Macro Final

If the quantity of goods and services produced in the economy decreases

it may be possible for nominal GDP to increase

If the per-worker production function shifts down,

it now takes more capital per hour worked to get the same amount of real GDP per hour worked.

The US has ______ social insurance programs, and generally has a ______ unemployment rate, as compared to Canada and Western Europe

less generous; lower

In the basic aggregate demand and aggregate supply mode, suppose firms become more optimistic about the future probability of new investment, what would happen

price level increase

In the basic aggregate demand and aggregate supply model, suppose there is an increase in taxes. What would happen in the long run

prices will decrease

GDP understates the total production of final goods and services because of the omission of

Household production

what would increase the unemployment rate

an increase in unemployment insurance payments

Nominal GDP is another word for

current dollar GDP

Most of the unemployment during the Great Depression was

cyclical unemployment

In the basic aggregate demand and aggregate supply model, an increase in US dollar value relative to other currencies in the shirt run lead to_________ in real GDP and ________ in the price level

decrease;decrease

In the basic aggregate demand and aggregate supply model, suppose the price of oil increases unexpectedly. In the long run price level_______ and UR_________

falls, rises

In comparison to a government that runs a balanced budget, when the government runs a budget deficit

firm investment will fall

Actual real GDP will be above potential GDP if

firms are producing above capacity

In the basic aggregate demand and aggregate supply model, a decrease in interest rates will in the short run lead to ________ in real GDP and ________ in the price level

increase, increase

Suppose there is a decrease in business taxes. This will

shift AD to the right

Suppose the US GDP growth rate is faster relative to other countries' GDP growth rates. This will

shift the aggregate demand curve to the left

Suppose tat nominal GDP in 2011 was less than real GDP in 2011. Given this information we know for certain that

the price level in 2011 was less than the price level in the base year

The CPI in the year 2009 was 180. The CPI in the year was 184. Inflation rate for 2010 equals

(184-180)/180 x 100 = 2.2%

Consider the following for a closed economy. Y=$20, C=$16, I=$8, TR=$2, T=$4, Then public saving is

8=20-16-G------->6

If the US dollar value decreases in value relative to other currencies, how does this affect the AD model

AD shift to the right

Suppose the US GDP growth rate is slower relative to other countries' GDP growth rates. This will

AD shift to the right

which is the following statements is true

GDP accounting rules do not adjust for production that pollutes the economy

The quantity of goods and services that can be produced by one worker or by one hour of work is

Labor productivity

In the basic aggregate demand and aggregate supply model, suppose there is a decrease in productivity, what would happen in the long run

NONE OF THE ABOVE, UR will increase, prices will increase, output will decline

Because of the negative supply shock, in the long run

NONE OF THE ABOVE, aggregate supply shifts to the left ,price level falls, UR falls

Which of the following would cause SRAS to shift to the left

NONE OF THE ABOVE, decrease in interest rates, decrease in business taxes, decrease in price level

When there is an increase in workers and firms adjusting to having previously underestimated the price level, the output ________ and the UR ___________ in the long run

NONE OF THE ABOVE, falls;falls, rises;rises, risies;falls

If the US dollar increases in value relative to other currencies, how does this affect the aggregate demand curve

aggregate demand shift to the left

The level of long run aggregate supply is not affected by

changes in price level

The substitution bias in the CPI refers to the idea that consumers

decrease the quantity of goods that increased in price and increase the quantity they buy of products that increase the least

In the basic aggregate demand and aggregate supply model, suppose there is an increase in interest rates. As a result, real GDP will _______ in the short run and _________ in the long run

decrease, increase to its initial level

In Alpha real GDP per capita is $9000. In Beta real GDP per capita is $6000. What is a prediction about the growth rates in real GDP per capita across the two countries

growth rate is lower in Alpha than in Beta

According to the loanable funds model, when government provides tax benefits to firms that invest in research and development, interest rates

increase

According to the loanable funds model, when the government spending increases, interest rates

increase

In the basic aggregate demand and aggregate supply model, a decrease US GDP growth rate relative to other countries' GDP growth rate will in the short run lead to _________ in real GDP and _________ in price level

increase; increase

In the basic aggregate demand and aggregate supply model, a decrease in interest rates will in the shirt run lead to_______ in real GDP and__________ in the price level

increase;increase

An increase in price level will

move the economy up along a stationary aggregate demand curve

In the basic aggregate demand and aggregate supply model, an increase in interest rates will in the long run lead to _________ in real GDP and __________ in the price level

no change, decrease

In the basic aggregate demand and aggregate supply model, an increase in government spending will in the long run lead to __________ in real GDP and _________ in the price level

no change, increase

In the basic aggregate demand and aggregate supply model, suppose there is an increase in the capital stock. What would happen in the short run

output will increase

In the basic aggregate demand and aggregate supply model, suppose there is an increase in productivity Which of the following will happen in the short run

output will increase, prices will decrease, unemployment will decrease

Which of the following government provisions would help increase the accumulation of knowledge capital

patents, copyrights, and education subsidies

period between a business cycle peak and business cycle trough is called

recession

suppose the labor force stays constant, WAP stays constant, but a greater number of unemployed become employed... the labor force would

remain constant

In the basic aggregate demand and aggregate supply model, suppose the price of oil rises unexpectedly. In the short run, the price level__________ and the UR__________

rises;rises

According to the new growth theory

technological change is influenced by economic incentives

when the economy faces diminishing returns

the slope of the per-worker production function becomes flatter as output increases

Because of diminishing returns, an economy can continue to increase real GDP per hour worked only if

there is technological change

Economists consider the natural rate of unemployment to occur when

when UR consists of only frictional and structural unemployment