Review Sheet: Economic Indicators Monday Exam 11/24

Review Sheet:  Economic Indicators

Output

1. Define Gross Domestic Product.
2. Identify each component of GDP by the expenditure method.  Provide an example of each.
3. Provide an example of:  intermediate good, non-market transaction, non-productive transaction, secondhand sale, and underground economy.  Why are these excluded from GDP?
4. How is a recession defined in terms of GDP?
5. What is unplanned investment?  How is it a factor in GDP?
6. How are net exports calculated?  What does it mean if the net exports component is a negative number?
7. What is GDP per capita? 
8. Explain the difference between nominal GDP and Real GDP.
9. How is real GDP calculated using base/current year prices and quantities?
10. What is the GDP Deflator?  How is it used in real GDP calculations?
11. What are the critical flaws of GDP as an economic indicator?  In other words, what does it do poorly?
12. Contrast Gross National Product (GNP) with Gross Domestic Product (GDP).

Unemployment

1.  Define:  full employment, unemployed, labor force
2. Identify each type of unemployment and provide an example.
3. Which type of unemployment is most serious to economists?  Least serious?
4. Which two type of unemployment are present at full employment?
5. Describe the impact of each on the calculation of the unemployment rate:  Discouraged workers, students, the underemployed, part-time workers.
6. Explain Okun’s Law.

Inflation

1. Define inflation.  Explain cost push and demand pull inflation.  Graph them.
2. Identify the groups helped/hurt by inflation.
3. What is the CPI?  How does it measure inflation?
4. What are market baskets?  Why are the market baskets weighted in the CPI?
5. How does the CPI differ from the GDP Deflator?  How are the two are indicators similar?
6. Explain the flaws imbedded in the CPI.
7. What is the difference between Core CPI and standard (headline) CPI?