EC233 Lecture Notes - Lecture 2: Deposit Insurance, Friendly Society, Foreign Exchange Market

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6 Dec 2020

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Defining aggregate output, income price level, and inflation. The most commonly reported measure of aggregate output is gdp. Gdp market value of final goods and services produced in a country. Aggregate income total income of factors of production from producing goods and services in the economy during the course of the year, is equal to aggregate output. When the total value of final goods and services is calculates, the resulting gdp measure is referred to as nominal gdp. Foreign exchange market foreign exchange market is where funds are converted from one crrency to another foreign exchange rate is the price of one currency in terms of. Inflation rate is its percentage increase three measures: Direct finance borrowers borrow funds directly from lenders in the financial markets by selling them securities. Promotes economic efficiency by producing an efficient allocation of capital, which increases production. Directly improve the well-being of consumers by allowing them to schedule purchases better.

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.

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True or False Questions:

1. Recessionary Expenditure Gap- Aggregate expenditures by which aggregate expenditures at the full employment GDP falls short of those required to achieve full employment GDP.

2. Private Closed Economy- An economy that includes consumer, business, and government segments of the economy.

3. Lump-sum taxes- A tax of a constant amount so the government obtains the same amount of tax at each level of GDP.

4. Aggregate Supply schedule- A relationship between a nation's price level and the amount of real domestic output that is produced.

5. Real Rate of Interest effect- The Nominal Rate of Interest earned on a project.

6. Savings- savings are planned investments by the consumer.

7. Wealth effect- The dollar amount of all the assets owned minus the dollar amount of all the liabilities or debt.

8. Savings Schedule - GDP less investment = savings

9. Aggregate Demand Schedule- a schedule that shows the amount of a nation's output (real GDP) that buyers desire to purchase at each price level.

10. Productivity- The measure of the level of the nation of real output and the amount of resources used to produce the output, less labor cost.

11. Multiplier effect- Measures the change in GDP to spending.

12. Injection- Investment by private business into the economy for capital goods is and injection into the economy.

13. Consumption schedule- The measurement of Disposable income less savings.

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Macroeconomics

Answer

Which one of the following will be an automatic stabilizer

A. Board of Governors and the 12 Federal Reserve Banks

GDP is the market value of

B. Structural

A decrease in government spending will cause

C. Real GDP is adjusted for changes in the price level.

An increase in aggregate demand is most likely to be caused by a decrease in

D. Price of one nation's currency in terms of another nation's currency

Which is one of the three types of unemployment

E. Two countries are comparatively able in producing what they need, however choices to engage in international trade

The Federal Reserve System consist of how many members and how many locations

F. People receive loans from their banks.

Foreign exchange rates refer to the

G. Real GDP.

Money is "created" when

H. Discount Rate

Fiscal policy is enacted through changes in

I. Private investment is crowded out by public spending

The tools of monetary policy for altering the reserves of commercial banks are the

J. All final goods and services produced in an economy in a given year.

The Federal funds rate is the rate that banks pay for loans from?

K. The tax rates on household income.

What is meant by the crowding out effect

L. Decrease in aggregate demand.

The goal of expansionary fiscal policy is to increase

M. Unemployment insurance

Nominal GDP differs from real GDP because

N. Discount rate, reserve ratio, open market operations, and term auction

What is meant by comparative advantage

O. Taxation and government spending.

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EC233 Lecture Notes - Lecture 2: Deposit Insurance, Friendly Society, Foreign Exchange Market

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