Macro Chapters 5-7

What is a true measure of national output?

GDP in constant dollars

What is the main reason to expect convergence in the long run.

Low-productivity countries learning from high-productivity countries

The unemployment rate is the number of unemployed people, expressed as a ____________

a percentage of the labor force.

An economy could produce above its potential GDP for a short period of time by________________

adding extra shifts of work, such as overtime or night shifts.

What would shift the production function upward?

an increase in the level of technology

When nominal interest rates are held below inflation rates, then households will have an incentive to______________

consume

The shrinking gap between the income levels of poor and rich countries is known as the_____________

convergence hypothesis.

Full employment is defined by most economists as the minimization of

cyclical unemployment.

In general, as productivity levels increase, the potential for productivity growth__________

decreases

A productivity decrease would be illustrated by a shift in the production function _________

downward

Compared with the U.S. , developing countries__________

face geographic conditions that limit productivity.

Human capital differs from physical capital in that______________

human capital is intangible.

An increase in the capital stock would be expected to

increase real GDP per capita.

A rightward shift in the aggregate demand curve is most likely to result in____________

inflation

The phrase "capital formation" is synonymous with ______________

investment spending.

Potential GDP is an estimate of the economy's ability to produce goods and services if the

labor force is fully employed.

If the capital stock decreases, then the economy will produce ____ output with the ____ amount of labor.

less, same

If part of the labor force is unemployed, the foregone goods and services are_____________

lost forever.

As the unemployment rate rises, ___________ rises.

lost national output rises.

Compared to workers in richer countries, workers in developing countries have__________________

lower productivity and lower wages.

Gross Domestic Product is calculated by adding together the _____________ and _____________

money value of final goods and services.

Discouraged workers are included in the_____________

not in the labor force category.

Intermediate goods, like milk sold by a farmer to a supermarket, are______________

not included in GDP.

Government policy to reduce unemployment and increase national output can be illustrated by an

outward shift of the aggregate demand curve caused by an increase in government spending.

In the aggregate demand-aggregate supply model, economic growth can be illustrated by an___________ of the ____________

outward shift of the aggregate demand curve.

The amount of goods and services the economy could produce if the labor force is fully employed is called

potential GDP.

More education and training usually lead to higher levels of_______

productivity

Laws that assign owners the rights to use assets as they see fit are called__________

property rights.

The arithmetic difference between the nominal rate of interest and the expected rate of inflation is the______________

real interest rate.

When you subtract the expected rate of inflation from the nominal rate of interest, you calculate the________________

real rate of interest.

The principal benefit of unemployment insurance is that it

replaces income lost due to unemployment.

four types of unemployment

seasonal frictional structural cyclical

Gross Domestic Product is best described as the____________________

sum of money values of all final output produced in the domestic economy within the year.

The horizontal axis on the aggregate demand-aggregate supply model measures the ____________

the level of total output.

The unemployment rate is equal to________________

the number unemployed divided by the labor force.

The vertical axis of the aggregate demand-aggregate supply model measures the amount of _____________

the price level.

The definition of Gross Domestic Product is

the total of the money values of all final goods and services produced in the domestic economy within a specific time period.

An increase in capital stock will shift the production function______________

upward

What would impose the greatest costs to society?

variable rates of inflation

The definition of human capital refers to______________ and ________

worker education and worker training.

A good produced in 2009 and held in inventory until it is sold in 2010 would be included in which measure of GDP?

In 2009 GDP

What is an explanation for why some poor countries suffer from lower productivity growth?

Poor countries have lower capital stocks.

What determines the productivity growth rates of a country?

Rates of increase of capital, technology, and workforce quality