Arezoo Nazari

1
Macro Review Game

• Arezoo Nazari ClarkTrexler
• 2009
• Period 2

2
Battle of Economists
Rules are simple, any number of people can play,
but only two people can face off at a time. The
game will start with two random people facing
off. The person who answers the question
correctly remains, the other sits down, and the
next in line takes their place. If both get the
answer correct they both remain. Each question
answered correctly is worth one point. The
person with the most points at the end of the
game win.
3
What is the measure of the level of prices in the
current year relative to the level of prices in
the base year called?
4
GDP Deflator
5
What does the Bureau of Economic Analysis measure?
6
Domestic Output National Income
7
Give three example that would not count in the
GDP.
8
Public Transfer Payments -welfare -social
security -food stampsPrivate Transfer
Payments -allowance -money as gifts -tooth
fairySecond Hand Sales -used cars -garage
sales -Goodwill
9
What does GDP stand for and explain the
definition.
10
GROSS DOMESTIC PRODUCT
The total market value of all final goods and
services produced in a given year within the
given country.
11
What are two ways of approach towards GDP?
12
Expenditure Income Approach
13
What are the components that make up the
expenditure approach?
14
-Households (C)-Businesses (Ig)-Government
(G)-Net Exports (Xn)
15
Sally spends 2.00 for a hot dog.State what
this expenditure would count in or if it does not
count in the GDP.
16
Consumption
17
What is the GDP Deflator equation?
18
GDP Deflator
Nominal GDP
Real GDP
19
What are the components that make up the income
approach?
20
W R I P GDP
- Wages- Rent- Income- Profit
21
What type of unemployment is a person who is
temporarily between jobs?
22
Frictional Unemployment
23
Name the two types of interest rates and what
they do.
24
Real Interest Rates the removal of inflation to
get the real cost of the fund to the person who
borrows
nominal interest rates - anticipated inflation
Nominal Interest Rates interest rates that are
unadjusted for inflation
real interest rate anticipated inflation
25
What measures the changes in price of a market
basket over time?
26
Consumer
Price
Index
27
The Business CycleWhat does each letter stand
for?
A
D
F
B
C
E
G
28
Business Cycle Answers

• The peak

B. Expansionary
C. Long Run Trend
D. Contractionary
E. Trough
F. Real GDP
G. Periods of Time
29
If the economy is in a recession what changes
happen to the Phillips Curve?
30
A slide to the right on the Phillips Curve will
occur. Inflation decreases and unemployment
increases.
31
What is another term that means the change in
prices over time?
32
INFLATION
33
How are real GDP, nominal GDP, and inflation
related?
34
Real Nominal - Inflation
35
If inflation decreases, unemployment
______________.
36
If inflation decreases, unemployment _increases_.
37
What are the two worse things that could happen
to a business?
38
Inflation
Unemployment
39
What is REAL GDP?
40
The market value of all final goods and services
produced in the United States in a given year
ADJUSTED FOR INFLATION.
41
How do you figure out unemployment rate?
42
Unemployment Rate
Unemployed

Labor Force
43
Fred buys a 120,000 home that was built five
years ago.State what this expenditure would
count in or if it does not count in the GDP.
44
It does NOT count in the GDP.
45
Now what makes a economy unstable?
46
An economy that exhibits 1. Large
recessions 2. A pronounced business cycle 3.
Financial crisis 4. Fluctuating inflation 5.
High inflation
47
What does it mean when the GDP decreases for two
quarters?
48
There is a Recession.
49
The Business Cycle A Different Look
If total spending decreases
_____________
Total Spending

• _____________

_____________
Fill in the blanks
_____________
_____________
_____________
_____________
_____________
_____________
_____________
_____________
50
The Business Cycle
Total Spending
Total Spending
_____________
_____________
Output
_____________
Employment
Income
_____________
_____________
Income
Employment
_____________
_____________
Demand
Output
_____________
_____________
Quantity Demanded
Prices
_____________
_____________
What is impacted most Capital Durable Goods
What is impacted least Nondurable Goods
Services
51
What is the interest rate affect?
52
When price levels go up, the REAL quantity of
money goes down.
Now Why does this happen?
53
Because due to an increased price level people
NEED more money to upkeep their spending, thus
the demand for loans increases. In the loanable
funds market this results in a decrease in
supply. To return to equilibrium the interest
rate will go up decreasing the real GDP as
investment drops off.
54
The expansion of the country's money supply that
results from banks being able to lend is
_____________.
55
The MULTIPLIER EFFECT
56
GDP is a ___________ measure,avoids ___________
counting, andexcludes __________ transaction.
57
GDP is a _monetary_ measure,avoids _ double_
counting, andexcludes _ nonproductive_
transactions.
58
If you lack skills or have a poor education you
are _____________ unemployed.
59
Structurally Unemployed
60
What isNational Income?
61
National accounts are consistent ways of
measuring the economic function of nations. They
show production, income, and expenditures for
both the private and public markets and
sometimes stocks and bonds.The most common
measure of national accounts are the GDP of
nations.
62
What is the definition of economic growth?Hint
think the definition of economics.
63
Economic growth is any INCREASE in the number of
GOODS SERVICES produced by an individual
economy over a period of time. This can be
determined by GDP or REAL GDP.
64
What makes an economy considered economically
stable?
65
Economic stability refers to the an economy
having the following 1. A stable rate of
inflation 2. Low rate of inflation 3. A
constant growth in output
66
What is NOMINAL GDP?
67
The market value of all final goods and services
produced in the United States in a given year
expressed in that years dollar.
68
What does the Phillips Curve represent?
69
Inflation vs. Unemployment
70
Draw a Keynesian Consumption graph with
dissavings and savings labeled.
71
Keynesian Consumption
C DI
Consumption
C
Savings
Dissavings
Break Even
Disposable Income
72
Workers are laid off.Name the type of
unemployment.
73
Cyclical Unemployment
74
What causes an increase in consumption?
75
-Increase in Wealth-Increase in Future
Prices-Decrease in Real Interest Rates
76
As taxes decrease what happens to consumption and
savings?
77
Consumption Increases
Savings Increases
78
Draw a short run Phillips Curve.
79
Short Run Phillips Curve
Inflation
PC
Unemployment
80
What is the major economic goal?
81
Growth
82
Draw a long run Phillips Curve with demand pull
inflation.
83
Long Run Phillips Curve-Demand Pull Inflation
PCLR
Inflation
2
3
PC2
1
PC1
NRU
U2
Unemployment
84
Draw Keynesian Consumption and Savings Graphs
that show consumption has increased.
85
Keynesian Consumption
C DI
Consumption
C2
C1
Disposable Income
S1
Savings
S2
O
Break Even 2
Disposable Income
Break Even 1
86
GAME OVER
GAME OVER
GAME OVER
GAME OVER
GAME OVER
GAME OVER