ECON 510 Homework 1

In the United States, spending on Social Security, Medicare, and Medicaid was approximately ________ of GDP in 1962, and is expected to be approximately ________ of GDP in 2050.

3% ; 20%

Long-run economic growth is measured by GDP productivity.

FALSE * it is measured by REAL GDP

The Great Moderation refers to the period from 1929-1933.

FALSE * the Great Moderation refers to between the early 1980's and 2007 (after the Vietnam war and before the 2008 recession)

In the short run, macroeconomics focuses on the business cycle, and in the long run, macroeconomics focuses on long-run economic growth.

TRUE

The unemployment rate is the percentage of the labor force that is unemployed, so is calculated as the number of unemployed people divided by the labor force.

TRUE

________ refers to alternating periods of economic expansion and economic recession in an economy.

The Business Cycle

Which of the following is an example of a monetary policy?

The Federal Reserve increases interest rates.

Which of the following is an example of a fiscal policy?

The federal government increases infrastructure spending during an economic recession.

Labor productivity refers to the quantity of goods and services that can be produced

by one worker or one hour of work

Changes in government taxes and purchases that are intended to achieve macroeconomic policy objectives refer to

fiscal policy

Since 1900, real GDP per capita in the United States has ________ in the short run and has ________ in the long run.

fluctuated; displayed a strong upward trend

As a percentage of GDP, U.S. imports have been ________ and U.S. imports have been ________ since 1950.

growing; growing

Economists measure the "openness" of an economy in terms of

how much it trades with other economies.

Over the past 20 years, purchases of foreign financial assets by U.S. investors has

increased significantly.

The process by which productivity raises the average standard of living is referred to as

long-run economic growth.

The actions that the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomic policy objectives refer to

monetary policy.

The business cycle is usually illustrated using movements in

real GDP.

Long-run economic growth is the process by which productivity increases

the average standard of living.

The labor force is

the sum of the employed and unemployed workers in an economy.

in the United States, periods of deflation

were relatively common prior to 1930.