macroeconomics 2302 ch 5, 6, 7

In the circular flow diagram, households demand _____ and supply _____

goods and services; labor

The expenditure approach to GDP is

GDP = C + I + G + EX - IM

Index most often used to measure inflation is

GDP deflator

If GNP is $800 billion and depreciation is $90 billion, then net national product is

$710 billion

If personal income is $925 billion and personal income taxes are $70 billion, the value of disposable personal income is

$855 billion

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

10%

If x is the base year and you're trying to find it's price index, it will always be

100

A company produced 12 motorcycles in 2010. The company sold 8 in 2010 and added 4 to its inventories. The market value of the motorcycles in 2010 was $1000 per unit. What is the value of this company's output that will be included in the 2010 GDP?

12,000. GDP is a total of all goods and services PRODUCED in a given year.

If there's 14,000 employed and 3,000 unemployed, the labor force equals

17,000

If nominal GDP is $18 trillion and real GDP is $3 trillion, the GDP deflator is

600

The GDP deflator in year 2 is 110 and the GDP deflator in year 3 is 118. The rate of inflation between years 2 and 3 is

7.27%

The value of a 2006 convertible you purchased from a dealer in 2010 would not be a part of 2010's

GDP

When differences between nominal GDP and real GDP result due to price changes and nothing else is compared, an index called the ____ is created

GDP deflator

The value of what Burger King produces in France is included in the United States ____ and in the French ____

GNP; GDP

The value of what KFC produces in Japan is included in the U.S. ____ and in the Japanese ____

GNP; GDP

The productivity of workers is defined as the

Output produced by a worker per hour

What is NOT a desirable characteristic in an economy?

Rapid increase in the general price level

The government wants to encourage consumer spending through cutting income taxes. This is an example of

a fiscal policy

A price index is

a measurement showing how the average price of a bundle of goods changes over time

GDP minus final sales gives a measure of the

change in business inventories

The income received and payments made by each sector of the economy are represented by a

circular flow diagram

When the Fed increases the rate of growth of the money supply to jump start the economy, the unemployment type that will be directly affected is the

cyclical unemployment

A decrease in the overall price level is known as

deflation

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

double counting

When a radiologist quits her job at a hospital and starts looking for a better job in another hospital, she is

frictionally unemployed

The total market value of all final goods and services produced within a given period by factors of production located within a country is

gross domestic product

If net investment is positive, then

gross investment is greater than depreciation

GNP converted into dollars using an average exchange rate over several years adjusted for rates of inflation is

gross national income

Nominal GDP measures the value of all goods and services

in current dollars

Matt graduated from college three weeks ago and is currently without work. He accept a job that will start in two weeks. Today, Matt is

in the labor force

Cheryl graduated from college a month ago and is now without work. She accepted a job that will start next month. Today, Cheryl is

in the labor force.

Real GDP is gross domestic product measured

in the prices of a base year

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

monetary policy

When GDP is measured in "current prices" it is known as the

nominal GDP

Double counting can be avoided by

not counting the value of intermediate goods in GDP

A rancher raises alpaca. Once a year, he shears them and sells the raw wool to a processor who spins it into yarn. The yarn is then sold to a mill which produces and sells alpaca sweaters. In calculating GDP we would count

only the sweaters

Inflation is an increase in the

overall price level

The per-hour output produced by a worker describes the

productivity of workers

The GDP deflator is the

ratio of nominal GDP to real GDP multiplied by 100

When GDP is measured using "adjustments for price changes" it is known as the

real GDP

The difference between the interest rate on a loan and the inflation rate is the

real interest rate

Slump, downturn, and contraction are all words for a

recession

The term "business cycle" refers to the

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

Demand for massage therapists declined in the spring of 2010, but the starting wages paid to massage therapists was still the same at the end of 2010. This is an example of

sticky price

An individual who cannot find a job because his or her skills have become obsolete is an example of

structural unemployment

Telephone operators who have lost their jobs as a result of computerized switchboards are an example of

structural unemployment

Macroeconomics

studies the behavior of the economy as a whole

Fiscal policies are government policies regarding ____ and ____

taxes; expenditures

The major lesson of the circular flow diagram is that

total income in the economy must always equal total spending

The period in the business cycle from a _____ to a _____ is called an expansion

trough; peak

Diane lost her job and immediately started looking for another job. As a result the

unemployment rate increases