Econ chapter 4

The standard of living in an economy is best measured by:

output per person.

Among economists today, the most widely accepted cause of the Great Depression is:

poor economic policymaking.

A nation's central bank:

controls the nation's monetary policy

Fiscal policy refers to:

decisions to determine the government's budget.

Aggregation allows economists to ______ at the cost of ________

see the big picture; obscuring the details

A government decision to privatize a sector of the economy formerly operated by the government is an example of _____ policy.

structural

In Econland exports equal 15 percent of total output, while imports equal 20 percent of total output. Econland has a:

trade deficit.

The fraction of people who would like to be employed, but can't find work is called the:

unemployment rate.

The three types of macroeconomic policy and define

1. Monetary policy: the determination of the nation's money supply 2. Fiscal policy: decisions that determine the government's budget, including the amount and composition of government expenditures and revenues. 3. Structural policy: policies that aim at changing the underlying structure, or institutions, of the nation's economy

Inflation was a major problem in the United States during the:

1970s.

The unemployment rate in the United States at the peak of the Great Depression was _____ percent.

25

Define economic growth. Why has the U.S. output grown rapidly over the last century?

Economic Growth- a process of steady increases in the quantity and quality of the goods and services the economy can produce. output has grown rapidly because The Baby Boom became of age to join the labor force, women joined the labor force. Technology made great advancements.

The relationship between economic growth and living standard;

Economic growth is a process of steady increases in the quantity and quality of the goods and services the economy can produce. Standard of living is the degree to which people have access to goods and services that make their lives easier, healthier, safer, and more enjoyable.

Examples of macroeconomic issues;

Economic growth, Productivity, Recessions and expansions, Unemployment, Inflation, Economic interdependence among nations

What are the three types of economic policies? Give examples for each type

Fiscal,Monetary, and Structural 1. Monetary policy: the determination of the nation's money supply. 2. Fiscal policy: decisions that determine the government's budget, including the amount and composition of government expenditures and revenues 3. Structural policy: policies that aims at changing the underlying structure, or institutions, of the nation's economy.

Major macroeconomic questions include all of the following EXCEPT 1. What causes slowdowns in productivity growth? 2. Can inflation be reduced without generating additional unemployment? 3. How do monopoly firms set prices and determine quantities to produce? 4.Are free trade agreements beneficial?

How do monopoly firms set prices and determine quantities to produce?

A government is running a budget deficit if:

government revenue is less than government spending.

After increasing at more than 2 percent per year between 1950 and 1973, the growth rate of average labor productivity _____ between 1973 and 1995, and ____ between 1996 to 2007.

slowed; picked up

The country of Northland produced $1,000 billion of output in one year. The population of Northland was 50 million, of whom 30 million were employed. What was average labor productivity in Northland?

$33,333 Total output/number of persons employed

Define Macroeconomics

: the study of the performance of the national economy as well as the policies used to improve that performance.

The use and problem with aggregation.

Aggregation is the adding up of individual economic variables to obtain economy wide totals. Aggregation allows us to see the big picture, but it can also obscure the details of an economic situation.

Define macroeconomics. Give examples of major macro issues.

Macro- the study of the performance of the national economy as well as the policies used to improve that performance. Example of macro issue- Economic growth, Productivity, Recessions and expansions, Unemployment, Inflation, Economic interdependence among nations

positive vs normative analysis

Positive: addresses the economic consequences of a particular event or policy. Normative: addresses the question of whether a policy should be used.

Which of the following would be considered an example of monetary policy

Provision of additional cash to the banking system.

Which of the following would be studied by macroeconomists? 1.The effect of government subsidies on sugar prices 2.The impact of the minimum wage on families below the poverty level 3.Inflation in developing countries 4.The effect of rent controls on housing prices in New York City

The effect of government subsidies on sugar prices

A particularly strong expansion is called a(n):

boom.

The causes of growth;

population growth, labor force participation growth, productivity growth

"U.S. exports will increase as a result of joined CAFTA," is an example of a ______ statement, while "The U.S. should join CAFTA," is an example of a _____ statement.

positive; normative