Scribd
Upload
16 views3 pages

Unit 2 Study Guide

The document outlines key concepts in economics, including GDP measurement methods, types of unemployment, and the circular flow model. It discusses the limitations of GDP, the implications of inflation, and the differences between nominal and real GDP. Additionally, it addresses the effects of business cycles and the impact of inflation on different economic agents.

Uploaded by

Meltem Taskin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
16 views3 pages

Unit 2 Study Guide

The document outlines key concepts in economics, including GDP measurement methods, types of unemployment, and the circular flow model. It discusses the limitations of GDP, the implications of inflation, and the differences between nominal and real GDP. Additionally, it addresses the effects of business cycles and the impact of inflation on different economic agents.

Uploaded by

Meltem Taskin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

BIG PICTURE IDEAS

#1. Economists measure the health of the economy by looking at key economic indicators like gross domestic product (GDP), the
. rate, and the . price index, which measures inflation.
#2. The circular flow model shows how households, businesses, and the . interact.
#3. Gross domestic product (GDP) is the dollar value of all . goods and services produced within a country
in one ..
#4. There are three types of unemployment: frictional, . , and cyclical. The economy is at full employment when
there is no . unemployment.
#5. . GDP is adjusted for inflation and expressed in constant, or unchanging, dollars. .
GDP is not adjusted for inflation.

Topic 2.1- The Circular Flow and GDP


1. How does the expenditures approach measure GDP? 2. How does the income approach measure GDP?

GDP = .+ . + .+ . National Income = .+ . + .+ .


3. How does the value-added approach measure GDP?

4. Businesses sell goods and services to households in the . market and households sell resources to
. in the resource market.
5. Public goods and services are provided by the . and are funded by ..
6. Identify an example of each of the following:
Consumer Spending Investment Spending Government Spending Net Exports

Topic 2.2- Limitations of GDP


7. Identify three types of transactions that are not included in GDP. Give an example of each.

Identify if each statement is True or False.


8. Services are not counted in the calculation of GDP because 13. Transfer payments are not counted in the calculation of GDP.
nothing new was produced. 14. The equation for net exports is imports minus exports.
9. Intermediate goods are used in the production process to 15. New housing construction is considered investment and is counted
produce final goods. in GDP.
10. A new paint job on a used car is not counted in GDP. 16. Canada’s GDP includes goods produced in other countries by
11. Investment spending is spending on financial assets like stocks Canadian companies.
and bonds. 17. Inventories, goods that have been produced by a business but have
12. Subsidies to businesses are examples of transfer payments. not yet been sold, are counted in GDP as investment.
©Jacob Clifford 2023. UltimateReviewPacket.com- Annual license required. Do not share or post online. Page 1 of 3
Topic 2.3- Unemployment
18. For each example, identify if the person faces frictional, structural, or cyclical unemployment or if they are not counted in the labor force.
Frictional Structural Cyclical Not Counted
Avery loses her job because of a recession and decides to stop looking for work
Lindsey quits her part-time job at a restaurant to search for a full-time job
David lost his job at a toy factory due to a national slowdown in production
After graduating from college, James lacks the skills to fill any of the available jobs
Daniel retires from being a lawyer and volunteers at a local museum full time
Use the info in the chart to identify the following. Show your work. 25. Assume an economy saw an increase in discouraged workers.
Does the unemployment rate overstate or understate the actual
level of joblessness in the economy? Explain.

19. Number of workers in the labor force. 26. What happens to the unemployment rate when full-time workers
involuntarily become part-time workers? Explain.
20. Labor force participation rate.

21. What is the equation for calculating the unemployment rate?

27. What is the natural rate of unemployment (NRU)?


22. Calculate the unemployment rate.

23. Assume that 50 of the 80 unemployed workers also become


discouraged workers. Calculate the new unemployment rate. 28. Fully explain why “full employment” does not mean 0%
unemployment.
24. Why are discouraged workers not included in the unemployment
rate?

Topic 2.4- Price Indices and Inflation


29. Identify the equation for the CPI. 31. If the CPI for a given year is 200 then the change in prices between that
year and the base year is . %.
32. If the CPI for a given year is 90 then the change in prices between that
30. Fill in the chart. Start with 2020 as the base year then year and the base year is . %.
recalculate with 2021 as the base year. 33. Assume the value of a market basket for a given year is $220 and the same
basket in the base year is $200. Calculate the CPI.

34. Assume the CPI is 120 and the current value of the market basket is $600.
What is the dollar value of the same basket using base year prices?

35. Assume the CPI is 140 and the value of a market basket adjusted for
inflation is $200. What is the dollar value of the basket in current prices?

©Jacob Clifford 2023. UltimateReviewPacket.com- Annual license required. Do not share or post online. Page 2 of 3
Topic 2.4- Price Indices and Inflation (continued)
36. What is the difference between the CPI 38. The nominal GDP is $100 billion and the real GDP is $80 billion. Calculate the GDP deflator.
and the GDP Deflator?
39. The Real GDP is $100 billion and the GDP deflator is 200. Calculate the nominal GDP.

40. The real GDP is $200 billion and the GDP deflator is 120. Calculate the nominal GDP.

37. Identify the equation for the GDP deflator. 41. The nominal GDP is $300 billion and the GDP deflator is 150. Calculate the real GDP.

42. The nominal GDP is $100 billion and the GDP deflator is 125. Calculate the real GDP.

Topic 2.5- Costs of Inflation


43. Identify who is hurt and who is helped by unexpected inflation. Identify if the following are helped or hurt by unexpected inflation.
44. A tenant who pays $1850 for rent each month.
45. An elderly couple living off fixed income.

Topic 2.6- Real v. Nominal GDP


46. Nominal GDP is measured in current prices and does not account for . whereas .
GDP is expressed in constant, or unchanging, dollars.
True or False:
47. Real GDP must increase when the Nominal GDP increases.
48. Nominal GDP is always greater than the Real GDP.
Use the table with data for Country X to calculate the following for 2023. Show your work.
49. Real GDP. 50. Real GDP per capita.

51. Based solely on the data, has the average standard of living for a person living in country X increased or decreased? Explain.

Topic 2.7- Business Cycles


Use the letters on the graph to identify the following:
52. Peak 55. Trough
53. Potential GDP 56. Expansion
54. Recession (contraction)
Use the graph to identify if each statement is True or False.
57. At C the economy is at full employment.
58. When the economy is at point A there is only frictional unemployment.
59. When the economy is at point B there is only cyclical unemployment.
60. Unemployment decreases when the economy moves from E to D.
61. At C the economy has 0% unemployment.
©Jacob Clifford 2023. UltimateReviewPacket.com- Annual license required. Do not share or post online. Page 3 of 3

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy