[ECE160] Quiz # 4

Frage	Antworten
Microeconomics 23	is the study of how individual households and firms make decisions and how they interact with one another in markets
Macroeconomics 23	is the study of the economy as a whole
Gross Domestic Product (GDP) 23	is a measure of the income and expenditures of an economy is the market value of all final goods and services produced within a country in a given period of time
GDP (Y) = ? 23	Consumption (C) + Investment (I) + Government Purchases (G) + Net Exports (NX) Y = C + I + G + NX
Consumption 23	is the spending by households on goods and services, with the exception of purchases of new housing
Investment 23	is the spending on capital equipment, inventories, and structures, including new housing
Government Purchases 23	is the spending on goods and services by local, state, and federal governments does not include transfer payments because they are not made in exchange for currently produced goods or services
Net Exports 23	exports minus imports
Nominal GDP 23	values the production of goods and services at current prices
Real GDP 23	values the production of goods and services at constant prices
GDP Deflator 23	is a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100 it tells us the rise in nominal GDP that is attributable to a rise in prices rather than a rise in the quantities produced
GDP and Economic Well-Being 23	— is the best single measure of economic well-being of a society — GDP per person tells the income and expenditure of the average person in the economy — higher GDP per person indicates a higher standard of living — is not a perfect measure of happiness or quality of life, however
Inflation 24	refers to a situation in which the economy's overall price level is rising
Consumer Price Index (CPI) 24	is a measure of the overall cost of the goods and services bought by a typical consumer is used to monitor changes in the cost of living over time
Inflation Rate 24	is the percentage change in the price level from the previous period IR2 = (CPI2 - CPI1)/CPI1 * 100
Substitution Bias 24	the basket does not change to reflect consumer reaction to changes in relative prices
Introduction of New Goods 24	the basket does not reflect the change in purchasing power brought on by the introduction of new products
Unmeasured Quality Changes 24	if the quality of a good rises from one year to the next, the value of a dollar rises, even if the price of the good stays the same if the quality of a good falls from one year to the next, the value of a dollar falls, even if the price of the good stays the same.
Producer Price Index 24	measures the cost of a basket of goods and services bought by firms rather than consumers
Indexed 24	when some dollar amount is automatically corrected for inflation by law or contract, the amount is indexed for inflation
Nominal Interest Rate 24	is the interest rate usually reported and not corrected for inflation
Real Interest Rate 24	is the nominal interest rate that is corrected for the effects of inflation
Productivity 25	refers to the amount of goods and services produced for each hour of a worker's time
Compounding 25	refers to the accumulation of growth over a period of time
Factors of Production 25	the inputs used to produce goods and services — physical capital, human capital, natural resources, technological knowledge
Physical Capital 25	is a produced factor of production is the stock of equipment and structures that are used to produce goods and services
Human Capital 25	the economist's term for the knowledge and skills that workers acquire through education, training, and experience
Natural Resources 25	inputs used in production that are provided by nature, such as land, rivers, and mineral deposits — renewable (e.g. trees and forests) and nonrenewable resources (petroleum and coal)
Technological Knowledge 25	society's understanding of the best ways to produce goods and services
Diminishing Returns 25	as the stock of capital rises, the extra output produced from an additional unit of capital falls
Catch-up Effect 25	refers to the property whereby countries that start off poor tend to grow more rapidly than countries that start off rich
Foreign Direct Investment 25	Capital investment owned and operated by a foreign entity
Foreign Portfolio Investment 25	Investments financed with foreign money but by operated by domestic residents
Brain Drain 25	the emigration of many of the most highly educated workers to rich countries
Property Rights 25	refer to the ability of people to exercise authority over the resources they own
Inward-orientated and Outward-orientated Trade Policies	inward — avoiding interaction with other countries outward — encouraging interaction with other countries

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