Econ Exam #2

income Americans gain from supplying resources abroad and the income that foreigners earn by supplying resources in the U.S.

"Net foreign factor income" in the national income accounts refers to the difference between the _____.

employment and output reach their lowest levels.

A trough in the business cycle occurs when

subtracting net investment from gross investment

Consumption of fixed capital (depreciation) can be determined by _____.

outward shift of the production possibilities frontier.

Economic growth can best be portrayed as a(n)

None of these

Environmental pollution is accounted for in _____.

consumption, investment, government purchases, and net exports

GDP can be calculated by summing _____.

total spending to deal with the adverse health effects of some products

GDP tends to overstate economic well-being because it takes into account _____.

the talents, training, and education of workers.

Human capital is

remain constant.

If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, its real GDP per capita will

pencils are weighted as twice as important in the economy compared to pens

If an economy produces 100 pencils and 100 pens, and pencils sell for twice as much as pens, _____

It would decrease.

If labor market institutions change so that it becomes easier to find a job, and unemployed people are unemployed for smaller durations of time, what would happen to the natural rate of unemployment?

employment and output increase.

In the expansion phase of a business cycle

domestically-produced, as well as imported, goods and services

In the expenditures approach of national income accounting, C, I, and G include expenditures for _____.

the difference between the income people in a country receive from resources owned in foreign countries and the income people in foreign countries receive from resources owned domestically

Net foreign factor income is _____.

the sum of all monetary transactions involving final goods and services that occur in the economy in a year

Nominal GDP is _____.

all final goods and services produced in an economy in a given year

Nominal GDP is the market value of _____.

GDP price index

Nominal GDP/Real GDP x 100

7%.

Over a 10-year period, the Consumer Price Index doubled. On the basis of this information and using the rule of 72, we can say that the average annual rate of inflation over this period was approximately

better measure of the physical environment than output.

Real GDP per capita is a

There is no cyclical unemployment present in the economy.

Suppose Canada has a population of 30 million people and a labor force participation rate of 2/3. Furthermore, suppose the natural rate of unemployment in Canada is 7%. If the current number of unemployed people is 1.4 million people, what can we conclude about Canada's economy?

add $10 billion to other elements of investment in calculating total investment

Suppose that inventories were $40 billion in 2012 and $50 billion in 2013. In 2013, national income accountants would _____

official unemployment rate will remain unchanged.

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result, the

Beta will experience greater economic growth than Alpha.

Suppose there are two economies, Alpha and Beta, that have the same production possibilities frontiers. If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future

years that it would take for a value (like real GDP) to double.

The "rule of 72" is a formula for determining the approximate number of

market price

The U.S. produces and sells millions of different products. To aggregate them together into a single measure of domestic output, the quantity of each good produced is weighted by its _____.

depreciation

The consumption of fixed capital in each year's production is called _____.

current consumption.

The cost of a higher living standard in the future is giving up

the CPI from one year to the next.

The inflation rate measures the percentage growth rate of

may cause the official unemployment rate to understate the true amount of unemployment.

The presence of discouraged workers

diminishing returns to capital.

The principle that if the amount of labor and other inputs is held constant, then the greater the amount of capital in use, the less an additional unit of capital adds to production is called the principle of

business cycles.

The recurrent ups and downs in the level of economic activity extending over several years are referred to as

are not employed but are seeking work.

The unemployed are those people who

excluded from the calculation of GDP because it does not represent new production

The value of corporate stocks and bonds traded in a given year is _____.

reduce current rates of consumption spending.

To increase future living standards by pursuing higher current rates of investment spending, an economy must

increases

Usually an abundance of natural resources ______ labor productivity.

Purchases by federal, state, and local governments

What do government purchases include in national income accounting?

physical capital.

When a firm builds a new factory, this is an example of an investment in

may be either positive or negative

When gross investment is positive, net investment _____.

the GDP Price Index

Which measure of inflation would include consumer goods and capital goods?

The lumber produced by Boise Cascade and sold to a builder of old houses

Which of the following is an example of an intermediate good?

The purchase of 100 shares of AT&T by a retired business executive.

Which of the following is not a component of gross investment?

(unemployed/labor force) x 100

Which of the following is the correct way to calculate the unemployment rate?

the Consumer Price Index

Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers?

For a given real interest rate, the nominal interest must increase if expected inflation increases.

Which of the following statements is correct?

Real GDP per capita

real GDP/population

CPI

value of a market basket in year/value of same basket in base year x 100