Macroeconomics Aggregates

Imports are subtracted from the calculation of GDP in the national income accounting identity because

Expenditure on foreign production is already included in the consumption, investment and government expenditure terms.

Which of the following statements is false?

The inflation rate can only be calculated as the percentage change in the CPI.

Which of the following is included in the economist's definition of investment?

The purchase of new machines, factories, or houses

Macroeconomics focuses on which of the following topics?

Unemployment, inflation, growth, and trade

A framework used to measure the level of aggregate economic activity in a country is known as;

National Income Accounts

Which of the following represents the aggregate accounting identity?

Production = expenditure = income

Which of these is the national income accounting identity?

Y = C + I + G + X - M

Which letter best represents the demand for factors of production in this circular flow model?

c

Which is the largest component of GDP?

consumption

In the circular flow model, who supplies factors of production in exchange for income?

households

The percentage increase in the cost of living from one year to the next is the;

inflation rate

Which of the following are not counted as final goods and hence not included in the calculation of GDP?

intermediate goods

The unemployment rate is specifically defined as the percentage of the;

labor force that is unemployed.

Gross domestic product is best defined as the:

market value of all final goods and services produced in a country during a period of time

The GDP deflator is 100 times the ratio of;

nominal GDP to real GDP.

Bill is a college student that is not actively looking for work. He is considered to be;

not in the labor force.

Mariam cleans her house twice a week. This task would cost Mariam $100 a week if she were to hire someone to clean. Mariam's activity adds to the GDP.

nothing

Many economists believe the CPI __________ inflation because it fails to consider quality improvements in products.

overstates

Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?

real GDP

A decline in economic activity that lasts at least two consecutive quarters is known as a;

recession

Which phase of the business cycle is characterized by increasing levels of unemployment?

recessions

If Americans still worked sixty hour weeks, as they did in 1890, __________.

the GDP would be much higher than it is but the well-being of the typical person would not necessarily be higher

The unemployment rate is specifically defined as the percentage of the;

the population of the labour force not working

Real GDP is:

the value of goods and services evaluated at base year prices

Which of these is not a shortcoming of GDP as a measure of welfare?

It only counts final goods and services and not intermediate goods.

In developed economies, labor income accounts for ______ of total income payments.

2/3

What is Capital income?

Income derived from owning physical and financial capital

Which of the following would be considered a type of government expenditure?

Interstate construction

Which of the following goods and services would be excluded from personal consumption expenditures in the Bureau of Economic Analysis (BEA) statistics?

a new house

As the value of a country's real GDP increases, the country is likely to:

devote more resources to pollution reduction

The consumer price index is an index computed using prices of a:

fixed basket of goods used by the typical consumer