Macroeconomics #2

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Current CPI

238

The Great Depression of the 1930s resulted in a decline in real GDP of about:

30 percent

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is:

4 percent

The full-employment unemployment rate for the United States economy is now generally considered to be:

4 to 5 percent of the labor force

Current Unemployment Rate

5.1%

Personal Income (PI) -Personal Taxes =Disposable Income (DI)

DI

Inflation caused by an increase in aggregate spending is referred to as:

Demand-pull inflation

Net exports are:

Exports less imports

A peak in the business cycle:

Is a temporary maximum point

GDP excludes:

the market value of unpaid work in the home

The recurrent ups and downs in the level of economic activity extending over several years are a description of:

A business cycle

Current Value of GDP

$18 Trillion

Answer the next question(s) on the basis of the following data. All figures are in billions of dollars. Personal taxes $40 Social Security Contributions 15 Taxes on Production and Imports 20 Corporate Income Taxes 40 Transfer Payments 22 US Exports 24 Undistributed Corporate Profits 35 Government Purchases 90 Gross Private Domestic Investment 75 US Imports 22 Personal Consumption Expenditures 250 Consumption of Fixed Capital 25 Net Foreign Factor 10 Statistical Discrepancy 0 Refer to the above data. DI is:

$274

Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is:

$30

Answer the next question(s) on the basis of the following data. All figures are in billions of dollars. Personal taxes $40 Social Security Contributions 15 Taxes on Production and Imports 20 Corporate Income Taxes 40 Transfer Payments 22 US Exports 24 Undistributed Corporate Profits 35 Government Purchases 90 Gross Private Domestic Investment 75 US Imports 22 Personal Consumption Expenditures 250 Consumption of Fixed Capital 25 Net Foreign Factor 10 Statistical Discrepancy 0 Refer to the above data. PI is:

$314

Answer the next question(s) on the basis of the following data. All figures are in billions of dollars. Personal taxes $40 Social Security Contributions 15 Taxes on Production and Imports 20 Corporate Income Taxes 40 Transfer Payments 22 US Exports 24 Undistributed Corporate Profits 35 Government Purchases 90 Gross Private Domestic Investment 75 US Imports 22 Personal Consumption Expenditures 250 Consumption of Fixed Capital 25 Net Foreign Factor 10 Statistical Discrepancy 0 Refer to the above data. NDP is:

$392

Answer the next question(s) on the basis of the following data. All figures are in billions of dollars. Personal taxes $40 Social Security Contributions 15 Taxes on Production and Imports 20 Corporate Income Taxes 40 Transfer Payments 22 US Exports 24 Undistributed Corporate Profits 35 Government Purchases 90 Gross Private Domestic Investment 75 US Imports 22 Personal Consumption Expenditures 250 Consumption of Fixed Capital 25 Net Foreign Factor 10 Statistical Discrepancy 0 Refer to the above data. NI is:

$402

Answer the next question(s) on the basis of the following data. All figures are in billions of dollars. Personal taxes $40 Social Security Contributions 15 Taxes on Production and Imports 20 Corporate Income Taxes 40 Transfer Payments 22 US Exports 24 Undistributed Corporate Profits 35 Government Purchases 90 Gross Private Domestic Investment 75 US Imports 22 Personal Consumption Expenditures 250 Consumption of Fixed Capital 25 Net Foreign Factor 10 Statistical Discrepancy 0 Refer to the above data. GDP is:

$417

If the natural rate of unemployment was 6 percent, the current unemployment rate was 12 percent, and the nominal GDP was $4,000 billion, then according to Okun's law the economy would have sacrificed:

$480 billion in potential output

Assume that an economy has 1500 workers, each working 2000 hours per year. If the average real output per worker-hour is $20, then total output or real GDP will be:

$60 million

Assume that an economy has 2,000 workers, each working 4,000 hours per year. If the average real output per worker-hour is $10, then total output or real GDP will be:

$80 million

Annual Rate of Inflation

(this year-last year)//last year

Current U.S. Debt

18.4 Trillion

From 1995-2007, labor productivity grew on average by:

2.7 percent

If the Consumer Price Index was 166.6 in one year and 172.2 in the next year, then the rate of inflation from one year to the next was:

3.4 %

A nation has a population of 260 million people. Of these, 60 million are retired, in the military, in institutions, or under 16 years old. There are 188 million who are employed and 12 million who are unemployed. What is the unemployment rate?

