Economics Test 1
Stagflation
High inflation + high unemployment = negative output growth
Increase in price level is known as
Inflation
If the central bank decreases the money supply, it is conducting
Monetary policy
The government implements fiscal policy when it changes
Taxes and/or spending
The data in the national income and product accounts are compiled by
The Bureau of Economic Analysis
Which of the following is not counted in the GNP of the United States
The profit earned by a restaurant located in the United States owned by a mexican company
The equation for GDP using the expenditure approach is
GDP=C+I+G+(EX-IM)
If the labor force is 500 and employment is 450, then the unemployment rate is
10%
Refer to Table 2. Assume that this economy produces only 2 goods Good X and Good Y. The value for this economy's nominal GDP in year 1 is
140
Refer to Table 1. The value of GDP in billions of dollars is
950
By not counting the value of intermediate goods when calculating GDP, you avoid
Double counting
In a business cycle, a peak represents the end of ____ and a trough represents the end of _____
Expansion, Recession
Promissory notes issued by the federal government when it borrows money
Treasury bonds
If nominal GDP is 8 trillion and real GDP is 6 trillion, the GDP deflator is
[nominal gdp/real gdp *100] (C.133.33)
An example of a transfer payment is
a social security retirement benefit
GDP is not a perfect measure of social welfare and the society's economic well-being because
all the above
Unemployment means that
at the going wage rate, there are people who want to work but cannot find work
In the circular flow diagram, firms ____ labor and households ____ goods and services.
demand, demand
A prolonged and deep recession is called
depression
Net Investment equals
gross investment minus depreciation
If the value of net exports is negative, then
imports exceed exports
It has become conventional to classify an economic downturn as a ___ when aggregate ____ declines for 2 consecutive quarters
recession; output
The term business cycle refers to
short-term ups and downs in the level of economic activity
Profits earned in the United States by foreign-owned companies are included in
the US GDP but not GNP
Deflation occurs when
the average price level declines
If not foreign companies produce in a country, but many of the country's companies produce abroad, then
the country's GNP will tend to exceed its GDP
We can use macroeconomics analysis to
understand why economies grow
If gross investment in 2017 is 750 billion and depreciation in 2017 is 750 billion, net investment in 2017 is
zero
