance
shelter at
31.933________________
12)
What are the 3 types of unemployment?
a. _______frictional_____________, ___structural________________________,
_____cyclical______________
13)
Match-up the following descriptions with the type of unemployment that exists.
a. College grad looking for first job
_____frictional_
b. Assembly line worker replaced by robot
_______structural_
c. Someone fired because of a lack of need
________cyclical__
d. Someone quitting their job looking for new one
__frictional_______
e. Someone declined for a job because of a lack of skills
____structural
14)
GDP per capita is one of the most commonly used economic indicators when comparing
countries (although most economist don’t like it). The formula is very simple, take the
real GDP and divide by population. Knowing this, complete the following chart.
Year
Real GDP
Population
1990
1995
2000
2005
25,600
100
15)
29,650
RGDP / per
capita
256
260
249
165
% change in RGDP
n/a
6%
4%
Give me three reasons why the CPI is not considered a very good measure for inflation
(you will need to use the following link:
http://www.sparknotes.com/economics/macro/measuring1/section2.rhtml
the substitution bias, the introduction of new items, and quality changes
16)
The three broad economic goals are as follows: ___economic
growth_________________________, ___full
employment___________________________, and _____price stability.