Macro Test2

A transfer payment is a payment for:

Which no services were rendered during the current year.

Which of the following would NOT be included in this year's GDP?

Your purchase of your neighbor's 2001 Toyota

The value, at current market prices, of the final goods and services produced during a particular period is:

Gross domestic product.

Which of the following statements regarding price level or inflation is correct?

In general, when the economy is in recession and jobs are hard to find, inflation tends to fall.

What is Inflation:

Is an increase in the overall level of prices.

Full employment, as defined by economists:

Is the Natural Rate of Unemployment.

Firms pay efficiency wages because:

It reduces the risk of losing the best workers.

Which one of the following transactions is included in a current year's GDP as investment spending?

Maggie bought a play-gym set for her day-care business.

A sheep ranch produces $30 worth of wool. A suit manufacturer produces $60 worth of suits. A retail outlet sells a suit to a customer for $180. The GDP would be:

$180.

Which of the following would NOT be considered a government transfer?

Payments by the Defense Department for a new weapons system

Intermediate goods are not counted in the calculation of GDP, because:

That involves double-counting.

If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, then the natural rate of unemployment is:

5%

Efficiency wages are wages that are

Above equilibrium to encourage better performance.

When disinflation occurs:

An economy may experience a recession.

To be counted as unemployed, one must:

Be out of work and be actively looking for a job.

In periods of unexpected inflation:

Borrowers benefit since they repay their loans in dollars with lower real value.

The consumer price index reflects the:

Changes in the prices of goods and services typically purchased by consumers.

The goal of unemployment policy is to eliminate frictional unemployment.

False

Unemployment rates differ little by education, age, or ethnic group.

False

Young females have a higher unemployment rate than young males.

False

In the United States, consumer spending accounts for approximately what percentage of GDP?

70%

Keynesian economics supports the economic ideas:

Argue that the government can help a depressed economy through fiscal and monetary policies

An example of cyclical unemployment is a(n):

Autoworker who is laid off from an automobile company due to a recession

The short-run alternation between economic downturns, recessions, and economic upturns and expansions is known as the:

Business cycle

The alternation between recessions and expansions is known as the:

Business cycle.

The ______ is the most widely used measure of inflation in the United States.

Consumer Price Index (CPI)

The largest component of GDP is:

Consumption expenditure.

Eliminating the business cycle would eliminate ______ unemployment.

Cyclical

The National Bureau of Economic Research announced that the U.S. economy had been in a recession in 2008. As a result, the type of unemployment that is on the rise is known as:

Cyclical unemployment

Value added in national income accounts refers to the:

Difference in the final price and the value of inputs purchased.

Everything else the same, if investment expenditures rise by $300 billion and imports increase by $300 billion, then GDP:

Does not change

The natural rate of unemployment is:

Equal to the sum of frictional and structural unemployment.

In a typical business cycle, the business cycle trough is immediately followed by the:

Expansion.

The two major approaches used by the government in estimating GDP are:

Expenditure and income.

Goods that are produced domestically but sold abroad are:

Exports

Net exports equals:

Exports minus imports.

In general, expansions are characterized by:

Failing unemployment.

Hyperinflation occurs when there is an excess of tax revenues over government spending.

False

Marge got a 5% raise while the rate of inflation was 6%. Marge's standard of living:

Fell by about 1%

Which of the following best represents the equation for GDP?

GDP = C + I + G + X - IM

Net domestic product measures:

GDP minus depreciation.

If we add up the consumer spending on goods and services, investment spending, government purchases of goods and services, and the value of exports, then subtract the value of imports, we have measured the nation's _____.

Gross domestic product.

Nominal GDP:

Has not been adjusted for changes in prices over time.

Unanticipated inflation:

Helps borrowers and hurts lenders.

Suppose that one month 6 million people in the United States were seeking jobs but had not found them, as in the previous month. Suppose that 2 million of these people gave up their searches in the current month and stopped looking for work. What will happen to the unemployment rate, all other things unchanged?

It will fail.

Don has built an extension to his house, this transaction will be:

Not included in GDP because it is not produced for the marketplace.

In calculating the unemployment rate, discouraged workers are:

Not included in the labor force.

The rate of unemployment is found by dividing the:

Number of people looking for work by the number of people looking for work plus the number of people employed.

Recessions are periods when:

Output and employment are falling.

An expansion is a period in which:

Output rises.

Among people counted as unemployed by the government are:

People without a job who are actively seeking a job.

Which of the following statistics is used to measure changes in the prices that firms pay for goods and services?

Producer Price Index (PPI)

When comparing the standard of living between nation's, of the following, the best measure is:

Real GDP per capita.

In a typical business cycle, the business cycle peak is immediately followed by the:

Recession.

Unanticipated inflation:

Reduces the value of money.

In the circular flow model, households:

Sell resources in the factor markets.

If the economy grew at a 3% rate this year and average prices grew ______, people would be better off this year compared with last year.

Slower than 3%

Investment spending is:

Spending on productive physical capital.

An example of an intermediate good will be:

Steel purchased by the aircraft manufacturers.

Which one of the following is an example of consumption expenditure?

Stephanie bought a laptop for her brother.

Sam, who is 55 years old and has been a steelworker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is experiencing

Structural Employment

During the 1970s when handheld calculators became popular and replaced slide rules in performing computations, workers in the slide rule industry lost their jobs. What type of unemployment did these workers experience?

Structural unemployment

When there is deflation in the economy:

The general price level falls.

Frictional unemployment exists because of all of the following except:

The minimum wage.

The labor force is:

The total of all people employed and unemployed but looking for work.

Real GDP is:

The value of the production of all final goods and services adjusted for price changes.

The natural rate of employment is achieved when:

There is no cyclical unemployment.

GDP is the:

Total market value of all final goods and services produced in one year.

Technological innovations in consumer products make it difficult to compare market baskets

True

The costs of inflation are greater when it is unanticipated.

True

During a recession:

Unemployment increases and the growth rate of real GDP decreases.

A worker classified as frictionally unemployed is one who is:

Voluntarily looking for work, somewhere a job exists that demands his or her skills