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Topic 2 - The Data of Macroeconomics
Terms in this set (25)
If the price of a hot dog is $2 and the price of a hamburger is $4, then 30 hot dogs contribute as much to GDP as _____ hamburgers.
Angus the sheep farmer sells wool to Barnaby the knitter for $20. Barnaby makes two sweaters, each of which has a market price of $40. Collette buys one of them, while the other remains on the shelf of Barnaby's store to be sold later. What is GDP here?
Which of the following does NOT add to Canada's GDP?
a) Air France buys a plane from a Canadian aircraft manufacturer
b) PotashCorp develops a new mine in Saskatchewan
c) The city of Toronto pays a salary to a police officer
d) Federal government sends a CPP to your grandmother
A Canadian buys a pair of shoes manufactured in Italy. How is the transaction treated in Canada's national income accounts?
net exports fall while GDP is unchanged
What is the largest component of GDP?
If all quantities produced rise by 10 percent, and all prices fall by 10 percent, which of the following occurs?
Real GDP rises by 10% and while nominal GDP is unchanged.
the market value of all final goods and services produced within a country in a given period of time
spending by households on goods and services, with the exception of purchases of new housing
spending on capital equipment, inventories, and structures, including household purchases of new housing
spending on goods and services by local, state, and federal governments
exports minus imports
GDP adjusted for inflation
GDP measured in current prices and not adjusted for inflation
a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100
Consumer Price Index (CPI)
a measure of the overall cost of the goods and services bought by a typical consumer
the percentage change in the price index from the preceding period
the automatic correction by law or contract of a dollar amount for the effects of inflation
nominal interest rate
the interest rate that is not corrected for the effects of inflation
real interest rate
the interest rate corrected for the effects of inflation, nominal interest rate-inflation rate
The consumer price index measures approximately the same economic phenomenon as which of the following?
What is the largest component in the basket of goods and services used to compute the CPI?
foods and beverages
If a Manitoba gun manufacturer raises the price of rifles it sells to the Canadian Armed Forces, which of the following will be increased by the price hikes?
the GDP deflator but not the CPI
Which of the following occurs because consumers can sometimes substitute cheaper goods for those that have risen in price?
The CPI overstates inflation
If the consumer price index is 200 in year 1980 and 300 today, then $600 in 1980 has the same purchasing power as ________ today.
You deposit $2,000 in a savings account, and a year later you have $2,100. Meanwhile, the consumer price index rises from 200 to 204.
In this case, the nominal interest rate is _____ percent, and the real interest rate is _____ percent.
nominal interest:($2100-$2000)/$2000=0.05 or 5%
the increase in CPI form 200 to 204 reflects 2% inflation204-200/204=0.019 or 2%real interest rate =nominal interest rate - inflation rate5%-2%=3%
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