im taking macro apperatly

What is GDP?

Dollar value of final goods and services produced within a country during a period.

What does GDP measure: quantities or dollar value?

Dollar value.

What is GNP?

Value of final output produced by a country's residents, including abroad.

GDP vs. GNP?

GDP uses location of production; GNP uses residents producing it.

What is nominal GDP?

GDP valued at current prices.

What is real GDP?

GDP adjusted for price changes, using base-year prices.

GDP deflator formula?

(Nominal GDP / Real GDP) × 100.

Inflation rate formula?

[(New price index − Old price index) / Old index] × 100.

GDP deflator rises 400 to 420: inflation?

5%.

Nominal GDP $5T, real GDP $4T: deflator?

125.

What is disposable personal income?

Personal income minus personal taxes.

What raises disposable personal income?

Lower personal taxes or higher personal income.

How are intermediate goods counted in GDP?

Included in final-good value, not counted separately.

Why exclude intermediate goods separately?

To avoid double counting.

One million books at $25: GDP contribution?

$25 million; do not add the author's intermediate payment again.

What does macroeconomics study?

Economy-wide output, employment, inflation, and growth.

What does microeconomics study?

Individuals, firms, and particular markets.

Four factor-payment pairs?

Labor-wages; land-rent; capital-interest; entrepreneurship-profit.

GDP expenditure formula?

GDP = C + I + G + (X − M).

What is the labor force?

Employed plus unemployed people.

Who counts as unemployed?

Jobless, available, actively searched in past 4 weeks; temporary-layoff exceptions.

Available but no job search in four weeks?

Not in labor force, unless qualifying as temporarily laid off.

Temporarily absent from work due to illness?

Employed.

What is a discouraged worker?

Someone who wants work but stopped searching due to poor job prospects.

Unemployment rate formula?

Unemployed / Labor force × 100.

Labor force participation rate formula?

Labor force / civilian noninstitutional population age 16+ × 100.

What is frictional unemployment?

Short-term unemployment while searching or changing jobs.

What is structural unemployment?

Skills or location mismatch between workers and available jobs.

What is cyclical unemployment?

Unemployment caused by downturns in the business cycle.

What is seasonal unemployment?

Joblessness caused by predictable seasonal changes.

Winter construction layoffs: unemployment type?

Seasonal.

Which unemployment type is helped by retraining?

Structural.

What is CPI?

Consumer Price Index; tracks a representative basket of consumer prices.

CPI rises from 100 to 113: inflation?

13%.

Does CPI tend to overstate or understate inflation?

Overstate slightly, due to substitution and measurement biases.

Approximate real interest rate formula?

Nominal interest rate − inflation rate.

Nominal interest 6%, inflation 2%: real rate?

4%.

Desired real rate 4%, expected inflation 4%: nominal?

About 8%.

Real wage formula using CPI?

Nominal wage / CPI × 100.

What is labor productivity?

Real GDP per hour worked.

Two main determinants of labor productivity?

Technology and capital per hour worked.

What is physical capital?

Produced assets used in production: machines, computers, buildings.

What is human capital?

Workers' accumulated education, skills, training, and knowledge.

College education is what type of capital?

Human capital.

New machinery or software affects productivity how?

Usually increases output per hour worked.

What sustains long-run growth most reliably?

Technological change and innovation.

What is potential GDP?

Sustainable output at normal utilization of labor and capital.

Does potential GDP change over time?

Yes; it generally grows with resources and productivity.

What is a recession under NBER approach?

Significant widespread decline in activity, typically lasting more than a few months.

Are two negative GDP quarters the official recession rule?

No; it is a rule of thumb, not the NBER definition.

What are expansion, peak, recession, trough?

Rising activity; high point; broad decline; low point.

Real GDP growth rate formula?

(New real GDP − Old real GDP) / Old real GDP × 100.

GDP rises 8700 to 9280 over 3 years: annual growth?

About 2.2% per year; closest answer 2%.

What is the loanable funds market?

Market for saving supplied and borrowing demanded.

What is the price in loanable funds market?

Real interest rate.

Interest rate above equilibrium: what occurs?

Surplus of loanable funds.

Interest rate below equilibrium: what occurs?

Shortage of loanable funds.

Figure 10-6 equilibrium rate and quantity?

4% and $120 million.

Figure 10-6 at 5%: supplied and demanded?

$150 million supplied; $90 million demanded.

Figure 10-6 at 5%: surplus?

$60 million.

Public saving formula?

Taxes − government purchases − transfer payments.

What increases public saving, other things equal?

Higher taxes or lower government purchases/transfers.

More saving shifts loanable funds supply where?

Right.

More saving affects real interest and investment how?

Interest rate falls; investment increases.

What are diminishing returns to capital?

Each equal addition of capital yields a smaller output gain.

Capital 8→10M raises GDP 2→3M; 10→12M adds?

Less than $1 million, assuming diminishing returns.

Per-worker production function shifts upward: meaning?

More output per hour at unchanged capital per hour.

What is the catch-up effect?

Poorer economies may grow faster by adopting technology and accumulating capital.

Figure 11-5: which point is poorer and faster-growing?

A: low initial GDP per capita and high growth.

Figure 11-5: which point is richer and slower-growing?

B: high initial GDP per capita and low growth.

What can hold back growth in low-income countries?

War, weak rule of law, low saving/investment, poor education.

Why is a good education system good for growth?

It builds human capital and productivity.

Who is associated with new growth theory?

Paul Romer.

What does new growth theory emphasize?

Ideas, innovation, knowledge spillovers, and R&D.

What is free riding on R&D?

Benefiting from research paid for by another firm.

Why may private firms underinvest in R&D?

Social returns exceed private returns due to spillovers.

At private R&D optimum, marginal cost vs social return?

Marginal cost is below the economy-wide marginal benefit.

What is foreign direct investment (FDI)?

Investment in productive business operations in another country.

Figure 11-4: more capital along same function, A to?

B; capital per hour rises from $50k to $60k.

Figure 11-4: which listed movement shows an upward production-function shift?

E to B; higher productivity at unchanged capital per hour.

What is aggregate expenditure (AE)?

Total planned spending: C + I + G + NX.

AE model: what determines equilibrium GDP?

Planned aggregate expenditure.

More government purchases shift AE line how?

Upward.

What is MPC?

Change in consumption / change in disposable income.

MPC 0.95, income rises $10M: consumption rises?

$9.5 million.

MPC 0.5, income rises $10M: consumption rises?

$5 million.

Simple spending multiplier formula?

1 / (1 − MPC).

MPC 0.9: simple multiplier?

10.

Investment +$10M, MPC 0.9: GDP change?

+$100 million in the simple multiplier model.

Actual inventory growth less than planned means?

Sales exceeded expectations; planned AE exceeded GDP.

Inventories fall more than expected: actual investment?

Less than planned investment.

Lower price level raises consumption via what effect?

Real wealth effect.

What often happens to unplanned inventories in recessions?

They rise when sales unexpectedly weaken.

What does the AD-AS model explain?

Short-run fluctuations in real GDP and price level.

Why does aggregate demand slope downward?

Wealth, interest-rate, and international-trade effects.

What is the interest-rate effect on AD?

Higher price level raises rates, reducing consumption and investment.

Higher personal income taxes shift AD how?

Left, through reduced disposable income and consumption.

More government spending shifts AD how?

Right.

What is a negative supply shock?

An event that raises production costs or reduces productive capacity.

Unexpected oil refining capacity drop shifts SRAS?

Left.