Exam (elaborations)
FSU ECO 2013 Exam 2 (1)
FSU ECO 2013 Exam 2 (1)
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FSU ECO 2013 Exam 2Stock - ANS-a base amount of something
Flow - ANS-change in the base amount
GDP - ANS-gross domestic product; the market value of all final goods and services produced
within a geographic area within a period of time
Final Good - ANS-good has reached it's final consumer
Intermediate Good - ANS-will be used in a final good; used goods don't count
Normal GDP - ANS-# output * price of output
Per Capita GDP - ANS-GDP divided by population; avg income for country, but doesn't account
for inequality
Expenditure Approach - ANS-Y = C + I + G + NX
gdp = consumption spending + investment spending + got spending + net
exports(exports-imports)
Income Approach - ANS-find GDP by adding all income together
Non Market Production - ANS-production that takes place outside market; makes GDP look
smaller
Black and Grey Market Production - ANS-transactions that don't show in overall markets; black
is always illegal production; grey is legal production that is not counted
Leisure and Job Quality - ANS-leisure time lowers GDP; GDP doesn't reflect changes in job
quality
Product Quality - ANS-GDP doesn't take quality of products or improvements in tech into effect
Economic Bads - ANS-something you pay to avoid; may increase GDP to replace items, even if
happiness lowers
X) garbage removal, pollution control, hurricanes
Price Level - ANS-measure of the overall prices of goods and services (stock)
Inflation - ANS-increases price level (flow)
, Deflation - ANS-decrease in price level
Disinflation - ANS-decrease in inflation rate
Nominal GDP - ANS-GDP calculated using contemporary prices; raises due to quantity and
price
Real GDP - ANS-GDP calculated using reference year prices
GDP Deflator - ANS-year of reference is used as defining #; base year deflator always 100
nominal GDP
--------------- x100
real GDP
Consumer Price Index - ANS-tracks cost of an ordinary consumers typical purchases over time
Market Basket - ANS-set of goods typically purchased by a household in a month; tracked over
time; increases with inflation, decreases with deflation; may overstate inflation bc it doesn't
account for improvements in quality
Inflation Rate - ANS-X2 - X1
%ΔX = ---------- x100
X1
X) 206-200
------------- x100 = 3%
206
Move forward in time when calculating prices - ANS-CPI(new)
----------- x old price
CPI(old)
Move backwards in time when calculating prices - ANS-CPI(old)
----------- x new price
CPI(new)
Business Cycle - ANS-ups and downs of the economy; not very predictable in real life
Labor Force - ANS-employed and unemployed; adult, noninstituationalized
Employed - ANS-work for pay, family business, 15+ hours
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