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EC 202 Exam 1 Cheat Sheet

by: brownn44

EC 202 Exam 1 Cheat Sheet EC 202

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About this Document

This is a cheat sheet that is allowed to be used on the exam.
EC 202 Macroeconomics
Professor Obst
Study Guide
50 ?




Popular in EC 202 Macroeconomics

Popular in Economcs

This 2 page Study Guide was uploaded by brownn44 on Tuesday June 28, 2016. The Study Guide belongs to EC 202 at Michigan State University taught by Professor Obst in Summer 2016. Since its upload, it has received 8 views. For similar materials see EC 202 Macroeconomics in Economcs at Michigan State University.


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Date Created: 06/28/16
8) Suppose, in 2008, Ford pays $600 for four car tires and $1000 for a car entertainment center all produced new in 2008. In 2009, Ford pays $400 for a newly produced car windshield, $500 for newly produced mats, and and sells new cars made with all of these parts (from 2008 and 2009) for $41,600. Then all of these activities contribute _____ to 2009 GDP and the value added in 2009 by Ford is _____. A) $41,600; $40,500 B) $40,000; $37,500C) $41,600; $39,100D) $40,000; $39,100E) $42,500; $40,000 Inverse relationship between interest rates and prices Understated inflation hurts lenders, helps borrowers - Stock (equity) prices  when expected future dividends  Interest rates  And/or additional return required due to risk  - If Congress were to index minimum wage to inflation, then when there is inflation, minimum wage earners can expect constant real wages - stock variables: capital, wealth, foreign debts, loan, value of bond holding, expenditures and investments, opening stock, money supply, population, savings - flow variables: national income, investment, expenditure, saving, depreciation, interest, exports, change in…, lending, borrowing, rent, profit, consumption, gov’t surplus, bond interest payments, GDP, gov’t spending - fiscal policy: determine gov’ts budget (expenditures/revenues) and taxes -> deficit, surplus - structural policy: aimed at changing underlying structure - monetary policy: determination of nations money supply -> output, employment, interest rates, inflation, stock prices, controlled by The Fed (central bank) - if CPI overstates inflation, use of indexing nominal incomes = unintended increases in real incomes - for investment component problem with small economy: unsold+ business value added = output – cost of inputs


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