Econ 2010 chapter 4 questions (Exam 1)

After increasing at more than 2 percent per year between 1950 and 1973, the growth rate of average labor productivity ________ between 1973 and 1995, and ________ between 1996 to 2007.

slowed; picked up

A broad government initiative to reduce a country's reliance on agriculture and promote high-technology industries is an example of ________ policy.

structural

Deregulation of the airline, trucking, telephone, and electric utility industries are examples of ________ policy.

structural

Government polices aimed at changing the underlying structure or institutions of the nation's economy are called:

structural policy.

Before 1970 the United States generally had a trade ________ and since 1970 the United States has generally run a trade ________.

surplus; deficit

The central bank of the United States is called:

the Federal Reserve System.

In the United States decisions to increase interest rates are made by ________ and decisions to increase taxes are made by ________.

the Federal Reserve; Congress

Monetary policy refers to:

the determination of the nation's money supply.

Inflation is the increase in:

the general level of prices.

Macroeconomic policies are government policies designed to affect:

the performance of the economy as a whole.

A trade imbalance occurs when:

the quantity of a country's exports differs significantly from the quantity of imports.

If Country A and Country B have the same population size, then the standard of living in these two countries can still be different depending on:

the relative sizes of total output.

If living standards in a country, as measured by output per person, increase, then total output must have:

increased more rapidly than population increased.

Since 1950, the standard of living in the United States has:

increased when measured by both total output and output per person.

In Econland population increased from 1 million to 1.1 million, the number of employed workers increased from 500,000 to 600,000, but average labor productivity decreased from $20,000 per worker per year to $18,000 per worker per year. Total output in Econland ________ and the average standard of living ________.

increased; decreased

In Econland population and average labor productivity are constant. If a larger proportion of the population becomes employed workers, then total output will ________ and output per person will ________.

increase; increase

A decision to join a free trade association, such as NAFTA, is an example of ________ policy.

structural

Decisions to reduce the money supply are made by ________ and are an example of ________ policy.

the Federal Reserve; monetary

A decision by Congress to reduce spending in order to balance the government's budget is an example of ________ policy.

fiscal

A decrease in the federal income tax is an example of ________ policy.

fiscal

Decisions to determine the government's budget are called:

fiscal policy.

If living standards in a country, as measured by output per person, decrease, then total output must have:

increased more slowly than population increased.

Average labor productivity equals:

output per employed worker.

The standard of living in an economy is best measured by:

output per person

Average consumption in an economy is best measured by ________, while average productivity in an economy is best measured by ________.

output per person; output per worker

Among economists today, the most widely accepted cause of the Great Depression is:

poor economic policymaking.

A nation's central bank:

controls the nation's monetary policy.

Fiscal policy refers to:

decisions to determine the government's budget.

If average labor productivity decreases while population and the number of employed workers remain constant, then total output:

decrease

In Econland population and average labor productivity are constant. If a larger proportion of the population enters retirement, then total output will ________ and output per person will ________.

decrease; decrease

If average labor productivity decreases while population and the number of employed workers remain constant, then output per person:

decreases

A particularly severe recession is called a(n):

depression

The process of steady increase in the quantity and quality of goods and services the economy can produce is called:

economic growth

Unemployment typically ________ during a recession.

rises

A decision by a government to sell businesses that currently are operated by the government to private investors is an example of ________ policy.

structural

A government decision to privatize a sector of the economy formerly operated by the government is an example of ________ policy.

structural

In Econland exports equal 15 percent of total output, while imports equal 20 percent of total output. Econland has a:

trade deficit.

In Econland exports equal 25 percent of total output, while imports equal 20 percent of total output. Econland has a:

trade surplus.

The fraction of people who would like to be employed, but can't find work is called the:

unemployment rate.

The Great Depression:

was a period of low production and high unemployment.

In 2016 the United States exported approximately ________ percent of all goods and services produced in the country.

12

Compared to 1929, total output in the U.S. in 2016 was approximately ________ times larger.

15

In 2016 the United States imported approximately ________ percent of all goods and services produced in the country.

15

The largest change in the unemployment rate from the beginning of a recession to the peak unemployment rate occurred during the recession beginning in:

1929

The unemployment rate in the United States at the peak of the Great Depression was ________ percent.

25

All of the following statements are correct EXCEPT:

Economies grow steadily over time.

Macroeconomic issues include all of the following EXCEPT:

energy reserves

When jobs are easy to find, wage increases are frequently given, and businesses are doing well, the economy is most likely in a(n):

expansion

A trade deficit occurs when:

exports are less than imports.

People who enjoy high standards of living usually have all of the following EXCEPT:

freedom from scarcity.

If tax revenues equal 20 percent of total output and government expenditures equal 25 percent of total output, then there is a:

government budget deficit.

If tax revenues equal 25 percent of total output and government expenditures equal 20 percent of total output, then there is a:

government budget surplus.

ALL of the following describe economic conditions during the Great Depression in the United States EXCEPT:

high rates of inflation.

If average labor productivity increases while population and the number of employed workers remain constant, then output per person:

increase

The Federal Reserve makes decisions regarding ________ policy while Congress makes decisions regarding ________ policy.

monetary; fiscal

If average labor productivity increases, then the same number of employed workers will always produce:

more total output.

The unemployment rate in the United States:

never falls to zero.

