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?

    <p>GDP indicators</p> Signup and view all the answers

    What do International Trade and Investment indicators typically indicate?

    <p>Balance of payments between trade partners</p> Signup and view all the answers

    What is the main focus of Consumer Spending indicators?

    <p>How much consumers make and save</p> Signup and view all the answers

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

    <p>Price inflation</p> Signup and view all the answers

    Which type of inflation is characterized by higher costs?

    <p>Cost inflation</p> Signup and view all the answers

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

    <p>Decrease in purchasing power of cash</p> Signup and view all the answers

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

    <p>Monetary inflation</p> Signup and view all the answers

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

    <p>Commodity prices and oil</p> Signup and view all the answers

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

    <p>Consumer Price Index</p> Signup and view all the answers

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

    <p>Increase in inflation</p> Signup and view all the answers

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

    <p>Excessive rise in price level</p> Signup and view all the answers

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

    <p>Income inflation</p> 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?

    <p>Reducing exports to international markets</p> Signup and view all the answers

    What is the primary purpose of the GDP deflator?

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

    What does Real GDP growth rate measure?

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

    What does Potential GDP represent?

    <p>The country's economy under ideal conditions</p> Signup and view all the answers

    How is GDP per Capita calculated?

    <p>Dividing the nominal GDP by the total population</p> Signup and view all the answers

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

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

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

    <p>The sum of all value added during production process</p> Signup and view all the answers

    What is economic growth referring to?

    <p>The increase in aggregate production in an economy.</p> 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?

    <p>Unemployment</p> 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?

    <p>Inflation</p> Signup and view all the answers

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

    <p>The economy as a whole</p> Signup and view all the answers

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

    <p>Foreign Exchange</p> Signup and view all the answers

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

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

    What does the GDP formula represent?

    <p>Consumption, investment, government expenditures, and net exports</p> Signup and view all the answers

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

    <p>Income approach begins with money spent and expenditure approach with the income earned</p> Signup and view all the answers

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

    <p>There is disagreement on its exact definition</p> Signup and view all the answers

    How is unemployment defined?

    <p>People not working but seeking employment</p> Signup and view all the answers

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

    <p>Gross Exports minus Gross Imports</p> Signup and view all the answers

    Which factor does the expenditure approach for GDP calculation prioritize?

    <p>Net exports by foreigners</p> Signup and view all the answers

    What is the formula to calculate Gross Value Added?

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

    How is the value of output of all sectors determined?

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

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

    <p>Gross Domestic Income (GDI)</p> Signup and view all the answers

    How is GVA (GDP) at producer prices calculated?

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

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

    <p>Total income and total expenditures</p> Signup and view all the answers

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

    <p>By subtracting each sector's intermediate consumption from the gross output value</p> 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.

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