Macro economics Test 2
In gdp terms, it is always
Exports - imports
Government purchases include spending on goods and services by
federal, state, and local governments
Calculating inflation rate is the equation
(Year 2-year1/year 1) X 100
Over the past century, real GDP per person in the United States has grown about _____ percent per year, which means it doubles about every _____ years.
2-3.5
The marginal tax rate on labor income for many workers in the us is...
50%
As the size of a tax increases the deadweight loss from the tax...
Decreases
GDP Consumption is
Household spending on durable and non durable goods as well as household spending on services
Equity deals with
How fairly the pie is sliced
Economists generally agree that _____ is the most important tax
Labor tax
Which of the Ten Principles of Economics does welfare economics explain more fully?
Markets are usually a good way to organize economic activity
If the government quadrupled the tax on gasoline, the deadweight loss from the gasoline tax would
More than quadruple
Laffer Curve
Related income tax rates to total income taxes collected
Efficiency deals with the
Size of the economic pie
GDP equation is
Y=C+I+G+NX
Welfare economics is the study of
how the allocation of resources affects economic well-being
After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are
included in GDP since government expenditures on goods and services are included in GDP
When a country is on the downward-sloping side of the Laffer curves, a cut in the tax rate will
increase tax revenue and decrease the deadweight loss.
What happens to consumer surplus if the price of a good increases?
it decreases
Government purchases include spending on goods and services by
local, state, and federal governments
Deadweight loss measures the
loss in a market to buyers and sellers that is not offset by an increase in government revenue.
willingness to pay
measures the value that a buyer places on a good
The cpi is used to
monitor changes in the cost of living
For the purpose of calculating GDP, investment is spending on
new capital equipment, inventories, and structures, including new housing
real interest rate formula
nominal interest rate - inflation rate
Inefficiency exists in an economy when a good is
not being produced by the lowest-cost producers.
If the tax on a good is doubled, the deadweight loss of the tax
quadruples
A nation's standard of living is best measured by its
real GDP per person
Producer surplus
the amount a seller is paid for a good minus the seller's cost of providing it
The larger the deadweight loss of a taxation
the larger the cost of any government program
GDP
the market value of all final goods and services produced within a country in a given period of time