Economics Test 1

Stagflation

High inflation + high unemployment = negative output growth

Increase in price level is known as

Inflation

If the central bank decreases the money supply, it is conducting

Monetary policy

The government implements fiscal policy when it changes

Taxes and/or spending

The data in the national income and product accounts are compiled by

The Bureau of Economic Analysis

Which of the following is not counted in the GNP of the United States

The profit earned by a restaurant located in the United States owned by a mexican company

The equation for GDP using the expenditure approach is

GDP=C+I+G+(EX-IM)

If the labor force is 500 and employment is 450, then the unemployment rate is

10%

Refer to Table 2. Assume that this economy produces only 2 goods Good X and Good Y. The value for this economy's nominal GDP in year 1 is

140

Refer to Table 1. The value of GDP in billions of dollars is

950

By not counting the value of intermediate goods when calculating GDP, you avoid

Double counting

In a business cycle, a peak represents the end of ____ and a trough represents the end of _____

Expansion, Recession

Promissory notes issued by the federal government when it borrows money

Treasury bonds

If nominal GDP is 8 trillion and real GDP is 6 trillion, the GDP deflator is

[nominal gdp/real gdp *100] (C.133.33)

An example of a transfer payment is

a social security retirement benefit

GDP is not a perfect measure of social welfare and the society's economic well-being because

all the above

Unemployment means that

at the going wage rate, there are people who want to work but cannot find work

In the circular flow diagram, firms ____ labor and households ____ goods and services.

demand, demand

A prolonged and deep recession is called

depression

Net Investment equals

gross investment minus depreciation

If the value of net exports is negative, then

imports exceed exports

It has become conventional to classify an economic downturn as a ___ when aggregate ____ declines for 2 consecutive quarters

recession; output

The term business cycle refers to

short-term ups and downs in the level of economic activity

Profits earned in the United States by foreign-owned companies are included in

the US GDP but not GNP

Deflation occurs when

the average price level declines

If not foreign companies produce in a country, but many of the country's companies produce abroad, then

the country's GNP will tend to exceed its GDP

We can use macroeconomics analysis to

understand why economies grow

If gross investment in 2017 is 750 billion and depreciation in 2017 is 750 billion, net investment in 2017 is

zero