Macroeconomics Final
If the bank returns $1,060 on the $1,000 deposited for a year during which inflation is 4%, the real interest rate is
2%
500lbs of apples and 1200lbs of bananas, 300lbs of apples and 1300lbs of bananas, opportunity cost of bananas
2lbs of apples
Equilibrium quantity and equilibrium price for a stapler is
70,000 and $6
Adding wages, interest, rent, and profits yield
GDP
Market value of the final goods and services produced in a given year within a country
GDP measures
Demand is the relationship between quantity demanded and the price of a good when all the other influences on buying plans remain the same
True regarding demand
Excludes the value of underground production and leisure time
U.S real GDP
Measuring total production by valuing items at their market value allows up to
add together the value of different goods that have different prices
oil refiners can refine a barrel of petroleum so that it yields either more home heating oil or more diesel fuel. If the price of diesel fuel falls, there is
an increase in supply of home heating oil
Macaroni and cheese is an inferior good, then a decrease in income results in
an increase in the demand for mac and cheese
A market defined as
any arrangement that brings buyers and sellers together
What determines the position of the supply curve of high skilled workers relative to that of low skilled workers
cost of acquiring the skill
How are final goods and services valued when measuring nominal GDP
current market prices
Created by recession
cyclical unemployment
Real GDP fluctuates around its trend
during business cycle
All of the available factors of production are being efficiently employed, the
economy is producing at a point on its PPF
NOT directly included in Canadian GDP
gasoline purchased by a tour bus operator
Circular flow model, two types of markets
goods and factor
For CPI to provide an accurate measure of the prices paid by urban consumers, it is necessary
have a market basket that is consistent and corresponds to what households actually purchase
Market demand curve for mangos is
horizontal sum of the individual demand curves of all buyers
Puerto Rico's PPF will shift outward further than Hawaii's PPF
if PR produces more hotels than Hawaii
The law of supply, other things remain the same
if the price of a good increases, the quantity supplied increases
Which factor of production does human capital enhance
labor
As a factor of production, oil reserves are counted as
land
If real GDP exceeds potential GDP, then the unemployment rate _____ the natural unemployment rate
less than
2012, real GDP is larger than nominal, GDP price index in 2012 is
less than 100
Household income earned from the markets for factors of production and with no government redistribution is
market income
CPI decreases from one year to the next, inflation rate is
negative
If the price of the goods and services contained in the CPI market basket increases from the base period to the next year, we know that
next year's cpi will be above 100
Whatever is paid out and cannot be reduced or reversed
opportunity cost
A _____ tax is one that taxes income at an average rate that decreases
regressive
increase in the demand for a good or service
rise in the price of a substitute good or service
Demand for oranges increase while the supply decreases. The equilibrium price of oranges _____ , and the equilibrium quantity _____
rises; perhaps changes but we can't say if it increases, decreases, or stays the same
Automobile workers union successfully negotiates a wage increase for its members, how does the wage hike affect the supply of automobiles
supply decrease
A price of $35 per dozen roses results in (figure)
surplus
Best definition of economic growth
sustained expansion of production possibilities
Because firms pay out everything they receive as income to the factors of production
total expenditure equals total income
Business cycle has two turning points
trough and peak
Nominal GDP is GDP
using current market prices
When Ford decides to increase production of hybrid cars, answers _____
what
Baskin Congressional Advisory Commission reported that the CPI overestimated inflation by
1.1% a year
analyze the aggregate effects on the national economy
BEST describes macroecon
Should we collect tolls on turnpikes using human toll collectors or mechanized toll machines?
Best example of "how?" question
Producing an amount of GDP equals to potential GDP is most consistent with the economy processing
Beyond the ppf
New goods bias, commodity substitution bias
Bias in the CPI
Compare the records of the CPI and the PCEPI tends to exceed CPI when
CPI tends to exceed the PCEPI
_____ the owners of the factors of production, while _____ what amounts of those factors is there
Households are and firms determine
An example of consumption good
Jake buys an iphone
Cumulative percentage of income graphed against cumulative percentage of households nominal gdp
Lorenz curve for income
kmart, home-depot, and delta
Macroeconomic topic
largest single component of U.S. federal government expenditures is spent on
Medicare and medicaid
Describe how the world ought to be, depend on people's values and cannot be tested
Normative statement
Unemployment rate is below the natural unemployment rate
Peak of business cycle
Circular flow model shows that goods and services flow from
businesses to households
Represents real flow (circular flow model)
capital
One person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good
comparative advantage
Which of the following shifts the demand curve for movies leftward
decrease in the price of netflix, a substitute for movies
Number of buyers of SUV, decrease sharply. So the
demand curve for SUVs shifts leftward
Price of green tea increases and the price of wasabi dip increases, what would be the effect on demand for sushi at lunch
demand for sushi would decrease
Nominal is measured in current dollars and real is measured in dollars of a given year
difference between nominal and real
Everything else same, government expenditure increases by $400 billion and imports increase by $700 billion, then GDP
does not change
Percentage of workers who work part time for non economic reasons
does not fluctuate much at all with the business cycle
Real interest rate is negative if the inflation rate
exceeds the nominal interest rate
Because of the circular flow of expenditure and income in the economy, total _____ equals total _____ equals total _____
expenditure; income value; value of production
Price for flour, used to produce bagels, increase. Equilibrium price of cream cheese _____ and the equilibrium quantity of cream cheese _____
falls and decreases
New replacement muffler installed by midas mufflers
final good or service
Which type of unemployment is a permanent and healthy phenomenon in a dynamic economy
frictional
3 main ways that government is the U.S. redistribute income
income taxes, income maintenance program, and subsidized services
"increase in the tax on gasoline increase the price of gasoline"
positive statement
Changes in which of the following factors do NOT shift the demand curve
price of the good
Currently redistribute income in the U.S.
progressive income tax, social security
To find the cost of the CPI market basket in the base period prices we have to multiply the
quantities in the cpi market basket by the base period prices
Production possibilities model, vertical axis measures _____ and the horizontal axis measures _____
quantity of a good or service; the quantity of the good or service
Measure of standard of living
real GDP and population