ECON 110, EXAM 2 QUESTIONS WITH
CORRECT ANSWERS 2026/2027
GDP - CORRECT ANSWER -measures the total income of everyone in the economy
GDP is the market value of all - CORRECT ANSWER -final goods and services produced within a
country in a given period of time
GDP does or doesn't count goods twice? - CORRECT ANSWER -Doesn't
GDP formula - CORRECT ANSWER -Y=C+I+G+NX(exports-imports)
Investment relative to GDP - CORRECT ANSWER -buying something today to do something more
efficiently in the future
Real GDP is not affected by - CORRECT ANSWER -changes in prices, the constant prices are those
observed in a designated base year
Nominal GDP - CORRECT ANSWER -production on goods and services valued at current prices
GDP deflator formula - CORRECT ANSWER -Nominal GDP/ Real GDP x100
Inflation definition - CORRECT ANSWER -overall rise in economy's price level
Inflation formula - CORRECT ANSWER -GDP deflator in yr1-GDP deflator in yr2/ GDP deflator in
yr1 x100
, What is the best measure of economic well being? - CORRECT ANSWER -GDP
Is larger GDP good or bad? - CORRECT ANSWER -Good, it implies good life, better healthcare,
better educational systems
What does GDP not include? - CORRECT ANSWER -Leisure
CPI measures - CORRECT ANSWER -overall level of prices, overall cost of goods and services
bought by a typical consumer
Inflation rate is - CORRECT ANSWER -the percentage change in a price index from past period
PPI, producer price index is the - CORRECT ANSWER -measure of the cost of goods and services
bought by firms
How do you calculate CPI? - CORRECT ANSWER -price of goods and services in current year
divided by the price of basket in base year times 100
Inflation rate formula - CORRECT ANSWER -CPI yr2- CPI yr1/ CPI yr1 x100
Indexation is - CORRECT ANSWER -dollar figures from different times
Indexation formula - CORRECT ANSWER -amount in yr t dollars x price level today/ price level in
yr t
Real interest rate= - CORRECT ANSWER -nominal interest rate-inflation rate (can be negative)
CORRECT ANSWERS 2026/2027
GDP - CORRECT ANSWER -measures the total income of everyone in the economy
GDP is the market value of all - CORRECT ANSWER -final goods and services produced within a
country in a given period of time
GDP does or doesn't count goods twice? - CORRECT ANSWER -Doesn't
GDP formula - CORRECT ANSWER -Y=C+I+G+NX(exports-imports)
Investment relative to GDP - CORRECT ANSWER -buying something today to do something more
efficiently in the future
Real GDP is not affected by - CORRECT ANSWER -changes in prices, the constant prices are those
observed in a designated base year
Nominal GDP - CORRECT ANSWER -production on goods and services valued at current prices
GDP deflator formula - CORRECT ANSWER -Nominal GDP/ Real GDP x100
Inflation definition - CORRECT ANSWER -overall rise in economy's price level
Inflation formula - CORRECT ANSWER -GDP deflator in yr1-GDP deflator in yr2/ GDP deflator in
yr1 x100
, What is the best measure of economic well being? - CORRECT ANSWER -GDP
Is larger GDP good or bad? - CORRECT ANSWER -Good, it implies good life, better healthcare,
better educational systems
What does GDP not include? - CORRECT ANSWER -Leisure
CPI measures - CORRECT ANSWER -overall level of prices, overall cost of goods and services
bought by a typical consumer
Inflation rate is - CORRECT ANSWER -the percentage change in a price index from past period
PPI, producer price index is the - CORRECT ANSWER -measure of the cost of goods and services
bought by firms
How do you calculate CPI? - CORRECT ANSWER -price of goods and services in current year
divided by the price of basket in base year times 100
Inflation rate formula - CORRECT ANSWER -CPI yr2- CPI yr1/ CPI yr1 x100
Indexation is - CORRECT ANSWER -dollar figures from different times
Indexation formula - CORRECT ANSWER -amount in yr t dollars x price level today/ price level in
yr t
Real interest rate= - CORRECT ANSWER -nominal interest rate-inflation rate (can be negative)
