Econ chapter 7 and 8

200 billion... remained the same and increased by 10

190

about ____ of US econ growth comes from improved productivity

2/3

setup corp

200000

200 billion... remained the same and fell by 10

210

6.5 and 3.5

3

suppose nominal annual interest rate on a 2 year loan is 16 percent and lender expect inflation to be 10

3

40 and 70

30

80 and 240 billion

300

pre capita GDP was about ______ in year 3 in zorn

303

between years 1 and 2 real GDP pre capita grew by ___ in Alta

4

if econ real GDP doubles in 18 years we can conclude that its average annual rate of growth is about ____ %

4

if nominal interest is 12% and real interest rate is 8 then inflation premium is

4%

if the unemployed rate is 9 % and the natural rate of unempl is 5% then the cyclical unempl rate is ___

4%

full empl unempl rate means an umemply rate is about ____ %

4-5

100 and 260

44%

between years 1 and 2 real GDP grew by ___ in Alta

5

500 and 450 billion

500 billion

assume the natural rate of unemply in US is 5% and the actual rate of unemply is 9%. okuns laws is ___ %

8; multiply cyclical unemply by 2

100, 50, and 47 million

94%

assume that the size of underground econ increases both absolutely and relatively over time

gdp will tend to increasingly understate the level of output through time

final goods and services refer to

goods and services purchased by ultimate users, rather than for resale or further processing

govt purchases include govt spending on

govt consumption goods and public capital goods

GDP differes from NDP in that

gross investment is used in calc GDP and net investment is used in NDP

real GDP and nom gdp differ bc real GDP

has been adjusted for changes in price level

suppose smith pays $100 to jones

we need more information to determine whether GDP has changed

an economy is enlarging its stock of capital goods

when gross inv exceeds replacement investment

in determining real GDP, nom. GDP for (chart)

years 1 and 2 inflated

280 and 160; price index

175

ZZZ corp

18

if consumer price index falls from 120 to 116

-3.33

if both real interest rate and nom interst rate is 3, inflation premium is

0

5% and 125 to 130

1

if consumer price index rises from 300 to 333

11%

if a nations real GDP is growing by 5 percent per year, its real GDP will double in app. _____ years

14

10000 and 20000

15%

the labor force includes employed workers and person who are ____

16 and older

net exports are negative when

a nations imports exceed its exports

positive net in is occuring in

C

other things equal... production capacity in econ is

C is growing rapidly

minus 6 billion

C; used up more capital goods than produced

if net foreign factor income earned in US is zero, the sum of national income, indirect business taxes, and the consumption of fixed capital equals

GDP

which of the following is the largest $ in US

GDP

real GDP refers to

GDP data that have been adjusted for changes in price level

price index

a comparison of price of market basket from a fixed point of reference

nominal GDP is adjusted for price changes through use of

GDP price index

real GDP pre capita is found by

GDPr divided by population

the total income earned in any year by US resource suppliers is measured by

NI

transfer payments are included in

PI

40 and 50 billion

add 10 billion

in the treatment of US exports and imports national income accountants

add exports, but subtract imports, in calc. GDP

cyclical unemply results from a deficiency of ____

aggregate spending

a price index can rise from one year to next even though

all of above occur

GDP data criticized as being inaccurate measures of econ welfare

all of the above

by summing values added at each stage in production of some good

all of the above

national income accountants define investment to include

any increase in business inventories

recurring upswings and downswings in econ real GDP over time are called

business cycles

US econ is considered to be at its ____ when 95 of labor force is emplyed

full employment

350 and 375

cannot make a meaningful comparison of the econ performance in 2002 relative to 2003

in an econ experiencing persistent deflation

changes in nominal GDP understate changes in real GDP

the largest component of national income

compensation of employees

in national income accounting, consumption expenditures include

consumer durable goods, consumer nondurable goods, and services

the largest component in US is

consumption

inflation may be caused by a negative supply stock

cost push

inflation initiated by increases in wages or other resource prices is

cost push inflation

real GDP measures

current output at base year prices

a large GDP gap implies a high rate of ____ unemply

cyclical

the type of unemply associated with recessions is called ____

cyclical unemply

inflation occurs when total spending exceeds the econ ability to provide output at existing price level

demand pull

a nations stock of capital goods will decline when

deprecation exceeds gross

which of the following is the smallest $ in US

disposable income

when an economys production capacity is expanding

domestic investment exceeds deprec.