6 percent

Current Population

7.2 Billion

Assuming the total population is 200 million, the labor force is 100 million, and 92 million workers are employed, the unemployment rate is:

8 percent

Which of the following is a final good or service? A. a haircut B. fertilizer purchased by a farm supplier C. diesel fuel bought for a delivery truck D. Chevrolet windows purchased by a General Motors assembly plant

A. a haircut

Which of the following is the smallest dollar amount in the United States? A. disposable income B. personal income C. gross domestic product D. national income

A. disposable income

Okun's Law

Actual Rate -Nominal rate = % x 2 = GDP gap

A supply factor in economic growth would be:

An increase in the quantity of labor

Which is a demand factor in economic growth?

An increase in total spending in the economy

The shift of labor out of agriculture to industry in the United States has tended to:

Increase labor productivity

GDP can be calculated by summing:

Investment, government purchases, consumption, and net exports

The agency responsible for compiling the National Income Product Accounts for the U.S. economy is the:

Bureau of Economic Analysis

Who calculates inflation?

Bureau of Labor Statistics

Frictional Unemployment

Searching or waiting to take job soon

Which factor has accounted for the largest increase in the productivity of labor in the United States? A. Economies of scale B. The quantity of capital C. Technological advance D. The education and training of workers

C. Technological advance

Which industry or sector of the economy would least likely be affected by the business cycle?

Services

Which of the following is the largest dollar amount in the United States? A. disposable income B. personal income C. gross domestic product D. national income

C. gross domestic product

Follower Countries

Can grow much faster because they can adopt leading technologies from the richer leading countries

What is one major measure of economic growth?

Changes in real GDP

Unemployment that occurs when there is deficient demand for the goods and services of an economy is called:

Cyclical

Structural Unemployment

Due to shift and changes in economy (i.e. computers invented

What economic concept would be most closely associated with a situation where an aluminum plant uses extensive computerization on the production line to reduce per-unit costs of production?

Economies of scale

A trough in the business cycle occurs when:

Employment and output reach their lowest levels

Who is the most affected by inflation

Fixed income receivers, savers, and creditors

+Personal Consumption +Gross Private Domestic Invest +Government Purchases +Net Exports =Gross Domestic Product

GDP

Final goods and services refer to:

Goods and services purchased by ultimate users, rather than for resale or further processing

Leader Countries

Grows by an average annual rate of 2 or 3 percent a year

3 Major Goals of Economy

Growth, Full Employment, Stable Prices

The knowledge and skills that make a productive worker are referred to by economists as:

Human Capital

A major argument for economic growth is that it:

Leads to a higher standard of living

GDP is the:

Monetary value of all final goods and services produced within the borders of a nation in a particular year

Total real output can be determined by:

Multiplying the input of labor (measured in work-hours) by labor productivity (measured by real output per worker per hour)

Gross Domestic Product (GDP) -Consumption of Fixed Capital =Net Domestic Product (NDP)

NDP

Net Domestic Product (NDP) -Statistical Discrepancy +Net Foreign Factor Income =National Income (NI)

NI

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

National income accounting

The full-employment rate of unemployment is also called the:

Natural rate of unemployment

In calculating GDP, governmental transfer payments, such as social security or unemployment compensation, are:

Not counted

National income accountants can avoid multiple counting by:

Only counting final goods

Cyclical Unemployment

Out of work because of recession (no jobs to be found)

National Income (NI) -Taxes on Production and Imports -Social Security Contributions -Corporate Income Taxes -Undistributed Corporate Profits +Transfer Payments =Personal Income (PI)

PI

The GDP gap measures the amount by which:

Potential GDP exceeds actual GDP

Intermediate Goods

Products purchased for resale or further manufacturing

Final Goods

Products that are purchased by their end users

Assume a current production possibilities are represented by the curve AB in the above diagram. Positive economic growth would best be indicated by a:

Shift in the curve from AB to CD

Institutional Structures that promote Economic Growth

Strong property rights, patents and copyrights, efficient financial institutions, literacy and widespread education, free trade and a competitive market

Kevin has lost his job in an automobile plant because of the use of robots for welding on the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers. The type of unemployment Kevin is faced with is:

Structural

The single most important source of productivity for economic growth for the United States has been:

Technological Advance

A nation's gross domestic product (GDP):

The dollar value of all final output produced within the borders of the nation

Inflation is a rise in:

The general level of prices over time

Value Added

The market value of a firms output less the value of the inputs the firm has bought from others

The basic determinants of labor inputs (total hours of work) include:

The size of the labor force and average hours of work

The concept of net domestic investment refers to:

Total investment less the amount of investment goods used up in producing the year's output

Which is the correct way to calculate the unemployment rate?

[(unemployed)/(labor force)] x 100

CPI

price of most recent market basket //divided by// price estimate of market basket 1982-1984


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