1Explain the concept of nominal GDP
Nominal GDP measures a country's economic output without adjusting for inflation
2Explain the output approach to calculating GDP
It calculates GDP by summing the value of final outputs produced by the economy
3Whats the formula for calculating GDP
Quantity X Price = GDP Or Final Output X Price = GDP
4If Hotdogs are substitues for Hamburgers, what happens to the demand curve for hotdogs if the price of hamburgers increase?
The demand for hotdogs shifts right becuase they are a substitute for hamburgers and the cheaper option.
5How does an increase in national income affect unemployment?
When national income rises, unemployment goes down since most people are then being employed.
6Which is more directly related to National Income, GNP or GDP
GDP is more directly related beuase it accounts for all goods produced within the U.S.
7Define Aggregate Demand (AD)
The total demand for goods and services in an economy at a given overall price level
8What is National Income (NI)
The total amount of money available for a nation to spend, Influencing employment and wages
9What are the three methods of calculating GDP
Output approach, Income approach, Expenditure approach
10What is the significance of a trade deficit
A trade deficit indicates that a country imports more than it exports leading to net capital inflow
11Define Gross Domestic Product (GDP)
the total value of goods produced and services provided in a country during one year.
12What does a rightward shift in the production possiblity frontier (PPF) indicate
It indicates an increase in the economys productive capacity, often due to technological advancements
13What does the law of demand state?
states that price and quantity demanded are inversely related.
14What is a GDP deflator
a measure of the overall level of prices (new, domestically produced, final goods and services)
15What is Green Gross Domestic Product (GGDP)
An index that factors enviornmental consequenses into conventional GDP calculations
16What is opportunity cost?
the loss of potential gain from other alternatives when one alternative is chosen.
17What does it mean for National Income (NI) to be less than Aggregate Demand (AD)?
Indicates that there will be unplanned inventory investment, suggesting excessive demand
18What is the Foreign Purchases Effect?
How inflation affects exports and imports impacting aggregate demand based on price changes
19What is the expenditure approach of GDP calculation?
It sums consumption, investment, government spending, and net exports to determine GDP
20Define a normal good in economic terms
A normal good is one whose demand increases as consumer income rises
21What is the effect of a price ceiling on the market?
A price ceiling set below equilibrium creates a shortage in the market
22What is the intrest rate effect on Aggregate Demand?
Higher inflation leads to higher interest rates, which decrease borrowing and reduce aggregate demand
23What are the implications of fixed wages during inflation
Fixed wages during inflation can reduce workers standard of living as purchasing power declines.
24Define Gross National Product (GNP)
value of all final goods produced in your country (USA)
25What is Real GDP
GDP corrected for changes in prices from year to year, adjusted for inflation
26What does income approach to GDP calculation include
It includes rent, wages, interest, and profits as components of national income
27what is the relationship between Aggregate Supply (AS) and Real GDP
Aggregate Supply has a direct relationship with real GDP, Indicating production Capacity
28What is the Wealth Effect in Economics?
That when people feel wealthier, they tend to spend more increasing aggregate demand
29What does a decrease in the price of a good typically indicate
It often leads to a downward movement along the demand curve for that good
30What is Straight-Line Depreciation
Straight-line depreciation is a method where an asset loses value at a constant rate over its useful life.