Econ 101 Test 2
A drop in the inflation rate is called
Disinflation
The total income households have after paying taxes and receiving government transfers is called:
Disposable income
Physical capital is purchased through investment spending, which in turn is mostly financed out of:
Domestic and foreign savings
he demand for loanable funds is _____________ sloping because ___________ respond to lower interest rates by ______________ their quantity demanded of loanable funds
Downward; investors; increasing
When interest rates increase, the demand for commercial and residential real estate will __________ and the price of real estate will ___________
decrease, decrease
Nation A's real GDP increased from $100 billion to $106 billion between 2010 and 2011. Nation A's population grew from 50 million to 51 million between 2010 and 2011. As a result:
real GDP per capita increased because the real GDP increased at a faster rate than the population.
Rawlings builds a new plant to make catcher's mitts.
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Rhonda Moviestar spends $10 million to buy a mansion built in the 1970s.
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Ronald Basketballstar spends $10 million to build a new mansion with a view of the Pacific Ocean.
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Rupert Moneybucks buys 100 shares of existing Coca-Cola stock.
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Russia buys $100 million in U.S. government bonds.
...
Suppose a panel of economists predicts that a nation's real GDP per capita will double in approximately 20 years. Based upon the rule of 70, what must be the predicted annual growth rate of real GDP per capita?
3.5%
If real GDP grows at an annual rate of 1%, it will double in approximately
70
Which of the following factors does NOT necessarily have to exist for convergence to occur between two countries? A. Equal access to education B. Equal access to infrastructure C. A common language between the two countries D. Similar policies and institutions
A common language between the two countries
Deflation
A falling aggregate price level
Labor productivity growth can be attributed to
A improvement in technological process
Inflation
A rising aggregate price level
Inflation is
A rising aggregate price level
which of the following is considered to be investing in a physical asset? A. purchasing shares of stock in IBM B. selling shares of stock in IBM C. buying a bond issues by IBM D. buying a new factory that produces IBM handled devices
D. buying a new factory that produces IBM handled devices
If interest rates on bonds rise, holding other things constant, stock prices will
DECREASE a
Mircoeconomics
Focuses on how decisions are made by individuals and firms are and the consequences of those decisions
In a closed economy, investment spending, I, must, equal:
GPD-C-G
All of the following create structural unemployment EXCEPT: A. a government-mandated price ceiling on the price of labor set above the equilibrium wage. B. granting Social Security benefits to laid-off workers. C. collective bargaining efforts that secure higher wages for unionized workers than for nonunionized workers. D. offering high wages in order to attract high-quality workers.
Granting social security benefits to laid-off workers
In a closed economy, the savings-investment spending identity is:
I = GDP - C - G
The term human capital describes
Improvement in a worker's skills made possible by eduction, training and knowledge
Increases in unemployment compensation does what?
Increases unemployment
Periods of recessions are limey to be marked by
Rising unemployment
Which is not part of GPD?A. A new truck purchased by a building contractor B. Telephone service purchased for a home C. New residential construction D. Used car sales
Used car sales
Paradox of thrift
When families and businesses are worried about the possibility of economic hard times, they prepare by cutting their spending
Which of the following is not a stock market index? A. the Dow Jones Industrial Average B. the producer price index C. the S&P 500 D. the Nasdaq
The producer price index
Trade surplus
When goods bought from foreigners is less then the value of goods it sells to them
Trade deflect
Whent he value of goods brought from foreigners is more than the value of goods sold to them
Fromt the standpoint of economic growth, banks are important to
channel savings into investment
The labor force is
The total of people employed and unemployed
GDP is
Total market value of all final goods and services produced in on year
16. A person without a job who is actively seeking and available for work is considered
Unemployed
A Financial asset
a claim that entitles the owner to future income from the seller
Providing linkage between savers and investors is an important aspect of
a well functioning financial system
investment spending refers to
adding to physical capital
Diminishing returns to physical capital means that as more and more physical capital is combined with a fixed amount of human capital and a fixed technology, eventually
additions to aggregate output or real GDP decline
Workers are more productive than in the past because workers today
are better educated and so have more human capital
Marcoeconomics
examines the aggregate behavior of the economy( how the actions of all the individuals and firms in the economy interact tot produce a particular level of economic performance as a whole
A negative externality
is a cat that individuals or firms impose on others with out having to offer compensation
Long-run economic growth
sustained upward trend int he economy output over time
If there is an increase in the government budget deficit
the demand for loanable funds will increase, interest rates will increase, and the amount of borrowing will increase
Price stability
when the aggregate price level is changing only slowly