Podcast
Questions and Answers
What is the primary definition of Gross Domestic Product (GDP)?
What is the primary definition of Gross Domestic Product (GDP)?
Which factor is NOT typically included in the calculation of GDP?
Which factor is NOT typically included in the calculation of GDP?
What does the Consumer Price Index (CPI) primarily measure?
What does the Consumer Price Index (CPI) primarily measure?
Which of the following describes structural unemployment?
Which of the following describes structural unemployment?
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How is the unemployment rate calculated?
How is the unemployment rate calculated?
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What characterizes an inflationary gap in an economy?
What characterizes an inflationary gap in an economy?
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Which statement accurately describes frictional unemployment?
Which statement accurately describes frictional unemployment?
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Which of the following is a weakness of the Consumer Price Index (CPI)?
Which of the following is a weakness of the Consumer Price Index (CPI)?
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Study Notes
Gross Domestic Product (GDP)
- GDP is the market value of all final goods and services produced within a country in a given period of time
- GDP does not include tax and stock
Consumer Price Index (CPI)
- CPI measures the overall price level of goods and services purchased by a typical consumer
- Formula: CPI = (Current basket / Base year basket) x 100
- CPI weakness: substitution bias (some prices rise faster than others, consumers buy more affordable products)
- CPI often overstates the increase in the cost of living
Circular-Flow Diagram
- Firms produce goods and services and sell them in markets
- Households buy goods and services from firms and provide factors of production (land, labor, capital, enterprise)
- There are leakages from the flow (e.g., savings, taxes, imports)
Unemployment
- Unemployed: Individuals who are not working but are looking for a job
- Labor force: Employed + Unemployed
- Unemployment rate: (Number of unemployed / Labor force) x 100
- Labor force participation rate: (Labor force / Population) x 100
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Types of unemployment
- Structural: Workers' skills are no longer needed by the market; typically requires retraining
- Frictional: When workers leave one job and are looking for another; usually short-term
- Cyclical: When the overall economy is performing poorly
Other Economic Concepts
- Inflationary gap: Y > Yp
- Contractionary gap: Y < Yp
- Stagflation: High price level and slow economic growth
- Factors affecting GDP: Consumption, Investment, Government Purchases, and Net Exports
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Description
This quiz covers essential concepts in economics, including Gross Domestic Product (GDP), Consumer Price Index (CPI), and the Circular-Flow Diagram. Explore how these metrics are calculated and their significance in understanding economic performance. Understand the implications of unemployment and the labor force in the economy.
