Exam 2 Macro

830 Million

If consumption expenditures are $500 million, net investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is

The United States and Japan

Over the past fifty years, there has been substantial closure of the gap in real GDP per person 74) between which of the following groups of countries?

U.S. real GDP per person has increased

Over the past four decades

maximum amount of GDP that can be produces while avoiding shortages of labor, capital, land, entrepreneurship that would bring rising inflation

Potential GDP is

be considered a natural occurrence in a growing economy

Suppose the country of Tiny Town experienced frictional unemployment. This frictional 49) unemployment would

urban consumers

The Consumer Price Index is a measure of the average of the prices paid by ________ for a 58) fixed basket of consumer goods and services.

a sustained expansion of production possibilities measured as the increase in real GDP over a given period

The best definition for economic growth is

130

see figure

320$

see figure

a;b

see figure

b; a

see figure

65 %

see table

A,B and C

see table

very high inflation rates

Hyperinflation is defined as

Final Good

A loaf of bread purchased by one of your instructors would be best described as

frictional unemployment

A person quits her job in order to spend time looking for a better-paying job. This type of 47) unemployment is an example of

real GDP decreases for a period of 6 or more months

A recession is commonly defined as occurring when

temporary business cycle showdown

According to the Economic Times (09/2012), Standard & Poorʹs forecast for Indiaʹs GDP 62) growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Based on this story, it is most likely that the slowdown reflects a

India's PPF has been shifting rightward since 1997

According to the Economic Times (09/2012), Standard & Poorʹs forecast for Indiaʹs GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Which of the following is TRUE?

increase GDP

An increase in exports of goods or services with no change in imports of goods or services

a sales tax

An indirect tax is exemplified by

4.0 %

At the end of last year the Consumer Price Index was equal to 157.5 and at the end of this year it was equal to 163.8. What is the inflation rate over this time period?

frictionally unemployed

Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work 44) with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as

real GDP decreases for at least 2 successive quarters

By common definition, a recession occurs when

Hong Kong and the United States

Convergence of the income gap has been most dramatic between

cyclical unemployment

Which type of unemployment increases during a recession?

decrease in stock of capital due to wear and tear

Depreciation is defined as the

3.23%

During 2013, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2012, real GDP was 105 billion and the population was 0.85 billion. Economiaʹs growth rate of real GDP per person is

Japan

During the 1990s, which of the following experienced the slowest rate of growth in real GDP per person?

the number of workers who quit one job to find another increases

Frictional unemployment increases when

normal labor market turnover

Frictional unemployment is the result of

Total expenditures of consumption, investment, and government expenditure on goods and services over a period of time

GDP can be computed as the sum of

Aggregate Expenditure Value of the aggregate production in a country during a given time period Aggregate Income ALL OF THESE

GDP equals

A) total amount that buyers spent on the final goods and services produced in a country during a specific time. B) total amount of income earned in producing the final goods and services in a country during a specific time. C) value of the final goods and services produced in a country during a specific time. D) All of the above answers are correct. (THIS IS ANSWER)

GDP is the

either by valuing the nations output of goods and services or by valuing the income generated in the production process

Gross domestic product can be calculated

17.5

If real GDP per person is growing at 4 percent per year, approximately how many years will it take to double?

225

If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the 57) CPI in the later year equals

prices are 20% higher than in the reference base period

If the CPI is 120, this means that

9.0%

In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armeniaʹs economic growth rate from 2011 to 2012?

1545$

In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. Armeniaʹs real GDP per person in 2012 was

not included because there is no market transaction

In calculating GDP, household production is

quarterly

In the United States, GDP is typically measured

Aggregate expenditure measures the dollar value of purchases of final goods and services

In the circular flow of economic activity

the 1970s experiences the highest inflation rates

Looking at inflation rates in the United States since the 1970s we see that

gross investment - depreciation

Net investment equals

China

Of the following Asian countries, which has the lowest level of real GDP per person?

100,105,110.25,115.76

Of the following sequences of price levels, which CORRECTLY represents a 5 percent inflation 60) rate?

personal consumption expenditure

Of the following, the largest component of GDP is

2% per year

Over the last 100 years, the average U.S. growth rate in real GDP per person was about

Incomes approach

Proprietorsʹ income is a component of which approach to measuring GDP?

the movement from peak to trough

Real GDP decreases during

$86

See figure

14

Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?

be greater than nominal GDP

Suppose an economy has some inflation. Then, after a base year, the value of real GDP will

5.4%

Suppose that last year the Consumer Price Index was 124; this year it is 130.7. What was the inflation rate between these years?

averaged approximately 2 percent per year over the past century

The growth rate of real GDP per person in the United States has

Growth in real GDP per person during most years

The historical record for the United States for the past 100 years shows

Mostly positive economic growth, though the Great Depression caused actual GDP to dip well below potential GDP

The historical record for the United States over the last 100 years shows

the people who are employed and unemployed

The labor force is defined as the number of

working-age population

The labor force participation rate is percentage of the ________ who are in the labor force.

an increase in textile imports displaces older textiles workers who do not have the skills necessary to find new jobs

The nationʹs structural unemployment will increase when

is the unemployment rate that occurs when the economy is at a full employment

The natural unemployment rate

percentage of labor force not working

The unemployment rate is defined as the

sum of working individuals plus unemployed workers, and multiplying by 100

The unemployment rate is found by dividing the number of unemployed people by the

the percentage of people in the labor force who are unemployed

The unemployment rate is measured as

accounts for differences in the prices of the same goods in different countries when measuring real GDP

The use of purchasing power parity prices

higher standards of living

We are interested in long-term growth primarily because it brings

Equal to the actual amount of unemployment

When economists speak of full employment, they refer to the case in which the sum of 42) frictional and structural unemployment is

Greater than; less than

When real GDP is ________ potential GDP, the unemployment rate is ________ the natural 41) unemployment rate.

not working but looking for a job

Which of the following best fits the definition of unemployed?

Aggregate income, aggregate expenditure and GDP and are all equal

Which of the following is CORRECT?

investment

Which of the following is NOT one of the components for computing GDP based upon the 14) income approach?

II only

Which of the following is TRUE regarding business cycles? I. Cycles are predictable. II. In each cycle, a peak follows an expansion. III. Potential GDP fluctuates around real GDP

I,II and III

Which of the following is included in ʺcompensation of employeesʺ part of the income 20) approach to measuring GDP? I. Wages and salaries. II. Pension fund contributions. III. Social Security contributions.

Real GDP/population

Which of the following is used to calculate the standard of living?

II only

Which of the following people would be considered unemployed by the Bureau of Labor 35) Statistics? I. Mrs. X retires from her job at the age of 55 and does not look for another job. II. Mr. Y was laid off from his job as a welder, but expects to be rehired in 8 months.

Rich, who is working 20 hours a week but wants a full-time job

Which of the following people would be counted as is employed in the Current Population Survey?

Gross Investment = Net Investment + Depreciation

Which of the following relationships is CORRECT?

The growth of real GDP per person accelerated between 1973 to 1984

Which of the following statements regarding U.S. economic growth is NOT correct?

is defined as a period of real GDP growth

an expansion