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University of Oregon Econ 202 Midterm 1 Questions with Correct Answers
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University of Oregon Econ 202 Midterm 1 Questions with Correct Answers
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University of Oregon Econ 202 Midterm 1 Questionswith Correct Answers
GDP def Correct Answer-Gross Domestic Product-market value of final
goods and services produced within a country in a given time period (4
part def)
Final good/service and intermediate good/serviced Correct Answer-
final-item that is bought by its final user during a specified time period
intermediate- item produced by one firm, bought by another firm, and
then used as component of final good or service. We don't add the
intermediate value because it would be double counting!
Income v. Expenditure approach to calculating gdp Correct Answer-we
can measure this either by 1) total income earned producing GDP or 2)
total expenditure on GDP
GDP=aggregate expenditure and equals aggregate income
Y= C+I+G+X-M Correct Answer-GDP= Household consumption
expenditures (C)+ firms make investments (I)+ Governments buy goods
and services (G) and rest of world buys net exports (X-M (value of
exports minus value of imports)). Firms pay incomes (y) to households
THIS IS THE EXPENDITURE APPROACH
, Real v. Nominal GDP Correct Answer-Real= value of goods and
services produced in a given year when valued at the prices of a
reference based year. By comparing the value of production in the 2
years at the same prices, we reveal the change in production. (RN, we
measure using 2005 dollars.)
Nominal= value of final goods and services produced in a given year
when valued at prices that year. This is just a more precise name for
GDP
Comparing standard of living over time/real GDP per person Correct
Answer-real GDP divided by the population. This tells us value of goods
and services that average person can enjoy.
Potential GDP Correct Answer-max level of real GDP that can be
produced while avoiding shortages of labor, capital, land, ent. ability
that would bring inflation
GDP to measure standard of living across countries Correct Answer-2
issues with using real GDP to compare living standards across countires:
1) real GDP of one country must be converted to same currency units as
other country
2) goods and services in both countries must be valued at same prices
Purchasing power parity Correct Answer-using the same prices for both
countries. Example: Big Mac in Chicago=$3.75 but $2.00 in Shanghai.
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