ECO 105 Study Guide for Exam #3: Economics Principles and Growth - Prof. Jeffrey Carlson, Study notes of Microeconomics

Download ECO 105 Study Guide for Exam #3: Economics Principles and Growth - Prof. Jeffrey Carlson and more Study notes Microeconomics in PDF only on Docsity! ECO 105 Study Guide for Exam #3 Chapter 10 1. Discuss the circular flow model and, in particular, how the model demonstrates the equality of income and expenditures at the aggregate level. 2. Define Gross Domestic Product (GDP) and be able to distinguish among items that are included in the calculation of GDP and those that are not. 3. What is the difference between final goods and intermediate goods? Why is this distinction important in the calculation of GDP? 4. List and discuss the various components of Gross Investment (I). 5. List and define the major components of GDP. Given the necessary information, be able to calculate GDP and NDP. 6. Explain the difference between real and nominal GDP. Given a choice between nominal GDP, Real GDP and Real GDP per capita (per person), which is considered the best measure of the standard of living in an economy? Why? 7. Explain what a price index, such as the GDP Deflator or the Consumer Price Index, is and what it is used for. Also, be able to calculate the inflation rate between two years given the appropriate information. 8. Given the necessary information, be able to calculate real GDP. 9. Explain why GDP is not necessarily a good measure of the level of social welfare or well being. Chapter 12 1. Be able to explain why the concept of economic growth is important, i.e., explain why so much emphasis is placed on growth by economic policy analysts and politicians. 2. Explain the relationship between productivity and growth. 3. List and describe each of the four determinants of productivity that we considered and explain how each one affects productivity. 4. Describe how public policy can affect economic growth, focusing on the following relationships: C savings and investment C investment from abroad C education C property rights and political stability C free trade C population growth C research and development