Econ Study Guide Ch 7-11
Economists claim that the unemployment rate can understate the true level of unemployment because none of the following groups is included EXCEPT:
workers without jobs who have looked for work in the past four weeks
A key input for measuring economic growth is: the size of the government's budget the Dow Jones stock market index life expectancy real GDP per capita
real GDP per capita
Menu costs are the
real costs of changing listed prices
GDP is the economy's total production of ________ for a given period.
Final goods and services
Which of the following is included in a current year's GDP?
Maggie bought a play-gym set for her day-care business.
Which of the following transactions would NOT be counted in GDP?
Your mother buys 100 shares of Nike stock
Sub-Saharan Africa is so poor mainly because:
political instability and civil wars
Productivity is declining when:
population growth exceeds real GDP growth.
If deflation occurs and your incoe is fixed, your real income:
will go up
If output is growing at 5% annually, how many years will it take for output to quadruple? 14 years 10 years 20 years 28 years
28 years
Suppose the real interest rate is 2.1% and the nominal interest rate is 5.4%. The inflation rate is: 7.5 3.3 -3.3 2.1
3.3% (5.4-2.1)
Suppose investment spending increases by $50B and as a result the equilibrium income increases by $200B. The investment multiplier is: 8 10 4 0.25
4
If the consumer price index changes from 120 to 125 between Dec. 2009 and Dec. 2010, the inflation rate is: 4.2% 5%
4.2%
The Republic of Livonia has an adult population of 100M: 60% of Livonia's pop is employed, and 10% are unemployed. The labor force participation rate in Livonia is: 70 60 7 10
70%
According to the accelerator principle
A higher growth rate of real GDP leads to higher planned investment spending
Real GDP = 8,000 autonomous consumption = 500 planned investment spending = 200 marginal propensity to consume = 0.8 What is consumption function?
C = 500 + 0.8Yd
According to the circular flow model, which of the following economic agents engage in consumer spending?
Households
If the circular flow model is in equilibrium and there is an increase in consumer spending, which of the following will happen?
Increase in nominal GDP
A price index:
always includes a base year, measures the cost of purchasing a market basket of output across different years, and is normalized to 100 for the base year
Which of the following will NOT increase the productivity of labor?
an increase in the size of the labor force
Frictional unemployment exists because of all of the following reasons EXCEPT:
for the min wage
Marginal Prosperity to Consume (MPC) equals the change in ________ divided by the change in ________.
consumer spending, disposable income
In the circular flow diagram, firms:
demand resources
The consumption function shifts when:
expected disposable income changes
When the govt. invests resources in a nation's educational system, it is investing in
human capital
Roads, telephone lines, power facilities, and schools are examples of?
infrastructure
Which of the following is one reason for Latin America's lack of economic growth since 1920?
low savings and investment spending because government policies led to inflation, bank failures, and other distributions
The slope of the consumption function if called the:
marginal prosperity to consume
The convergence hypothesis says that international differences in GDP per capita tend to ________ over time.
narrow
The rate of unemployment is found by dividing the....
number of people not working but looking for work by the number of people not working but looking for work plus the number of people employed
Actual investment spending equals:
planned investment plus unplanned investment
structural unemployment
results when there are more job hunters than jobs
. When future disposable income rises, current consumption:
rises
The sources of funds for investment spending are:
savings by households, government, and foreigners.
Cyclical unemployment is the result of:
the business cycle