Macro Final Exam- Review Sheet 1

In comparison to a government that runs a balanced budget, when the government runs a budget deficit,

business investment will fall

In the circular flow model, the value of total production for an economy _______ the value of total expenditures on final goods and services

equals

Consider the following data for a closed economy Y= $12 trillion C= $8 trillion I= $2 trillion G= $2 trillion TR= $2 trillion T= $3 trillion Based on the information above, what is the level of private saving in the economy?

$3 trillion

Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the below table, nominal GDP for this simple economy equals: Product Quantity Price Sweatshirts 50 $35.00 Dental Exams 40 $75.00 Coffee Drinks 1,000 $4.00 Coffee Beans 2,000 $0.50

$8,750

Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2012 equals Year Nominal GDP Real GDP 2011 $13,399 $12,976 2012 $14,078 $13,254 2013 $14,441 $13,312

105.1

According to the "Rule of 70", how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

14 years

If real GDP grows by 3% in 2011, 3.2% in 2012, and 2.5% in 2013, what is the average annual growth rate of real GDP?

2.9%

______ is the ease with which a financial security can be exchanged for money

Liquidity

a small economy increased its capital per hour worked (K/L) from $40,000 to $50,000. As a result, real GDP per worker (Y/L) grew from $20,000 to $25,000. If the economy increases its capital per hour worked by another $10,000 to $60,000, but there is no change in technology, by how much more and in what direction will output per worker change?

Output per worker will increase by less than $5,000

If government saving is negative, then

T-TR < G

Which of the following transactions represents the purchase of a final good

Your father buys a new John Deere riding lawn mower

Using the market for loanable funds, which of the following has the potential to raise the real interest rate?

an increase in the demand for loanable funds

The per-worker production function shows the relationship between ___ per hour worked and ____ per hour worked, holding ____ constant

capital; real GDP; technology

to calculate GDP by the expenditure method, one must add

consumption spending, investment spending, government spending and net exports

In the long run, a country will experience an increasing standard of living only if it experiences

continuous technological change

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?

discouraged workers

The labor force equals the number of people

employed plus unemployed

A student who just graduated from college but has not found a job would most likely be

frictionally unemployed

An economy can improve its standard of living by

increasing the amount of capital available per hour worked

Which of the following increases labor productivity?

inventions of new machinery, equipment, or software

the purchase of a new house is included in

investment expenditures

An efficiency wage

is higher than the market wage and tends to increase productivity

If the per-worker production function shifts down

it now takes more capital per hour worked to get the same amount of real GPD per hour worked

the labor force participation rate equals the

labor force divided by the working-age population x 100

the purchase by a foreign government of an airplane produced in the US is included in U.S

net exports

when consumers are less confident about their jobs or incomes, they are more likely to

reduce purchases of durable goods than nondurable goods

If there is a change in the ability of a firm to produce a given level of output with a given level of inputs, we say there is

technological change

According to new growth theory,

technological change is influenced by economic incentives

If the federal government implements programs so that the unemployed are more quickly matched with jobs, then

the natural rate of unemployment will decrease

When an economy faces diminishing returns

the slope of the per-worker production function becomes flatter as capital per hour worked increases

GDP is calculated by summing up

the total market value of final goods and services produced in the economy during a period of time

Jack was unemployed two weeks ago but just started a new job. As a result of this increase in the number of employed workers, which of the following occurred?

the unemployment rate decreased

Mike has been unemployed for over a year. He hasn't looked for a job in the last three months, but he's just started looking for work again. Because Mike started looking for a new job,

the unemployment rate increased

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S Bureau of Labor would equal

(20/100) x 100

If real GDP in a small country in 2012 is $8 billion and real GDP in the same country in 2013 is $8.3 billion, the growth rate of real GDP between 2012 and 2013

3.75%

the GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is

5% higher than in year 2 than in year 1

when the labor market is at full employment

there is no cyclical unemployment in the economy