Macro Econ Exam 2

Which of the following is used to compare the average standard of living across countries?

GDP per person

Decisions about saving and investment are

complicated by the fact that the future is uncertain.

Which of the following represents an income flow in the circular flow of domestic output and national income?

corporate profits

In the modern economic growth process, it is typical to find that

follower countries can grow faster than leader countries.

Prices

for many commodities and raw materials such as corn, oil, and natural gas are extremely flexible.

In which industry or sector of the economy is output least likely to be affected by the business cycle?

medical services

The system that measures the economy's overall performance is formally known as

national income accounting.

Government purchases include all of the following except expenditures for

new factory equipment.

Suppose a small economy produces only video game consoles. In year one, 12,000 video game consoles are produced and sold at a price of $420 each. In year two, 12,000 video game consoles are produced and sold at a price of $400 each. Which of the following statements is true about year 1 to year 2 if year 1 is the base year?

nominal GDP decreases, while real GDP stays constant.

Proponents of economic growth say that pollution

occurs, not because of growth, but because common resources are treated as free goods.

The size of the labor force depends on the size of the working-age population and the

participation rate.

Suppose that Techno Co. produces laptop computers. At a price of $1,000 per laptop, Techno determines that its optimal output is 3,000 laptops per week. If prices are sticky and fears of a recession reduce demand for laptop computers, we would expect Techno to

reduce output in the short run.

Cost-push inflation

reduces real output.

Labor productivity can only increase if

capital increases faster than labor.

If actual GDP is $460 billion and there is a positive GDP gap of $30 billion, potential GDP is

$430 billion.

Compared with the period from 1973 to 1995, the annual rate of productivity growth from 1995 to 2010 was about

2 times faster.

The unemployment rate in an economy is 12 percent. The total population of the economy is 350 million, and the size of the civilian labor force is 165 million. The number of unemployed workers in this economy is

20 million.

Suppose the nominal annual interest rate on a two-year loan is 8 percent and lenders expect inflation to be 5 percent in each of the two years. The annual real rate of interest is

3 percent.

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is

300.

Which of the following is not an explanation put forward to explain the recent productivity slowdown?

A massive influx of immigrant labor has caused the labor force to expand much faster than real GDP.

Which of the following economic regions has experienced the least growth in real GDP per capita since 1820?

Africa

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

All of these are identified as causes of business cycle fluctuations.

Which of the following statements is accurate about most economies?

Economies experience a positive growth trend over the long run but experience significant variability in the short run. Correct

Which of the following transactions would be included in GDP?

Henry buys a newly constructed house.

Other things equal, which of the following would decrease the rate of economic growth, as measured by changes in real GDP?

a decrease in the labor-force participation rate

Net exports is a positive number when

a nation's exports of goods and services exceed its imports. Correct

Expenditures on the research and development (R&D) of new productive technologies

are included in Ig.

Over the past several decades, the percentage of women in the paid U.S. workforce has

increased due to higher wages, expanded job accessibility, changing preferences and attitudes, and other factors. Correct

Suppose that a person's nominal income rises from $10,000 to $12,000 and the Consumer Price Index rises from 100 to 105. The person's real income will

rise by about 15 percent.

At the core of understanding economic growth is the idea that t

save and invest.

The two topics of primary concern in macroeconomics are

short-run fluctuations in output and employment and long-run economic growth.

The national income account, proprietors' income, consists of the net income of

sole proprietorships, partnerships, and other unincorporated businesses.

Real GDP measures the

value of final goods and services produced within the borders of a country, adjusted for price changes.