Econ chapter 7 and 8
200 billion... remained the same and increased by 10
190
about ____ of US econ growth comes from improved productivity
2/3
setup corp
200000
200 billion... remained the same and fell by 10
210
6.5 and 3.5
3
suppose nominal annual interest rate on a 2 year loan is 16 percent and lender expect inflation to be 10
3
40 and 70
30
80 and 240 billion
300
pre capita GDP was about ______ in year 3 in zorn
303
between years 1 and 2 real GDP pre capita grew by ___ in Alta
4
if econ real GDP doubles in 18 years we can conclude that its average annual rate of growth is about ____ %
4
if nominal interest is 12% and real interest rate is 8 then inflation premium is
4%
if the unemployed rate is 9 % and the natural rate of unempl is 5% then the cyclical unempl rate is ___
4%
full empl unempl rate means an umemply rate is about ____ %
4-5
100 and 260
44%
between years 1 and 2 real GDP grew by ___ in Alta
5
500 and 450 billion
500 billion
assume the natural rate of unemply in US is 5% and the actual rate of unemply is 9%. okuns laws is ___ %
8; multiply cyclical unemply by 2
100, 50, and 47 million
94%
assume that the size of underground econ increases both absolutely and relatively over time
gdp will tend to increasingly understate the level of output through time
final goods and services refer to
goods and services purchased by ultimate users, rather than for resale or further processing
govt purchases include govt spending on
govt consumption goods and public capital goods
GDP differes from NDP in that
gross investment is used in calc GDP and net investment is used in NDP
real GDP and nom gdp differ bc real GDP
has been adjusted for changes in price level
suppose smith pays $100 to jones
we need more information to determine whether GDP has changed
an economy is enlarging its stock of capital goods
when gross inv exceeds replacement investment
in determining real GDP, nom. GDP for (chart)
years 1 and 2 inflated
280 and 160; price index
175
ZZZ corp
18
if consumer price index falls from 120 to 116
-3.33
if both real interest rate and nom interst rate is 3, inflation premium is
0
5% and 125 to 130
1
if consumer price index rises from 300 to 333
11%
if a nations real GDP is growing by 5 percent per year, its real GDP will double in app. _____ years
14
10000 and 20000
15%
the labor force includes employed workers and person who are ____
16 and older
net exports are negative when
a nations imports exceed its exports
positive net in is occuring in
C
other things equal... production capacity in econ is
C is growing rapidly
minus 6 billion
C; used up more capital goods than produced
if net foreign factor income earned in US is zero, the sum of national income, indirect business taxes, and the consumption of fixed capital equals
GDP
which of the following is the largest $ in US
GDP
real GDP refers to
GDP data that have been adjusted for changes in price level
price index
a comparison of price of market basket from a fixed point of reference
nominal GDP is adjusted for price changes through use of
GDP price index
real GDP pre capita is found by
GDPr divided by population
the total income earned in any year by US resource suppliers is measured by
NI
transfer payments are included in
PI
40 and 50 billion
add 10 billion
in the treatment of US exports and imports national income accountants
add exports, but subtract imports, in calc. GDP
cyclical unemply results from a deficiency of ____
aggregate spending
a price index can rise from one year to next even though
all of above occur
GDP data criticized as being inaccurate measures of econ welfare
all of the above
by summing values added at each stage in production of some good
all of the above
national income accountants define investment to include
any increase in business inventories
recurring upswings and downswings in econ real GDP over time are called
business cycles
US econ is considered to be at its ____ when 95 of labor force is emplyed
full employment
350 and 375
cannot make a meaningful comparison of the econ performance in 2002 relative to 2003
in an econ experiencing persistent deflation
changes in nominal GDP understate changes in real GDP
the largest component of national income
compensation of employees
in national income accounting, consumption expenditures include
consumer durable goods, consumer nondurable goods, and services
the largest component in US is
consumption
inflation may be caused by a negative supply stock
cost push
inflation initiated by increases in wages or other resource prices is
cost push inflation
real GDP measures
current output at base year prices
a large GDP gap implies a high rate of ____ unemply
cyclical
the type of unemply associated with recessions is called ____
cyclical unemply
inflation occurs when total spending exceeds the econ ability to provide output at existing price level
demand pull
a nations stock of capital goods will decline when
deprecation exceeds gross
which of the following is the smallest $ in US
disposable income
when an economys production capacity is expanding
domestic investment exceeds deprec.