Analysis that addresses the question of whether a policy should be used is called ________ analysis.

normative

Economic analysis is useful in resolving all of the following types of issues EXCEPT:

normative

"Any tax cut to increase demand for output should favor lower-income people" is a ________ statement about ________ policy.

normative; fiscal

"The Federal Reserve should raise interest rates in order to keep inflation at an acceptably low level" is a ________ statement about ________ policy.

normative; monetary

Positive analysis:

aims at determining only the economic consequences of a particular policy. C) depends on the analyst's values.

The growth of total output in the United States since 1929 has been:

rapid but with fluctuations.

If the unemployment rate increases from 4 percent to 10 percent, then the economy is mostly likely in a(n):

recession

When jobs are hard to find, profits are low, few wage increases are given, and many companies go out of business, the economy is most likely in a(n):

recession

Inflation was a major problem in the United States during the:

1970s

Normative analysis:

addresses the question of whether a policy should be used.

In Econland total output is $8 billion, population equals 500,000 people, and, of these, 400,000 are employed workers. Output per person in Econland equals ________ and average labor productivity equals ________.

$16,000; $20,000

In both Gamma and Delta average labor productivity is $20,000 per worker per year. The population of Gamma is 200,000 and the population of Delta is 400,000. Sixty percent of the population in each country is employed. Total output in Gamma is ________ and total output in Delta is ________.

$2.4 billion; $4.8 billion

In Econland total output is $6 billion, population equals 250,000 people, and, of these, 200,000 are employed workers. Output per person in Econland equals ________ and average labor productivity equals ________.

$24,000; $30,000

The country of Northland produced $1,000 billion of output in one year. The population of Northland was 50 million, of whom 30 million were employed. What was average labor productivity in Northland?

$33,333

In both Gamma and Delta average labor productivity is $40,000 per worker per year. The population of Gamma is 200,000 and the population of Delta is 400,000. Fifty percent of the population in each country is employed. Total output in Gamma is ________ and total output in Delta is ________.

$4 billion; $8 billion

Decisions to cut taxes are made by ________ and are an example of ________ policy.

Congress; fiscal

________ policy focuses on the nation's money supply, while ________ policy focuses on

Monetary; fiscal

________ policy focuses on the nation's money supply, while ________ policy aims at changing the underlying structures or institutions of the economy.

Monetary; structural

________ analysis addresses the question of whether a policy should be used, while ________ analysis addresses the economic consequences of a particular policy.

Normative; positive

The value of output was $1,000 billion in Northland and $2,000 billion in Southland. The population of Northland was 50 million and the population of Southland was 120 million. There were 30 million employed workers in Northland and 75 million employed workers in Southland. Average labor productivity was higher in ________ and the standard of living was ________.

Northland; higher in Northland

Which of the following would be considered an example of monetary policy?

Provision of additional cash to the banking system.

The value of output was $100 billion in Northland and $200 billion in Southland. The population of Northland was 50 million and the population of Southland was 30 million. There were 30 million employed workers in Northland and 20 million employed workers in Southland.

Southland; higher in Southland

Which of the following correctly ranks the amounts from largest to smallest?

Total output, average labor productivity, output per person

Major macroeconomic questions include all of the following EXCEPT:

What causes differences in wages between men and women?

A particularly strong expansion is called a(n):

boom

In Econland population increased from 1 million to 1.1 million, the number of employed workers increased from 500,000 to 600,000, but average labor productivity decreased from $20,000 per worker per year to $19,000 per worker per year. Total output in Econland ________ and the average standard of living ________.

increased; increased

Over the entire period since 1950, average labor productivity in the United States has ________ although between 1973 and 1995 the rate of change ________.

increased; slowed

Major macroeconomic issues include differences across countries in all of the following EXCEPT:

infant mortality rates.

The rate at which prices in general are increasing is called the:

inflation rate

If average labor productivity decreases, then the same number of employed workers will always produce:

less total output.

In the 1950's and 1960's the European unemployment rate tended to be ________ the U.S. unemployment rate, while in the 1990's the European unemployment rate tended to be ________ the U.S. unemployment rate.

lower than; higher than

An increase in interest rates by the Federal Reserve is an example of ________ policy.

monetary

The provision of additional cash to the banking system is an example of ________ policy.

monetary

The Federal Reserve makes decisions regarding:

monetary policy only.

The determination of the nation's money supply is called:

monetary policy.

When comparing the standard of living in two countries it is important to adjust total output for differences in:

population

If Country A and Country B have the same total output, then the standard of living in these two countries can be different depending on:

population size.

Analysis that aims at determining only the economic consequences of a particular policy is called ________ analysis.

positive

"If Congress cuts income taxes, demand for output is likely to increase" is a ________ statement about ________ policy.

positive; fiscal

"If the Federal Reserve raises interest rates, demand for housing is likely to fall" is a ________ statement about ________ policy.

positive; monetary

"The plan to create private accounts in Social Security will reduce benefits for some workers," is an example of a ________ statement, while "Social Security will be better if the private accounts are allowed" is an example of a ________ statement.

positive; normative

"U.S. exports will increase as a result of joined CAFTA," is an example of a ________ statement, while "The U.S. should join CAFTA," is an example of a ________ statement.

positive; normative

"Privatization of government owned industries is likely to increase unemployment in the short run" is a ________ statement about ________ policy.

positive; structural