ECON 1BB3 Lecture : Economics – January 22-31st Lecture Notes.docx

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ochrealligator278

12 Sep 2013

School

McMaster University

Department

Economics

Course

ECON 1BB3

Professor

Bridget O' Shaughnessy

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ECON 1BB3 Full Course Notes

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According to statistics canada: yes if you are in a restaurant, no if you are at home. Gross domestic product (gdp): market value of all final good and services produced in a country in a given period of time. Stock: measured at a given point in time. Gdp is a measure of how much stuff we make. Final: only include final goods and services, only count when we sell product not the things used to make product (to avoid double counting) In a given period of time: count all the new final goods and services produced in that year, ex. Do not count if bought a used car (produced in an earlier year) Three ways to calculate gdp: output (basic prices, expenditure (market prices, income (market prices) The difference between gdp at market prices and gdp at basic price is basic prices do not include sales tax whereas market prices do.

Related Questions

An improvement in technology causes the production possibilities frontier (PPF) to

	shift to the right.
	pivot upward.
	shift to the left.
	pivot downward.

(7)

Which of the following is not shown by the circular flow model?

	The flow of resources in one direction and money in the other
	The equality of aggregate spending and aggregate income
	The interaction of households, firms, and the government
	The total amount of goods and services the economy can produce

(8)

Gross domestic product (GDP) is defined as

	the market value of all final goods and services produced in an economy in a given period of time.
	the market value of all consumption goods and services produced in an economy in a given period of time.
	the market value of all investment goods and services produced in an economy in a given period of time.
	the real value of all investment goods and services produced in an economy in a given period of time.

(9)

Real GDP

	includes all domestic and foreign transactions.
	includes the dollar value of domestic transactions only.
	tries to isolate the effect of changing output, holding prices constant.
	measures GDP in terms of prices of goods and services produced.

(10)

When economists talk about economic growth, they are usually referring to

	the percentage change in nominal GDP.
	the percentage change in real GDP.
	the percentage change in nominal investment.
	the percentage change in real investment.

chocolateant769

Why should we be glad when GDP goes up?

GDP and employment are not necessarily related. In fact, recently, we have had things called "jobless recoveries" where GDP goes up but employment does not.

The reason this can happen is that GDP is the value of all final goods and services produced in a country in a given period. If GDP goes up, the value of these things has gone up. But that can happen without more jobs being created.

For example, imagine an economy that has very little in the way of machines. If more machines are invented, GDP will go up as things can be produced more quickly. At the same time, employment may well go down because people will be thrown out of work by the machines.

So -- it's defined as economic growth because the economy is making more things (in dollar value). But that does not have to mean that employment goes up.

greylocust179

1. Gross Domestic Product equals the :
total output of all goods and services produced by resourceslocated in the U.S.
market value of all goods and services produced by resourceslocated in the U.S.
market value of all final goods and services produced by resourceslocated in the U.S.
value added to the economy by intermediate goods and services minusoriginal cost

2. Which of the following is not considered a component ofinvestment when calculating GDP?
new residential construction
construction of new factories
net increases in inventory
purchases of corporate stock

3. Which is true of leakages and injections in the circularflow?
Leakages minus injections equal GDP.
Injections minus leakages equal GDP.
Leakages minus injections equal zero in equilibrium.
Domestic leakages must equal domestic injections.

4. Because of activity in the underground economy,
GDP statistics understate the true volume of economicactivity
GDP statistics overstate the true prices in the economy
consumers are not as well off as GDP statistics indicate
firms' profits are higher than GDP statistics indicate

5. The consumer price index measures changes in
the prices of all goods and services
the prices of goods that are sold
the total cost of a specific market basket of consumer goods andservices
the total costs of all goods and services

6. The unemployment rate is the
percentage of people in the economy who do not hold jobs
percentage of the labor force that does not have a job
number of people in the economy who have given up looking foremployment
number of people in the labor force without jobs

7. Which of the following people would be classified asunemployed?
a person who wants a job as a fashion model but cannot find work inthat field
someone who quits a part-time job to attend school full-time
someone who gives up looking for a job
a person who works at a job that underemploys his or herskills

8. Frictional unemployment refers to unemployment that resultsfrom
a mismatch of skills
being in the wrong geographical location
taking the time to find the best job
seasonal decreases in demand for labor

9. If the aggregate demand curve shifts rightward,
the price level increases and output decreases
the resulting increase in the price level is usually calledcost-push inflation
the resulting increase in the price level is usually calleddemand-pull inflation
the price level increases only if there is also a leftward shift ofthe aggregate supply curve

10. The Consumer Price Index measures the cost of
all goods and services produced in the U.S. economy
all goods produced in the U.S. economy
a fixed market basket of consumer goods and services produced inthe U.S. economy
a fixed market basket of producer goods and services

ECON 1BB3 Lecture : Economics – January 22-31st Lecture Notes.docx

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