personal income is most likely to exceed national income
during a period of recession or depression
transfer payments are
excluded when calculating GDP because dont reflect current production
econ characterized by above data
experiencing declining production capacity bc net inv is negative
net exports are
exports less imports
GDP includes
final, but not intermediate goods
a nations gross domestic product can be calculated by
finding the sum of C + Ig + G +Xn
a college grad using the summer following grad to search for a job would be classified as part of ____ unempl
frictional
during a period of _______ people tend to hold goods rather than money
hyperinflation
as defined in national income accounting, investment includes
imports, but not exports
GDP measures and reports output
in dollar amounts
GDP price index
includes all goods comprising the nations domestic output
which of the following best defines disposable income
income received by households less personal taxes
econ growth is best defined
increase in either GDPr or an increase in GDPr pre capita
360 and 450 billion
increased by 60 billion
120 and 65 billion
increased by 65
972 and 90
inflated to 1080 billion
"too much money chasing too few goods"
inflation premium or demand pool
relationship between the size of cyclical unemply and business cycle is
inverse
trailblazer
investment in 2003 and dis in 2004
A nations gross domestic product
is the dollar value of the total output produced within the borders of a nation
growth is advantageous to a nation because it
lessens the burden of scarcity
to be officially umemployed a person must be ____
looking for a job
The GDP is the
monetary value of all final goods and services produced within a nation in a particular year
the total amount of income earned by US resourced suppliers in a year is measured by
national income
the smallest component of aggregate spending in the US is
net exports
if depreication (consumption) exceeds domest. we can conclude that
net investment is negative
gross investment refers to
net investment plus replacement investment
for the years shown above, the growth of
nom gdp overstates increase in real output
if real GDP rises and GDP price index has increased
nominal GDP must have increased
if real GDP falls from one period to another
none of the above
in calculating GDP, govt transfer payments, such as social security are
not counted
By summing the dollar value of all market transactions in the econ we would
obtain a sum substantially larger than the GDP
national income accountants can avoid multiple counting by
only counting final goods
the natural rate of unemployment is that rate of unemployment occurring when the econ is at its ____ output
potential
the GDP gap measures amount by which ____ exceeds _____
potential GDP; actual GDP
inflation means
prices in aggregate are rising, although some particular prices may be falling
Tom Atoe grows tomatoes for home consumption.. this activity is
productive but is excluded from GDP because no market transaction occurs
in national income accounting, govt purchases include
purchases by feder, local, and state
the growth of GDP understate changes in econ well being over time if
quality of products and services improve
if nominal gdp rises
real gdp may either rise or fall
the phase of the business cycle in which real GDP declines is called a
recession
defines okuns law
shows the relationship between unemply rate and size of negative GDP gap
unemply involving a mismatch of skills of unemply workers and skills required available for job is ____
structrual
80 and 70 billion
subtract 10
the value of US imports
subtracted from exports when GDP because imports do no constitute productino in US
value added can be determined by
subtracting the purchase of intermediate products from value of sales of final products
the fact that nom gdp has risen faster than real gdp
suggests that general price level risen
if intermediate goods and services were included in GDP
the GDP would be overstated
value added refers to
the diff between the value of a firms output and value of inputs it has purchased from others
if depreciation exceeds gross investment
the econ stock of capital shrinks
historically real GDP has increased less rapidly than nominal GDP
the general price level has increased
GDP excludes
the market value of unpaid work in home
130 and 150; 110 and 100
the price level increased between 1 and 2
in comparing GDP data over period of years, difference between nominal and real GDP may arise because
the price level may chnge over time
in second quarter, US nominal GDP increased but real GDP declinded
the price level rose by more than nominal GDP
nominal GDP
the sum of all monetary transactions involving final goods and services
if the economy adds to its inventory of goods during some year
this amount should be included in calculating that years GDP
the concept of net dom investment refers to
total investment less the amount of investment goods used up in producing years output
if personal income exceeds national income, we conclude that
transfer payments exceeded the sum of undistributed corp profits
GDP tends to
understate econ welfare bc it does not take into account increases in leisure
a large underground econ results in
understated GDP
