Question 1

Why do economists measure growth in an economy using real GDP rather than nominal GDP?

Accepted Answer

Nominal GDP measures the final dollar value of all goods and services produced in an economy in a year.This measurement is made using current dollars.Growth in nominal GDP can occur for three reasons: (1) more goods and services are produced, (2) goods and services have higher prices, and (3) there is an increase in both goods and services produced and their associated prices.Real GDP is measured in constant dollars, so an increase in real GDP simply measures an increase in the production of goods and services.

Question 2

What are two broad categories of macroeconomic shocks?

Accepted Answer

In macroeconomics, shocks are categorized as either demand shocks or supply shocks.Demand shocks are unexpected changes in the demand for goods and services while supply shocks are unexpected changes in the supply of goods and services (usually due to input price changes).

Question 3

Define macroeconomics and provide two key concerns it studies.

Accepted Answer

Macroeconomics studies the behaviour of an economy as a whole.It focuses its studies upon two key concerns: (1) long-run economic growth, and (2) short-run fluctuations in output and employment (the business cycle).

Question 4

Describe and discuss the two explanations of the Great Recession?

Accepted Answer

The answer of Describe and discuss the two explanations of...

Question 5

What is the difference between financial investment and economic investment?

Accepted Answer

Financial investment involves the purcha

Question 6

List two concerns with inflation.

Accepted Answer

First, if the rate of inflation exceeds

Question 7

What is the Great Recession? Describe its causes and also its impact on the Canadian Economy.

Accepted Answer

In late 2008 and 2009, Canada and many o

Question 8

If households are typically the source of savings and businesses the source of investments, how then are savings and investments coordinated?

Accepted Answer

Banks and other financial inst

Question 9

What will happen to prices and output levels if there is an unexpected demand increase and prices are fully flexible?

Accepted Answer

In this instance, output is fi

Question 10

In this list, identify those investments which are financial (F) and those that are economic (E): Canada Savings Bonds, stock in Potash Corporation of Saskatchewan, an old house you plan on fixing and reselling, new machinery for a factory you own, land that you plan to develop, an old window factory, your university education.

Accepted Answer

Canada Savings Bonds (F), stock in Potas

Question 11

Suppose that we are in a condition of "stuck" prices so that the price of nails will not go above or below $2/kg.Further suppose that nail factories have been built on a business plan designed to deliver 6,000 kg/week.How many nails will be sold in a market in which demand (which includes a modest amount of inventory) is characterized by: (a) P = 5 - 0.5Q, (b) P = 6 - 0.5Q, and (c) P = 4 - 0.5Q, where P is in $/kg and Q is in thousands of kg/week? In each case, what happens to inventory.

Accepted Answer

(a) At $2/kg we get 2 = 5 - 0.5Q, -3 = -

Question 12

Why do economists use the term "sticky" prices rather than "stuck" prices?

Accepted Answer

Prices do eventually adjust, so they are

Question 13

What roles do expectations play in macroeconomics?

Accepted Answer

There are two channels through which eco

Question 14

What is GDP per capita?

Accepted Answer

It is GDP divided by

Question 15

In order to grow, what must a country do?

Accepted Answer

Economic growth requires that

Question 16

What are inventories and what role do they play in an economy with sticky prices?

Accepted Answer

Inventories are goods that have been pro

Question 17

In order to compare GDP across nations, economists typically make 3 adjustments.What are these adjustments and why are they carried out?

Accepted Answer

First, currencies are converted to a com

Question 18

What is the difference between nominal and real GDP?

Accepted Answer

The GDP measures all final goods and ser

Question 19

Suppose that we are in a condition of fully flexible prices, but production of nails will not go above 200 chairs/month.What price will chairs sell for if market demand is characterized by: (a) P = 425 - 1.5Q, (b) P = 530 - 1.5Q, and (c) P = 400 - 0.5Q, where P is in $/chair and Q is in chairs/month?

Accepted Answer

(a) P = 425 - 1.5(200), P = 42

Question 20

Describe and discuss two economic solutions to solve the Great Recession.

Accepted Answer

The Stimulus Solution The majority of ec

Exam 6: A: an Introduction to Macroeconomics

Why do economists measure growth in an economy using real GDP rather than nominal GDP?

What are two broad categories of macroeconomic shocks?

Define macroeconomics and provide two key concerns it studies.

Describe and discuss the two explanations of the Great Recession?

What is the difference between financial investment and economic investment?

List two concerns with inflation.

What is the Great Recession? Describe its causes and also its impact on the Canadian Economy.

If households are typically the source of savings and businesses the source of investments, how then are savings and investments coordinated?

What will happen to prices and output levels if there is an unexpected demand increase and prices are fully flexible?

Why do economists use the term "sticky" prices rather than "stuck" prices?

What roles do expectations play in macroeconomics?

What is GDP per capita?

In order to grow, what must a country do?

What are inventories and what role do they play in an economy with sticky prices?

In order to compare GDP across nations, economists typically make 3 adjustments.What are these adjustments and why are they carried out?

What is the difference between nominal and real GDP?

Describe and discuss two economic solutions to solve the Great Recession.

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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