NCSU EC 202 EXAM 1 REVIEW QUESTIONS WITH 100% CORRECT ANSWERS

Positive Externalities


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"Spill-over benefits"




Deficit


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Government spending falls short of tax revenue: government must
borrow or print the difference.




Externalities

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Uncompensated benefits (or costs) granted by one party to (or
inflicted upon) another. There are positive and negative externalities.




Real GDP


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GDP controlled for inflation of prices. Uses prices of a base year to
calculate GDP adjusted for inflation.
RGDP = P(NBY) x Q(Nt)
The sum for the product of the prices of goods in then base year and
the quantity of those goods produced in year "t"




GDP Deflator


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(Nominal GDP/ Real GDP) x 100




Nominal GDP


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