ECON 304 UPDATED Questions and
CORRECT Answers
endogenous variable - CORRECT ANSWER✔✔- a variable that is determined within the
model
exogenous variable - CORRECT ANSWER✔✔- A variable determined outside the model
Market Clearing - CORRECT ANSWER✔✔- An assumption that prices are flexible, adjust
to equate supply and demand.
sticky prices - CORRECT ANSWER✔✔- prices that move to their equilibrium values very
slowly
flexible prices - CORRECT ANSWER✔✔- product prices that freely move upward or
downward when product demand or supply changes
imput markets tend to be? sticky or flexible - CORRECT ANSWER✔✔- stickey
GDP - CORRECT ANSWER✔✔- Gross Domestic Product- the total market value of all final
goods and services produced annually in an economy (indicates level of production)
total expenditure? - CORRECT ANSWER✔✔- total expenditure on domestically located
factors of production
Total income - CORRECT ANSWER✔✔- earned by domestically located factors of
production
how do you figure out the dollar ammount of what was produced - CORRECT
ANSWER✔✔- -expenditure approach total spending
-income approach, add up all income provided by goods and services.
, ex.
1000 total revenue
-700 in wages
-100 rent
-100interest
100 total net income
income just goes to investmnts - CORRECT ANSWER✔✔- therefore every 1,000 dollars of
revenue = 1000 production
what happens when you add up the values at each production level? - CORRECT
ANSWER✔✔- You get the gdp value
expendature approach - CORRECT ANSWER✔✔- c
i
g
nx
y = all those
C=Consumption - CORRECT ANSWER✔✔- -the value of all goods and services bought by
households
-2/3 of the spending is consumer spending
I=Investment - CORRECT ANSWER✔✔- -spending on capital, a physical asset used in
future production
-business fixed investment is spending like on plant and equipment
-inventory investment the change in the value of all firms inventories
- residential fixed investment
G= goverment spending - CORRECT ANSWER✔✔- all gov purchases on good and services
ex like spending on subway system
excludes transfer payments like social security
CORRECT Answers
endogenous variable - CORRECT ANSWER✔✔- a variable that is determined within the
model
exogenous variable - CORRECT ANSWER✔✔- A variable determined outside the model
Market Clearing - CORRECT ANSWER✔✔- An assumption that prices are flexible, adjust
to equate supply and demand.
sticky prices - CORRECT ANSWER✔✔- prices that move to their equilibrium values very
slowly
flexible prices - CORRECT ANSWER✔✔- product prices that freely move upward or
downward when product demand or supply changes
imput markets tend to be? sticky or flexible - CORRECT ANSWER✔✔- stickey
GDP - CORRECT ANSWER✔✔- Gross Domestic Product- the total market value of all final
goods and services produced annually in an economy (indicates level of production)
total expenditure? - CORRECT ANSWER✔✔- total expenditure on domestically located
factors of production
Total income - CORRECT ANSWER✔✔- earned by domestically located factors of
production
how do you figure out the dollar ammount of what was produced - CORRECT
ANSWER✔✔- -expenditure approach total spending
-income approach, add up all income provided by goods and services.
, ex.
1000 total revenue
-700 in wages
-100 rent
-100interest
100 total net income
income just goes to investmnts - CORRECT ANSWER✔✔- therefore every 1,000 dollars of
revenue = 1000 production
what happens when you add up the values at each production level? - CORRECT
ANSWER✔✔- You get the gdp value
expendature approach - CORRECT ANSWER✔✔- c
i
g
nx
y = all those
C=Consumption - CORRECT ANSWER✔✔- -the value of all goods and services bought by
households
-2/3 of the spending is consumer spending
I=Investment - CORRECT ANSWER✔✔- -spending on capital, a physical asset used in
future production
-business fixed investment is spending like on plant and equipment
-inventory investment the change in the value of all firms inventories
- residential fixed investment
G= goverment spending - CORRECT ANSWER✔✔- all gov purchases on good and services
ex like spending on subway system
excludes transfer payments like social security
