Macro

_____ unemployment includes workers who voluntarily quit their jobs to search for better positions.

frictional

______ unemployment is when a person is voluntarily job searching or searching for a new career.

frictional

If the labor force is 20 million people and the total employed is 18 million, what is the unemployment rate? 10% 2% 20% 18%

10%

_________ unemployment is the result of changes in the business cycle.

cyclical

Everything else the same, if investment expenditures rise by $300 billion and imports increase by $300 billion, then GDP increases by $600 billion. increases by $300 billion. decreases by $600 billion. does not change.

increases by $300 billion.

One important reason economists track business investment is that it is a leading indicator of the business cycle. it shows where the economy has been. it helps them decide which stocks to purchase. business investment is an excellent proxy for government investment.

it is a leading indicator of the business cycle.

What is D

trough

One criticism of the National Bureau of Economic Research's process of dating business cycle turning points is that the methodology is not clearly known by the general public.

true

are unemployed people considered a part of the labor force?

yes

_____ Uses updated or revised information to determine phases of the business cycle:

Business cycle dating committee

What is the difference between real and nominal gross domestic product (GDP)? -Nominal GDP is measured in dollars, whereas real GDP is a comparison to all other nation's production. -Nominal GDP is another name of net domestic product, or NDP. -Nominal GDP is measured in dollars, whereas real GDP is measured in terms of some consumption commodity, such as tons of coal, available in the economy right now. -There is no difference between real and nominal GDP. Real GDP measures the expenditure of a nation, whereas nominal GDP measures the income accounts that make up those expenditure measures. -Nominal GDP for a given year is measured in dollars of that year, whereas real GDP is measured in dollars of some base year.

Nominal GDP for a given year is measured in dollars of that year, whereas real GDP is measured in dollars of some base year

True or False: Integrated Environmental and Economic Satellite Accounts are intended to take into account the environmental benefits or harmful effects of economic activity.

True

How do trends in bond interest rates help predict changes in the business cycle? -When long-term rates are higher than short-term rates, a trough is present. -When long-term rates are lower than short-term rates, a recession is likely. -When long-term rates are higher than short-term rates, a recession is likely. -When long-term rates are lower than short-term rates, an expansion is likely.

When long-term rates are lower than short-term rates, a recession is likely.

The ability to use physical resources in creative ways to produce goods and services is known as physical capital. labor. entrepreneurial ability, technology, and ideas. natural resources.

entrepreneurial ability, technology, and ideas

In an economy, how are income and expenditure related? they are ____

equal

What is B

expansion

The two approaches used by the government in estimating GDP are

expidentures and income

One way a stable financial system supports economic growth is that it keeps tax rates low. subsidizes borrowers of financial capital. facilitates the movement of capital from savings to investment. increases the incidence of unanticipated price changes.

facilitates the movement of capital from savings to investment

____ is a monthly index designed to predict overall economic activity and related inflation pressure.

national activity index

Over the past century, when worker productivity rose nominal prices rose. capital fell. real wages rose. fewer public goods were available.

real wages rose

What is C

recession

The "business cycle" refers to short-run fluctuations in macroeconomic activity. a long-run increase in GDP. changes in the economy over the course of the four seasons. changes in the economy between winter and summer.

short-run fluctuations in macroeconomic activity.

When the National Activity Index is negative, this means that the economy is growing _____ than long term economic growth

slower

_____ is a form of GDP which is an exchange rate that removes price level differences between countries

GDP PPP

GDP divided by population=

GDP per capita

_______= ______ - (output of U.S. citizens living abroad) + (output of foreign nationals living in the U.S.)

GDP, GNP

Business cycles are common in emerging economies but not in developed economies.

false

Social media has made markets less efficient by keeping buyers and sellers from meeting face to face.

false

Structural and cyclical unemployment are unavoidable; therefore, the economy is in full employment when frictional unemployment is zero.

false

the set of factors that develop human capability and permit the easy and efficient growth of business activity

intangible infrastructures

________ unemployment is long-lasting unemployment that comes about due to shifts in an economy

structural

Suppose the National Activity Index of the Federal Reserve Bank of Chicago hovered around +0.25 for a few months but then dropped to -1.5 in November. What is the BEST interpretation of this finding? -Economic activity was above the historical trend rate of growth, but it is likely that the economy moved into a recession in November. -The economy was in an expansion in October but moved into a recession in November. -The rate of economic growth slowed in November, but the economy did not move into a recession. -The economy grew at a rate of 0.25% for a few months, but economic growth actually decreased by 1.5% in November

Economic activity was above the historical trend rate of growth, but it is likely that the economy moved into a recession in November.

The GDP of the country Econia is $100 billion with the following components: C = $50 billion, I = $15 billion, G = $30 billion, and (X - M) = $5 billion. Which of these would have the largest immediate impact to increase Econia's GDP? - Exports rise by $4 billion. -The government spends $10 billion more on transfer payments. -Inventory investment rises by $5 billion due to decreases in sales. -Consumers spend $8 billion more by reducing their savings by $8 billion.

Exports rise by $4 billion.

Which of these would be considered frictional unemployment? I. Alisha has taken a job at a different company in order to accept a promotion. She quit her current job but has one month off until she starts her new job. II. John has lost his job as a book binder, as the demand for e-books has replaced demand for traditional books. III. Melissa quit her full-time job to become a full-time student in order to pursue her Ph.D. I and II only I only III only II only

I only

Which Does a good job identifying recessions in the current time frame: Business cycle dating committee or National Activity Index

National Activity Index

Which statement is TRUE about the National Activity Index? Negative values always mean the economy is in a recession. Positive values indicate the economy may face a period of increasing inflation. When the index has a zero value, the economy has reached a trough. Negative values mean the economy is growing more slowly than its long-term trend.

Negative values mean the economy is growing more slowly than its long-term trend.

_____ is a measure of the change in the average prices paid by urban consumers for a typical market basket of goods and services. The producer price index Personal consumption expenditure The GDP deflator The consumer price index

The consumer price index

Which of these is a NOT a problem in measuring consumer prices? -It takes time to include new products in the consumer price index. -The consumer price index does not account for product substitution. -The reference period used for the consumer price index is 1982-1984. -The consumer price index does not easily adjust to changes in the quality of products.

The reference period used for the consumer price index is 1982-1984.

Long-run economic growth can be achieved by making better use of underutilized resources. True False

fales

Which of these is NOT a source of increases in productivity? improvements in labor quality research and development increases in population growth capital investment

increases in population growth

Total factor productivity captures the factors that influence the overall effectiveness of _____

inputs

One of the key concepts involved in the circular flow diagram is that -households and businesses are in conflict with each other. -one person's spending is another person's income. -the national economy is similar to a zero-sum game. -the sum of the resource and product markets must equal household income.

one persons spending is another persons income

Suppose the National Activity Index of the Federal Reserve Bank of Chicago drops to -0.83 this month after being above +0.36 for the previous three months. This movement in the index indicates that -the economy is at its peak this month but will move into the recession stage in the near future. -the economy has probably moved into a recession. -the rate of economic growth has dropped below the historical trend rate of growth, and the economy has reached a trough. -the rate of economic growth has slowed, but not enough to suggest that a recession is imminent.

the economy has probably moved into a recession.

Business cycles can be described as fluctuations from the economy's long‑term growth trend.

true

Countries with strong legal systems tend to have more economic prosperity than those without.

true

Efficiency wages give employees an incentive to work hard and remain with their present employers, but contribute to structural unemployment.

true

If inflation is unanticipated, then income may be redistributed from creditors to debtors.

true

In general, free societies have more economic growth than totalitarian societies do.

true