LC Chapter 5 Macro
The following are actual headlines from stories in the Wall Street Journal (Web site, June 2011). Which of the stories would be studied in macroeconomics?
"Stocks Swoon, Worry Rises"
A Japanese automaker produces $1 million worth of automobiles in its factory in the United States. How much of that is added into the GDP of the United States?
$1 million
A U.S. automaker produces $1 million worth of automobiles in Japan and $2 million worth of automobiles in the United States. How much of that is added into the GDP of the United States?
$2 million
In both of the recessions prior to 2007 the unemployment rate remained near:
6%.
_____ cycles are short-run fluctuations in the macroeconomy known also as booms and busts.
Business
Which of the following is a durable good?
a car
A U.S. automaker produces $1 million worth of automobiles in Japan and $2 million worth of automobiles in the United States. How much of that is added into the GNP of the United States?
$3 million
Use the following data to calculate GDP: consumption = $9.5 billion, investment = $3 billion, government spending = $2.5 billion, exports = $2 billion, imports = $1 billion.
GDP = $16 billion GDP is $16 billion. The equation is GDP = C + I + G + (X − M) = $9.5 billion + $3 billion + $2.5 billion + ($2 billion − $1 billion) = $16 billion.
Which of the following is a macroeconomic topic?
how best to foster economic growth
Which of the following is a macroeconomic topic?
how monetary policy affects interest rates
Which of the following is a macroeconomic topic?
how monetary policy affects the inflation rate
The _____ economy can include illegal transactions or those not reported to the IRS for tax collection.
informal
Which of the following are NOT considered when measuring GDP per capita?
natural resources
Which of the following is NOT used to calculate GDP as part of the expenditures approach?
net interest
In the business cycle, the point at which an expansion turns into a contraction is known as a(n) _____.
peak
Which of the following is NOT used to calculate GDP as part of the expenditures approach?
proprietor's income
Suppose you saw a news article that quoted economists as saying that business investments have begun to decline. In which phase of the business cycle does this occur?
recession
The headline "Bailout Plan Rejected, Markets Plunge, Forcing New Scramble to Solve Crisis" appeared in the Wall Street Journal on September 30, 2008. What phase of the business cycle does this headline suggest the economy was in at that time?
recession
In which phase of the business cycle does unemployment decrease and economic activity increase?
recovery
Suppose that news stories quote economists as saying business investments have begun to increase. This would be evidence that the economy is moving into the _____ phase of the business cycle.
recovery
The part of the business cycle that goes from economic trough to economic peak is known as a(n) _____.
recovery
Which of the following is a fixed investment?
the purchase of a manufacturing plant
Which of the following is NOT considered when measuring GDP per capita?
under-the-table payments
Which of the following is a nondurable good?
ice cream
Which of the following is a durable good?
a refrigerator
Which of the following is a macroeconomic topic?
how quickly unemployment falls after recessions end
One indication of a recession is that the interest rates on long-term bonds are _____ than on short-term bills.
lower
_____ is equal to the total market value of all final goods and services produced by resources supplied by U.S. residents in a given year, whether produced domestically or abroad.
GNP
Which of the following are NOT considered when measuring GDP per capita?
environmental quality
Which of the following is a macroeconomic topic?
how the adoption of new technology affects the business cycle
The _____ economy includes all transactions that are conducted but are not licensed and/or generate income that is not reported to the government.
informal
A U.S. automaker produces $1 million worth of automobiles in Japan. How much of that is added into the GDP of the United States?
no
A Japanese automaker produces $1 million worth of automobiles in its factory in the United States. How much of that is added to the GNP of the United States?
none
A U.S. automaker produces $1 million worth of automobiles in Japan. How much of that is added into the GDP of the United States?
none
Which of the following is NOT considered when measuring GDP per capita?
under the table
what is a topic of macro
unemployment rate
Which of the following is a macroeconomic topic?
what causes prices to increase
If exports for a country are $2 billion and imports are $3 billion, what are net exports?
−$1 billion