Macro Econ Test 1

In the United States over the past century, real GDP per person has grown by about __________ percent per year.

2

For the purpose of calculating GDP, investment is spending on

capital equipment, inventories, and structures, including household purchases of new housing.

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

consumption of services.

GDP is defined as the

value of all final goods and services produced within a country in a given period of time.

Thousands of people develop lung cancer from second-hand exposure to cigarette smoke. This is an example of

a market failure caused by an externality.

market failure

a situation in which a market left on its own fails to allocate resources efficiently

Which of the following is included in GDP?

Both the market value of rental housing services and the market value of owner-occupied housing services

Economist Robert Fogel focused on which of the following factors as one determinant of long-run economic growth?

Nutrition

Which of the following is correct?

Even though Japan had a higher growth rate of real GDP per person than the United States over the last 120 years, it's level of real GDP per person is less than that of the United States.

In the simple circular-flow diagram, which of the following is not true?

Households are the only decisions makers

What is GDP computed in

Market Prices

The overriding reason why households and societies face many decisions is that?

Resources are scarce

Which of the following is included in the calculation of GDP?

The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.

Which of the following do economists not generally regard as a legitimate reason for the government to intervene in a market?

To protect an industry from foreign competition

An organization that tries to encourage the flow of investment from advanced countries to poor countries is the

World Bank

prodcutivity

amount of goods and services produced from each unit of labor input.

If your firm's production function has constant returns to scale, then if you double all your inputs, your firm's output will

double but productivity will not change.

A transfer payment is a payment made by

government, but not in exchange for a currently produced good or service.

Malthus predicted that the power of population growth was

greater than the power of the earth to produce subsistence. His forecast was off the mark.

Other things the same, a country that increases its savings rate will have

higher future capital and higher future real GDP per person.

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

included in U.S. GDP, but it is not included in U.S. GNP.

If an economy's GDP falls, then it must be the case that the economy's

income and expenditure both fall.

GDP measures

income and expenditures

Relationship between inflation and unemployment

inverse relationship

If over a short time there is an increase in the number of people retired and a decrease in the number of people working, then productivity

rises but real GDP per person falls.

market power

the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices

property rights

the ability of an individual to own and exercise control over scarce resources

Savion's aunt gave him $25 for his birthday with the condition that Savion buys himself something. In deciding how to spend the money, Savion narrows his options down to four choices: Option 1, Option 2, Option 3, and Option 4. Each option costs $25. Finally, he decides on Option 2. The opportunity cost of this decision is

the value to Savion of the option he would have chosen had Option 2 not been available.