macro exam 2

In a closed economy, what remains after paying for consumption and government purchases is

national saving

inflation rate example

2005-2004/2004 X 100

For this economy, taxes amount to

GDP- consumption -private saving

For this economy, government purchases amount to

GDP-consumption-national saving

Which of the following is not correct? cpI is used...

The consumer price index is used to measure the quantity of goods and services that the economy is producing.

Which of the following expressions must be equal to national saving for a closed economy?

Y-C-G

Other things the same, if a country raises its saving rate, when is productivity growth higher?

as the economy moves toward the long run, but not in the long run.

Two of the economy's most important financial intermediaries are

banks and mutual funds.

If the equilibrium quantity of loanable funds is $56 billion and if the rate of inflation is 4 percent, then the equilibrium real interest rate is

between 6-8 percent

Two countries are the same, except one is poorer. Assuming the traditional assumption about the production function is made there are

diminishing returns to capital so the poor country grows faster.

The traditional view of the production process is that capital is subject to

diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than in rich countri

countries that have had higher output growth per person have typically done so without higher productivity growth.

false

institutions that help to match one person's saving with another person's investment are collectively called the

financial systems

The catch-up effect refers to the idea that

it is easier for a country to grow fast and so catch-up if it starts out relatively poor.

Country A and country B both increase their capital stock by one unit. Output in country A increases by 15 while output in country B increases by 12. Other things the same, diminishing returns implies that country A is

poorer than Country B. less than 15 units.

A rapid increase in the number of workers, other things the same, is likely in the short term to

raise real GDP, but decrease real GDP per person.

Each day Sonja works 8 hours and produces 8 units of goods and services. Emma works 10 hours each day and produces 9 units of goods and services. It follows that

sonja has a hgiher productivity than emma

Economists use the term inflation to describe a situation in which

the economy's overall price level increasing

f the equilibrium quantity of loanable funds is $50 billion and if the equilibrium nominal interest rate is 8 percent, then

the rate of inflation is approximately 2 percent.

n a particular production process, if the quantities of all inputs used double, then the quantity of output doubles as well. This means that

the relevant production function has the constant-returns-to-scale property.

The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers.

true