Macro Assignment 2

When a firm sells a product out of inventory, investment expenditures ____, and consumption expenditures ____

Decrease; Increase

The marginal product of labor is:

additional output produced when one additional unit of labor is added.

In a classical economy, if consumption increases as the interest rate decreases, then a $10 billion rise in government spending would:

crowd out between zero and $10 billion of investment.

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bread for $6. The value added by the miller is:

$2.

If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately ____ percent.

4.7

If the consumption function is given by C = 150 + 0.85Y and Y increases by 1 unit, then C increases by:

0.85 units.

If nominal gross domestic product (GDP) in 2009 equals $14 trillion and real GDP in 2009 equals $11 trillion, what is the value of the GDP deflator?

1.27

The employment statistics computed from the establishment survey do NOT include

Those who are self-employed

In the circular flow model, the flow of dollars from firms to households is paid _, and the flow of dollars from households to firms is paid ___.

as wages, capital income, and profits; for goods and services

The government raises lump-sum taxes on income by $100 billion, and the neoclassical economy adjusts so that output does not change. If the marginal propensity to consume is 0.6, private saving:

falls by $40 billion.

Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation, ____

gives a better measure of ongoing, sustained price changes.

In the circular flow diagram, firms receive revenue from the _ market, which is used to purchase inputs in the ___ market.

goods; factor

The neoclassical theory of distribution explains the allocation of:

income among factors of production.

If nominal gross domestic product (GDP) increased by 5 percent and the GDP deflator increased by 3 percent, then real GDP _ by ___ percent.

increased; 2

According to the neoclassical theory of distribution, in an economy described by a Cobb-Douglas production function, workers should experience high rates of real wage growth when:

labor productivity is growing rapidly.

Net national product equals gross national product (GNP):

minus depreciation.

The labor force equals the:

number of employed and unemployed individuals

National saving is:

private saving plus public saving.

Assuming that goods and factor markets are perfectly competitive, which one of these explains the increasing share of capital in national income?

technological advancement that has decreased the role of labor and increased the role of capital in production

If an earthquake destroys some of the capital stock, the neoclassical theory of distribution predicts that:

the real wage will fall and the real rental price of capital will rise.