GDP

The business cycle depicts:

D. short-run fluctuations in output and employment.

Which of the following is most closely related to recessions?

D. negative growth in output

Which of the following statements is most accurate about advanced economies?

B. Economies experience a positive growth trend over the long run, but experience significant variability in the short run.

Why are high rates of unemployment of concern to economists?

C. There is lost output that could have been produced if the unemployed had been working.

Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each. This year Harry's again produced 10,000 large pepperoni pizzas (identical to last year's pizzas), but sold them for $12 each. Based on this information we can conclude that Harry's production of large pepperoni pizzas this year:

A. increased nominal GDP by $20,000, but left real GDP unchanged.

Real GDP is preferred to nominal GDP as a measure of economic performance because:

A. nominal GDP uses current prices and thus may over- or understate true changes in output.

The three statistics that are the main focus for those measuring macroeconomic health are:

A. real GDP, inflation, and unemployment.

The two topics of primary concern in macroeconomics are:

A. short-run fluctuations in output and employment, and long-run economic growth.

Which of the following would an economist consider to be investment?

A. Boeing building a new factory

Inflation is defined as:

A. an increase in the overall level of prices.

For an economy to increase investment, it must:

A. increase saving.

Unemployment describes the condition where:

B. a person cannot get a job, but is willing to work and is actively seeking work.

28. Increased present saving:

B. comes at the expense of reduced current consumption.

Higher rates of unemployment are linked with:

B. higher crime rates as the unemployed seek to replace lost income.

Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each. This year Harry's again produced 10,000 large pepperoni pizzas (identical to last year's pizzas), but sold them for $12 each. Based on this information we can conclude that Harry's production of large pepperoni pizzas:

B. increased nominal GDP from last year, but real GDP was unaffected.

The term "recession" describes a situation where:

B. output and living standards decline.

Before the period of modern economic growth:

B. rates of population growth virtually matched rates of output growth.

When economists refer to "investment," they are describing a situation where:

B. resources are devoted to increasing future output.

In making international comparisons of living standards using GDP, which of the following is not adjusted for in the calculation?

B. the quantity of resources available to the economy

Real GDP measures the:

B. value of final goods and services produced within the borders of a country, corrected for price changes.

Why are economists concerned about inflation?

C. Inflation lowers the standard of living for people whose income does not increase as fast as the price level.

If an economy wants to increase its current level of investment, it must:

D. sacrifice current consumption.

Savings are generated whenever:

C. current income exceeds current spending.

Banks and other financial institutions:

C. promote economic growth by helping to direct household saving to businesses that want to invest.

Macroeconomics is mostly focused on:

C. the economy as a whole.

Which of the following is used to measure directly the average standard of living across countries?

D. GDP per person

Which of the following countries would economists say definitively is achieving modern economic growth?

D. Nigeria experiences a 2.7 percent increase in real GDP per person.

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

D. nominal GDP would rise, but real GDP would be unchanged.

Modern economic growth refers to countries that have experienced an increase in:

D. real output per person.