Eco 155 test 2

calculating real GDP with a base year

"use 2010 as yiur base year real Gdp in 2011 was...." you would multiply the base year price by the current year quantity

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

$250 to GDP.

(Figure: Circular-Flow Model) If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of that box), which of the following is likely to happen if there is a decrease in consumer spending?

C) an increase in the unemployment rate

Suppose that nominal GDP is $1,000 in 2009 and nominal GDP is $1,500 in 2010. If the overall price level ____ between 2009 and 2010, we could say that real GDP _____

C) increased by more than 50%; increased.

GDP =

Consumption + Investment + Government Spending + Net Exports

intermediate goods

Goods used in the production of final goods (not included in GDP)

how to calculate GDP deflator

Nominal GDP/Real GDP x 100

Nominal GDP

has not been adjusted for changes in prices over time.

How to find nominal GDP

multiply current year price and quantity

If the price level in the economy and the nominal wages both doubled, then real wages would

remain unchanges\d