Macroeconomic final test 2
Which of the following statements best characterizes the Classical view of business cycles
Fluctuations in business activity occur in regular and predictable patterns
Macroeconomics emerged as a separate field largely in response to
John M. Keynes explanation of depression
Aggregate accounting emerged from the work of two economists for which they recieved the Nobel Prize. The two economists are
Simon Kuznets and Richard Stone
The top if the business cycle is called
a peak
Keynesian economists believe
government can implement policy proposals that can positively impact the economy
If per capita output increases by 2 percent and population grows by 3 percent,output
grows by 5 percent
During the business cycle, an economic expansion occurs
in between the trough and peak
Increasing output beyond its potential tends to
increase inflation
As the marginal propensity to expand rises the multiplier
increases
The likely reason that the CPI receives more attention in the media than the GDP deflator is because the CPI
is more relevant to consumers
Before the Great Depression the popular view of government was
laissez-faire, and after the Depression , the popular view of government was activist
The US produces and sells millions of types of products. To add them up to a single aggregate, each good is weighed by its
market price
The difference between gross domestic product(GDP) and gross national product (GNP) is that GDP
measures the economic activity that occurs within a country while GNP measures the economic activity of all the people and businesses of a country
What is a leading economic indicator
number of new buildings permits for private housing
Structural employment is caused by
people losing jobs when their skills become obsolete due to technological innovations
Comparisons of GDP levels across countries are least accurate where
prices differ across countries and non-market activities are a large part of total economic activity
If the CPI in year equals 2 110 and the CPI in year 3 equals 121, it can be concluded that consumer prices
rose from year 2 to year 3 by 10%
In the early 2000s, the United States went through what many economist describe as a jobless recovery , which is a situation in which real output grows but the unemployment rate does not fall. Normally an increase in real output affects
structural employment
According to estimates in the text, which of the following factors made the most important contribution to US growth between 1928 and today
technology
The marginal propensity to expand equals the ratio of
the change in aggregate expenditure to change in income
Real gross domestic product is best defined as
the market value of all final goods and services produced in an economy, stated in the prices of a given year
The multiplier model makes it possible to estimate how a change in aggregate expenditures affects
equilibrium output
If the labor force is 90 million and the number of people who are looking for jobs but cannot find them is 9 million, the unemployment rate is
10 percent
Real output is
GDP after the effects of inflation has been removed
What is the value of intermediate good excluded from
GDP and GNP
A recession is often considered to be
an economic downturn that persists for more than two consecutive quarters of the year
The secular trend growth rate is the
average rate of growth in real output over many years
After the Great Depression, economic downturns
became shorter
The multiplier process works because when expenditures don't equal production
businesses adjust production
According to the Classical growth model, the most important source of economic growth was
capital accumulation
The largest expenditure component of GDP is
consumption
A change in business inventories is
counted in GDP as an investment
what type of employment is considered to be most controllable through macroeconomic policy
cyclical employment
When people stop looking for work, because they can't find a job, but still want a job, they're called
discouraged workers
How do most economist agree policy should be used during a depression
economic policy should be used to improve economic conditions
An increase in nominal GDP implies an increase in
either the price level or output or both
The largest component of aggregate income is
employees compensation
The labor force participation rate equals
the number of people in the labor force as a percentage of the total population at least sixteen years old
Per capita real output is best defined as the market value of all final goods and services produced in an economy in
the prices of a given year divided by the population
Using the expenditure approach, gross domestic product equals
the sum of consumption, investment, government purchases and net exports
The business cycle
the term used to describe fluctuations in output around its long term trend
For the purposes of calculating GDP, gross private domestic investment includes
the value of new residential construction
The idea behind Say's Law is that people work because
they want to buy things
Equilibrium income is that level of income
toward which the economy gravitates in the short-run