Macroeconomic ch 2,4,10,11

suppose that an economy produces 30,000 units of Good A which sells at $3 a unit and 60,000 units of Good B which sells $2 per unit. Production of Good A contributes: _________ times as much to GDP as the production of Good B

3/4

if the nominal interest rate is 8 percent and the real interest rate is 3.5 percent, the the inflation rate is

4.5 percent

If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is

5 percent

Social Security Payments are indexed for inflation using

The CPI

in the equation Y = C + I + G + NX , _________ represents the economies total expenditure

Y

GDP per person tells us the income and expenditure of the

average person in the economy

If, at the current price, there is a shortage of a good, then the price is ____________ equilibrium price

below

of social security benefits and federal income tax brackets, which is indexed

both are indexed

a competitive market is one in which there: are so many ___________ & ____________ that each has a _____________ impact on the price of the product.

buyers sellers negligible

In a perfectly competitive market, at the market price, buyers

can buy all the want, and sellers can sell all they want

positive statement

claims that attempt to describe the world as it is

normative statement

claims that attempt to prescribe how the world should be

when looking at a graph of nominal and real interest rates you notice that the graph for nominal rates and the graph for real rates cross each other many times. From this you can conclude: ______________ prices sometimes rose and fell in the _________ __________ represented on the graph

consumer time frame

the CPI differs from the GDP deflator in that: _____________ in the prices of foreign produced goods that are sold to U.S. consumers show up in the CPI but not in the GDP deflator.

increases

A recession has traditionally been defined as a period during which: ___________ GDP _________________ for _______ consecutive quarters.

real declines 2

Unlike national income, personal income: Excludes __________ earnings, ___________ business taxes, ____________ income taxes and social insurance contributions, and includes __________ and transfer payments received by households from the government

retained indirect corporate interest

if the quantity of a good improves while its price remains the same, then the value of a dollar _____________, and the cost of living _______________.

rises decrease

economist use the term inflation to describe a situation in which: the economy's over all price level is ____________

rising

social security payments are indexed for inflation using

the CPI

changes in the producer price index are often thought to be useful in predicting changes in

the consumer price index

In a given market, how are the equilibrium price and the market clearing price related?

they are the same price

in the economy of Ukzten in 2010m consumption was $1000, exports were $100, government purchases were $450, imports were $150, and investment was $350. What was Ukzten's GDP in 2010?

$1750

Al's Aluminum Company sells $1 million worth of aluminum to Shiny Foil Company, which uses the aluminum to make aluminum foil. Shiny Foil Company sells $4 million worth of aluminum foil to households. The transactions just described contribute how much to GDP?

$4 million

If the CPI was 90 in 1975 and is 225 today, then $100 today purchase the same amount of goods and services as

$40. purchased in 1975 40(225/90)=100

a farmer sells $50,000 of apples to individuals who take them home to eat and $75,000 of apples to a company that uses the produce apple cider. How much of the farmers sales will be included as apples in GDP

$50,000

Megan's salary for three consecutive years, along with other values, are presented in the tables below: 2008 2009 2010 Salary: $60,000 $65,000 $72,000 CPI: 200.0 212.0 233.2 Real Int. Rate: 3.0% 3.6% 3.3% Meagan's 2008 salary in 2010 dollars is

$69,960

Recently, the U.S. national income accounts have switched to calling government purchases

government consumption expenditure and gross investment

in a market economy, supply and demand determine: both the __________ of each good produced and the __________ at which it is sold

quantity price

A recession is always associated with a declining __________ GDP

real

if the nominal rate of interest is 6 percent and the rate of inflation is 4 percent, then the real interest rate:

2 percent

If the consumer price index was 88 in 2009, 96 in 2010, and 100 in 2011, then the base year must be

2011

the nominal interest rate tells you: how fast the number of ___________ in your _________ ____________ rises over time

dollars bank account

the consumption component of the GDP includes

durable goods, non-durable goods, and services

What basket of goods and services is used to construct the CPI? the goods and services that are typically bought by ______________

consumers

In the national income accounts, depreciation is called: "____________ of ___________ capital"

consumption fixed

If sellers expect higher basket prices in the near future, the current supply of baskets will ______________.

decrease

an increase in the price of a good will ______________ quantity demanded

decrease

How is net national product (NNP) calculated? ______________ losses are ______________ from the total ____________ of a nation's citizens.

depreciation subtracted income

Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices _________________ marijuana use, but the evidence does not support this comment

encourage

The CPI and the GDP deflator

generally move together

The CPI is a measure of the total cost of: the ___________ and ____________ purchased by a typical consumer

goods services

when we move along a given supply curve: all nonprice determinants of supply are __________ _____________

held constant

a market supply curve is determined by: ____________ summing individual supply curves

horizontally

By far the largest category of goods and services in the CPI basket is

housing

categories of the US consumer spending ranked from largest to smallest are ____________, transportation, food and bev, _____________ ____________

housing medical care

Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor Toysorama is mass producing an excellent copy and plans to flood the market with their $5 doll in 6 weeks. Funsters should: _____________ the supply of their doll ____________ the other doll hits the market

increase before

If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes weight gain, then we likely would see: an ________________ in the demand for brown rice and a _____________ in demand for white rice

increase decrease

what would happen to the equilibrium price and quantity of lattes if the cost of producing steamed milk, which is used to make lattes, rises? the equilibrium price would ____________, and the equilibrium quantity would ______________

increase decrease

A good is produced by a firm in 2009, added to the firm's inventory in 2010, and sold to a household in 2010. As a result, on net: 2009 GDP ______________ and 2010 GDP ___________ ______ _______________

increased did not change

A downward sloping demand curve illustrates

law of demand

the substitution bias in the consumer price index refers to the: substitution by consumers towards goods that have become relatively _______ expensive and away from goods that have become relatively _______ expensive

less more

The consumer price index is used to: monitor changes in the cost of _________ over time

living

In the US in the late 1970's nominal interest rates were high and inflation rates were very high. As a result, real interest rates were

low, and in some years they were negative

the calculations of the CPI, tea is given greater weight than beer: consumers buy _____________ tea than beer

more

the real interest rate = _________ Interest Rate minus Rate of _____________

nominal inflation

the GDP deflator is the ratio of: _____________ GDP/ __________ GDP multiplied by 100

nominal real

the inflation rate is the: __________________ change in the _____________ level from one period to another

percentage price

The income that households and noncorporate businesses receive is called

personal income

The law of supply and demand asserts that: The ______________ of a good will eventually rise in response to an excess demand for that good.

price

Adam Smith suggest that an invisible hang guides market economies. In this analogy, what is the baton that the invisible hand uses to conduct the economic orchestra?

prices

Changes in real GDP reflect: only changes in the amounts being _______________.

produced

the price index that measures the cost of a basket of goods and services bought by firms is called the: ______________ price index

producer

the real interest rate tells you: how fast the ______________ power of your ________ ____________ rises over time

purchasing bank account

If, at the current price, there is a surplus of a good, then: ____________ are _____________ more than _____________ wish to ___________

sellers producing buyers buy