35 Questions
What is the main difference between microeconomics and macroeconomics?
Microeconomics studies the behavior of individual consumers and firms, while macroeconomics studies large collections of consumers and firms.
In terms of economic growth, how much richer was Canada in 2000 compared to 1900?
Canada was 6 times richer in 2000 than in 1900.
What are some examples of aggregate variables studied in macroeconomics?
Examples of aggregate variables include GDP, inflation, and unemployment.
Explain the concept of business cycles.
Business cycles refer to the recurring periods of expansion and contraction in the economy.
What is the main purpose of macroeconomic models?
Macroeconomic models are used to study aggregate variables and explain stylized facts.
How is GDP measured using the income approach?
By summing up all incomes earned by the factors of production within a country during a specific period.
What is the total revenue of the Restaurant in the fictional island economy?
$30 million
Calculate the GDP of the fictional island economy using the product approach.
$20 million (Coconut Producer) + $30 million (Restaurant) = $50 million
What is the GDP per capita in the largest economies used as a measure of standard of living?
It is used to compare and analyze the relative economic well-being of individuals in different countries.
Explain how GDP per capita is calculated.
By dividing the total GDP of a country by its population.
What role does the government play in the National Income and Expenditure Accounts (NIEA)?
The government collects taxes and provides public services, influencing the flow of income and expenditure within the economy.
What is the Product Approach in calculating GDP?
The sum of value added to goods and services in production across all productive units in the economy.
Explain the Expenditure Approach in calculating GDP.
Total spending on all final goods and services production in the economy.
What is included in the calculation of Total Expenditure in the Expenditure Approach?
Consumption (C), Investment (I), Government expenditure (G), Net exports (NX)
Describe the Income Approach in calculating GDP.
Adding up all incomes received by economic agents contributing to production.
Why is it important to have equivalent measures of GDP?
To ensure accuracy and reliability in calculating the total value of goods and services produced in the economy.
How does the Product Approach differ from the Income Approach in calculating GDP?
The Product Approach focuses on the value added at each stage of production, while the Income Approach considers the total incomes earned.
How is the inflation rate calculated using price indices?
The inflation rate is calculated as the rate of change in the price level.
What is the formula to calculate nominal GDP for a specific year?
Nominal GDP = (Price of Good A x Quantity of Good A) + (Price of Good B x Quantity of Good B)
How is the percentage increase in nominal GDP from one year to another calculated?
Percentage increase in nominal GDP = ((GDP2 - GDP1) / GDP1) x 100%
Why is government production difficult to measure?
Government production is difficult to measure because the output, like defense services, is typically not sold in the market.
How does a price index help in understanding the price level?
A price index is a weighted average of observed prices that provides a measure of the price level.
What does Real GDP measure?
Real GDP measures the value of total output adjusted for changes in prices.
Calculate the percentage increase in real GDP from year 1 to year 2 using the base year 1 approach.
35.4%
What is the ratio of real GDP in year 2 to real GDP in year 1 using year 2 as the base year?
1.312
Explain the concept of chain-weighted GDP and how it is calculated.
The chain-weighted GDP is a geometric average of the ratios calculated using different base years, considering relative price changes over time.
What is the chain-weighted ratio of real GDP in year 2 to real GDP in year 1?
1.333
If the relative price of apples to oranges changes over time, how does it impact the calculation of chain-weighted real GDP?
It adjusts the real GDP calculation to reflect changes in relative prices, providing a more accurate measure of economic growth.
Why is chain-weighted GDP considered a more reliable measure of real GDP growth compared to using a single base year approach?
Chain-weighted GDP accounts for relative price changes over time, providing a more accurate representation of economic growth.
What is the formula for calculating chain-weighted real GDP in year 1 dollars?
RGDP2c1 = GDP1 × gc
How is the chain-weighted real GDP in year 2 dollars calculated?
RGDP1c2 = GDP2 ÷ gc
What is the formula for calculating the Implicit GDP Price Deflator?
Implicit Price Deflator = Nominal GDP ÷ Real GDP
How is the Consumer Price Index (CPI) for the current year calculated?
Current year CPI = (Cost of base year quantities at current prices ÷ Cost of base year quantities at base year prices) × 100
What is the percentage increase in the Implicit GDP Price Deflator from year 1 to year 2?
65.9%
Calculate the Consumer Price Index (CPI) for year 2 if year 1 is taken as the base year.
171.2
Get all the details about the teaching assistants and tutorial schedule for the course. Contact information for Siu Lun Cheong, Naqeeb Ali, and Nafees Hossain provided. Tutorials are scheduled on Thursdays at different times and locations.
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