personal income is most likely to exceed national income

during a period of recession or depression

transfer payments are

excluded when calculating GDP because dont reflect current production

econ characterized by above data

experiencing declining production capacity bc net inv is negative

net exports are

exports less imports

GDP includes

final, but not intermediate goods

a nations gross domestic product can be calculated by

finding the sum of C + Ig + G +Xn

a college grad using the summer following grad to search for a job would be classified as part of ____ unempl

frictional

during a period of _______ people tend to hold goods rather than money

hyperinflation

as defined in national income accounting, investment includes

imports, but not exports

GDP measures and reports output

in dollar amounts

GDP price index

includes all goods comprising the nations domestic output

which of the following best defines disposable income

income received by households less personal taxes

econ growth is best defined

increase in either GDPr or an increase in GDPr pre capita

360 and 450 billion

increased by 60 billion

120 and 65 billion

increased by 65

972 and 90

inflated to 1080 billion

"too much money chasing too few goods"

inflation premium or demand pool

relationship between the size of cyclical unemply and business cycle is

inverse

trailblazer

investment in 2003 and dis in 2004

A nations gross domestic product

is the dollar value of the total output produced within the borders of a nation

growth is advantageous to a nation because it

lessens the burden of scarcity

to be officially umemployed a person must be ____

looking for a job

The GDP is the

monetary value of all final goods and services produced within a nation in a particular year

the total amount of income earned by US resourced suppliers in a year is measured by

national income

the smallest component of aggregate spending in the US is

net exports

if depreication (consumption) exceeds domest. we can conclude that

net investment is negative

gross investment refers to

net investment plus replacement investment

for the years shown above, the growth of

nom gdp overstates increase in real output

if real GDP rises and GDP price index has increased

nominal GDP must have increased

if real GDP falls from one period to another

none of the above

in calculating GDP, govt transfer payments, such as social security are

not counted

By summing the dollar value of all market transactions in the econ we would

obtain a sum substantially larger than the GDP

national income accountants can avoid multiple counting by

only counting final goods

the natural rate of unemployment is that rate of unemployment occurring when the econ is at its ____ output

potential

the GDP gap measures amount by which ____ exceeds _____

potential GDP; actual GDP

inflation means

prices in aggregate are rising, although some particular prices may be falling

Tom Atoe grows tomatoes for home consumption.. this activity is

productive but is excluded from GDP because no market transaction occurs

in national income accounting, govt purchases include

purchases by feder, local, and state

the growth of GDP understate changes in econ well being over time if

quality of products and services improve

if nominal gdp rises

real gdp may either rise or fall

the phase of the business cycle in which real GDP declines is called a

recession

defines okuns law

shows the relationship between unemply rate and size of negative GDP gap

unemply involving a mismatch of skills of unemply workers and skills required available for job is ____

structrual

80 and 70 billion

subtract 10

the value of US imports

subtracted from exports when GDP because imports do no constitute productino in US

value added can be determined by

subtracting the purchase of intermediate products from value of sales of final products

the fact that nom gdp has risen faster than real gdp

suggests that general price level risen

if intermediate goods and services were included in GDP

the GDP would be overstated

value added refers to

the diff between the value of a firms output and value of inputs it has purchased from others

if depreciation exceeds gross investment

the econ stock of capital shrinks

historically real GDP has increased less rapidly than nominal GDP

the general price level has increased

GDP excludes

the market value of unpaid work in home

130 and 150; 110 and 100

the price level increased between 1 and 2

in comparing GDP data over period of years, difference between nominal and real GDP may arise because

the price level may chnge over time

in second quarter, US nominal GDP increased but real GDP declinded

the price level rose by more than nominal GDP

nominal GDP

the sum of all monetary transactions involving final goods and services

if the economy adds to its inventory of goods during some year

this amount should be included in calculating that years GDP

the concept of net dom investment refers to

total investment less the amount of investment goods used up in producing years output

if personal income exceeds national income, we conclude that

transfer payments exceeded the sum of undistributed corp profits

GDP tends to

understate econ welfare bc it does not take into account increases in leisure

a large underground econ results in

understated GDP