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?

Reading Guide: ch. 8/ Inflation

1.  Define inflation
2.  Identify and explain the two types of inflation.
3.  Create chart identifying the people and groups helped by inflation and hurt by inflation.
4.  The Federal Reserve has set an inflation "target" of 2%/year indicating that they believe modest inflation is desirable.  Why not aim for 0% inflation?

Ch.8 Reading Guide: Unemployment Rate

You will be using chapter 8 up to 141.

1.What is GDP per capita and how may it be used as an economic indicator?
2. Why is GDP per capita still an imperfect measure of living standards?
3. Diagram the business cycle model in your notes.  Name each phase and note the types of economic conditions said to occur in each phase.
4. Define:  unemployment, unemployment rate, labor force, full employment
5. Identify each type of unemployment and provide a real-life example.
6. Explain Okun's Law and the relationship between GDP and UR.
7. To what extent is the unemployment rate inaccurate?  Explain.

DUE MONDAY. Have a wonderful weekend.

Reading Guide: Ch. 7

 

*Note:  You may skip reading about the “income approach” to GDP. (p118-119).

DUE THRUS

1. What is National Income Accounting?  Why is it performed?
2. What does Gross Domestic Product (GDP) measure?
3. Using the expenditures approach to GDP calculations, identify the types of transactions that are included and excluded from this indicator.
4. Why would counting secondhand sales and intermediate products be considered “double counting” to national income accountants?

DUE FRI

1. What are inventories (also called unplanned investment)?  Why are they counted toward GDP?
2. Briefly describe each economic indicator listed and explain how each differs from GDP:  Net Domestic Product, National Income, Personal Income, and Disposable Income.
3. Contrast Gross Domestic Product (GDP) with Gross National  Product (GNP).
4. What is the difference between Real GDP and Nominal GDP?  Which is a more useful measure to economists?
5. What shortcomings does GDP have as a macroeconomic measurement?

 

 

Vocabulary

You are responsible for all chapter vocabulary on page 128.

Taxing the Poor

Watch:  http://www.pbs.org/now/shows/415/video.html

What are some reasons Alabama instituted a grocery tax?

Provide one example of how poor families are impacted by the tax.

Some argue Alabama favors wealth companies at the expense of the poor.  Explain why this is according to the film.

Do you believe the grocery tax is fair or unfair?  Use specific examples to support your view.

If the grocery tax was eliminated, what type of tax ought to replace it in your opinion?  Explain your rationale.