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Econ 202 Exam 1 Miami University questions with Correct Answers
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Econ 202 Exam 1 Miami University questions with Correct Answers
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Econ 202 Exam 1 Miami University questionswith Correct Answers
national income accounting identities Correct Answer-production =
income = spending
definition of GDP based on the production approach Correct Answer-
total value of all final goods and services produced in the economy
during a given year; goods and services are added up using their market
prices
Customer Spending (C) Correct Answer-final goods and services bought
by households for personal use; examples: nondurable and durable
goods, services
Investment Spending (I) Correct Answer-purchases of new capital goods
made by firms for future production; examples: equipment, factories,
houses; does NOT include: purchases that may relocate existing assets,
financial investments
Government Spending (G) Correct Answer-goods and services bought
by federal, state, local gov'ts; examples: military equipment, highways,
services provided by gov't employees; does NOT include: transfer
payments to individuals, social security, unemployment, disaster reliefs
Exports (X) Correct Answer-foreign spending on domestically produced
goods and services
, Imports (IM) Correct Answer-domestic spending on goods and services
produced abroad
Nominal Correct Answer-current dollars, use current year prices to add
up value of final goods and services produced, changes b/c of prices and
quantities produced (year)(price) x (year)(quantity)
Real Correct Answer-constant dollars, use base year prices to add up
value of final goods and services produced; changes because of
quantities produced (base year price) x (year)(quantity)
why GDP is not a perfect measure of economic well-being Correct
Answer-only a measure of the country's aggregate output, is not a
sufficient goal b/c it doesn't address how a country uses that output to
effect living standards, no one-to-one match between GDP and quality
of life
how to construct a consumer price index based on a basket and prices
Correct Answer-1. fix a basket of goods and services 2. find prices of
each good in each year 3. compute the cost of the basket in each year 4.
pick a base year and convert the costs into index #s
GDP deflator as another measure of the price level Correct Answer-
Reflects prices of goods and services produced domestically,
(nominal/real) x 100
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