Macro Midterm 2

The aggregate production function Y = f(L, H, K) shows that economic growth can occur if: (i) human capital increases. (ii) labor productivity falls. (iii) the capital stock in the country depreciates. (iv) the depreciation rate increases.

1 only

Refer to the diagram of the circular flow of income. The key lessons from this diagram are that:(i) all flows of resources are matched by flows of money.(ii) the market value of total output must be equal to total spending.(iii) total spending must equal total income.(iv) all inputs are provided by businesses.

1, 2, 3

In 2017, the total population of Africa was estimated to be about 1,250,000,000 people. This number, in billions, is:

1.25

Which of the following is (are) included in investment? (i) military spending (ii) the purchase of an aircraft by a domestic airline (iii) the purchase of $45,000 worth of bonds (iv) the purchase of $32,000 worth of stock (v) social security payments (vi) the construction of a highway by the federal government

2 only

In 2010, Canada's GDP was approximately $1,357 billion, and its population was about 34.12 million. What was Canada's approximate GDP per person in 2010?

39,770

The government passes a new investment tax credit initiative. Which input in the production function changes, and what is the effect on economic growth in the country?

The capital stock increases, and economic growth is positively affected.

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP?

They aren't counted

The aggregate production function is represented as:

Y= f(L,H,K)

Southeast Asian countries experience high temperatures and high humidity during the monsoon seasons. This makes working conditions difficult. Because air conditioners are expensive and consume a lot of electricity, an alternative air cooler called an Eco-cooler was invented. This device does not use electricity, is made from readily available soda bottles, and works by funneling air into a room. This scenario is an example of:

a technological innovation that can increase labor productivity and thus increase economic growth.

The moral of the story of the Solow growth model is that:

capital accumulation alone cannot lead to sustainable economic growth.

If a bakery buys a second oven, hires a second baker, buys double the number of ingredients, doubles the size of the bakery, and then produces double the number of cakes, then the bakery is experiencing:

constant returns to scale

Which of the following is a scaled number?

government budget deficit as a percentage of GDP

Total income measured by adding total wages and total profits is referred to as:

gross domestic income.

Which of the following encourages the development of new ideas and inventions?

patents

A constant returns to scale production function means that if all inputs are increased by 75%, this should lead to output:

rising by 75%

Along the same aggregate production function, the level of _____ is the same.

technology

Technological advancement is NOT represented by which of the following?

the adoption of an existing technology by new firms

Which definition best describes real GDP?

the production of goods and services valued at constant prices

Which of the following is an example of transfer payments? government loans military salaries interest earned on savings in banks unemployment benefits

unemployment benefits

You purchase a new car (produced this year) for $38,000. After six months, you sell the car for $31,500. How much does GDP rise because of these two transactions?

GDP rises by 38k

What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint?

In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.

James is growing older and no longer cares to pull weeds on his property. Instead, James pays the kid next door $10 a week in cash to make sure his yard is weed free. GDP would fail to measure this activity because of what limitation?

It does not take into account the shadow economy.

After much debate with his partner, Boris decides to become a stay-home father to raise his family's new set of twins. Now, while his partner works in the office, Boris focuses on raising the children and completing household activities. GDP would fail to measure the work Boris does at home because of what limitation?

It doesn't count nonmarket activities.

What is the difference between microeconomics and macroeconomics?

Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.

In 2018 in New Zealand nominal GDP grew by 7.8% and prices rose by 2.0%. In Micronesia, real GDP grew by 4.0% and prices rose by 3.9%. Thus ______ had a higher growth in nominal GDP, and _______had a higher growth in real GDP.

Micronesia; New Zealand

Which of the following countries enjoyed significant catch-up economic growth in the second half of the twentieth century?

South Korea

Which of the following is an example of a durable good? your haircut your new car fresh flowers from the florist a soft drink

your new car