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ECON 105 (Economics) Midterm Exam Study Questions and Answers.
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ECON 105 (Economics) Midterm Exam Study Questions and Answers.
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ECON 105 (Economics) Midterm ExamStudy Questions and Answers.
Can commodities be final goods?
Correct Answer -Yes. An apple you just straight up eat. If u make apple pie
it is intermediate.
Value added concept, double counting concept, and formula
Correct Answer -Value added is the payment owed to a firm's factors of
production (wages and capital) and also profits
Value added = Sales revenue - cost of intermediate goods
Double counting is counting the
Sum of all values added in a economy is...
Correct Answer -It's total output
A primary good is also known as a
Correct Answer -Commodity
A mine is what to a mine-making firm vs a steel making firm
Correct Answer -It is a commodity for the mine-making firm and a
intermediate good for the steel makers
,Three ways of measuring national income. What does this mean it's
measuring as well?
Correct Answer -1) Concept of value added
2) Sum of total flow of expenditure on final domestic product
3) The total flow of income generated by the flow of domestic production
Flow meaning creation, exchange, extinction of value
It's measuring GDP
Commodity is
Correct Answer -A raw material or primary product like iron or coffee
GDP is made out of what four things
Correct Answer -Consumption = household expenditure on goods and
services
Investments = semi-permanent goods that increase capital stock of
country. So not stocks or bonds or crypto. Also any good that hasn't been
sold yet
Government spending =
Net exports = exports - imports
,CRITERIA = ALL MUST BE NEW EG BUYING HOUSE FROM SOMEONE ELSE
DOESNT COUNT AS INVESTMENT + WHEN THEY ARE PRODUCED NOT
WHEN SOLD
Capital stock...
Correct Answer -Depreciates each year
What is double counting
Correct Answer -Counting the value of the same product more than once
because you are not considering the intermediate goods that came from
other firms.
Can commodities be intermediate goods? What about final goods?
Correct Answer -Yes
For an intermediate good you have to be
Correct Answer -Selling something.
What are the factors of production?
Correct Answer -Land, labour, capital and entrepreneurship
What is capital?
Correct Answer -wealth in the form of money or other assets owned by a
person or organization
, What is the economy's total quantity of capital goods called? What
happens when you create new capital goods?
Correct Answer -Capital stock - creating new capital goods is called fixed
investment
How do we calculate the total investment in a given year?
Correct Answer -Sum of changes in inventories + additions to plants and
equipment + construction of new residential housing units
Can investment be inventories?
Correct Answer -Yep
What are government purchases in terms of adding up GDP?
Correct Answer -Expenditure on currently produced goods and services
exclusive of gov transfer payments
Whatever is produced or expenditure is also...
Correct Answer -Someone's income. This is why we have the three ways of
calculating GDP
Salaries and production are
Correct Answer -The same thing
Why will the sum of total expenditure of total income (aka the sum of
everyone's income) both tell you the GDP?
Correct Answer -Cause salaries and production are the same thing
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