Engineering Economy & Legislations: Course Overview

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Questions and Answers

What do Gross Domestic Product (GDP) indicators measure?

How much the economy produces (correct)

How much consumers make and save

GDP by industry

How much is invested internationally

Which indicator shows employment by industry, state, county, and other areas?

Government indicators

Special indicators

Prices and Inflation indicators

Employment indicators (correct)

What does the term 'Inflation indicators' aim to indicate?

Fluctuations in prices paid for goods and services (correct)

Measures how much capital consumers feed back into the economy

Indicates the balance of payments between trade partners

Changes in currency purchasing power

Which economic indicator represents the monetary value of finished goods and services produced within a country's borders?

GDP indicators Signup and view all the answers

What do International Trade and Investment indicators typically indicate?

Balance of payments between trade partners Signup and view all the answers

What is the main focus of Consumer Spending indicators?

How much consumers make and save Signup and view all the answers

What is the term often meant to signify in economics when used without discrimination?

Price inflation Signup and view all the answers

Which type of inflation is characterized by higher costs?

Cost inflation Signup and view all the answers

Which of the following is a potential effect of inflation on the economy?

Decrease in purchasing power of cash Signup and view all the answers

What type of inflation focuses on over-creating cash balances?

Monetary inflation Signup and view all the answers

What does Core inflation exclude when calculating prices of goods and services?

Commodity prices and oil Signup and view all the answers

Which economic statistic is commonly used to identify periods of inflation or deflation?

Consumer Price Index Signup and view all the answers

What economic consequence can arise from high prices and increased cash mass traded?

Increase in inflation Signup and view all the answers

What is the primary concern when the term 'inflation' is mentioned without specification?

Excessive rise in price level Signup and view all the answers

Which type of inflation is mainly influenced by high cash income, wages, or profits?

Income inflation Signup and view all the answers

What potential consequence of inflation can impact international trade by reducing the volume of goods sold to other countries?

Reducing exports to international markets Signup and view all the answers

What is the primary purpose of the GDP deflator?

To measure changes in market prices for inflation or deflation Signup and view all the answers

What does Real GDP growth rate measure?

The difference in values of all products and services between the current and base year Signup and view all the answers

What does Potential GDP represent?

The country's economy under ideal conditions Signup and view all the answers

How is GDP per Capita calculated?

Dividing the nominal GDP by the total population Signup and view all the answers

What is the main role of Constant Price level in calculating prices of goods and services?

It sets a standard value to measure price changes over time Signup and view all the answers

What is the Production (Value Added) approach in GDP calculation?

The sum of all value added during production process Signup and view all the answers

What is economic growth referring to?

The increase in aggregate production in an economy. Signup and view all the answers

What is the term used to describe individuals of working age who are able to work and are not working at the present time?

Unemployment Signup and view all the answers

What is the term used to describe a sustained increase in the general price level of goods and services in an economy over a period of time?

Inflation Signup and view all the answers

What is the focus of macroeconomics in the context of economics?

The economy as a whole Signup and view all the answers

What is the term used to describe the value of one currency in terms of another currency?

Foreign Exchange Signup and view all the answers

What is the importance of understanding economic growth according to economists?

To understand the factors that promote or retard it to support economic policies Signup and view all the answers

What does the GDP formula represent?

Consumption, investment, government expenditures, and net exports Signup and view all the answers

How does the income approach differ from the expenditure approach in calculating GDP?

Income approach begins with money spent and expenditure approach with the income earned Signup and view all the answers

What distinguishes inflation as an economic term despite the lack of consensus among economists?

There is disagreement on its exact definition Signup and view all the answers

How is unemployment defined?

People not working but seeking employment Signup and view all the answers

What does the term 'Net Imports' represent in the GDP formula?

Gross Exports minus Gross Imports Signup and view all the answers

Which factor does the expenditure approach for GDP calculation prioritize?

Net exports by foreigners Signup and view all the answers

What is the formula to calculate Gross Value Added?

Gross value added = gross value of output - value of intermediate consumption Signup and view all the answers

How is the value of output of all sectors determined?

By multiplying the output of each sector by their respective market prices Signup and view all the answers

What is the measurement of GDP using the income approach called?

Gross Domestic Income (GDI) Signup and view all the answers

How is GVA (GDP) at producer prices calculated?

Adding indirect tax minus subsidies to GVA (GDP) at factor cost Signup and view all the answers

What does the income approach state should be equal in an economy?

Total income and total expenditures Signup and view all the answers

How is the GVA (GDP) at factor cost calculated?

By subtracting each sector's intermediate consumption from the gross output value Signup and view all the answers

Study Notes

GDP and Its Components

GDP (Gross Domestic Product) = C + I + G + (X - M)
C: Consumption expenditure (by households)
I: Investment (by businesses)
G: Government expenditures (on goods and services)
X: Net exports (gross exports)
M: Net imports (gross imports)

GDP Approaches

Expenditure approach: GDP is the sum of final uses of goods and services (except intermediate consumption) measured in purchasers' prices
Income approach: GDP is the sum of primary incomes generated by goods and services distributed by resident producer units (Gross Domestic Income, GDI)
Production (Value Added) approach: GDP is the sum of all value-added to products during the production process

Measuring GDP

GDP represents the monetary value of all finished goods and services produced within a country's borders in a specific time period (usually one year)
GDP is calculated at a constant price level, which is usually set by a predetermined base year or by using the price levels of the previous year
Real GDP growth rate is calculated by adjusting changes in market prices for inflation or deflation

Economic Growth Indicators

Many indicators are used to measure economic performance, including:
- Gross Domestic Product indicators (GDP)
- Consumer Spending indicators
- Income and Savings indicators
- Industry Performance indicators
- International Trade and Investment indicators
- Prices and Inflation indicators
- Investment in Fixed Assets indicators
- Employment indicators
- Government indicators
- Special indicators (e.g. distribution of personal income, global value chains, healthcare spending)

Inflation

Inflation is one of the most common economic terms, but there is no agreement among economists on its definition
Inflation can refer to:
- Excessive rise in the overall price level
- High cash income or wages or profits
- High costs
- Over-creating cash balances
Types of inflation:
- Headline inflation (considers all goods and services)
- Core inflation (considers all goods and services except commodity prices and oil)

Unemployment Rate

Unemployment represents individuals of working age who are able to work and are not working at the present time
Different countries have different working ages (e.g. 16 years or more, 18 years or more)

Economic Growth

Refers to the increase in aggregate production in an economy
Economists try to understand the factors that promote or retard economic growth to support economic policies that will support development, progress, and rising living standards

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Description

Learn about the course objectives and topics covered in Menoufia University's UR 425: Engineering Economy & Legislations class with Dr. Ahmed Hamdy Ahmed Arafa from the CSE Dept. Explore concepts such as supply and demand, economic decision-making, alternatives selection, economic feasibility, and time value of money.