macro 2

when income is 0

retired on the latter half

income greater than consumption

saving

GDP deflator is _____ for the base year

100

a public school teachers salary

government purchases

In this context, what are institutions?

the laws, social norms, and conventions of a culture

c. Suppose the black market shrinks because firms shift to the formal sector, but production remains the same

. GDP would rise, and living standards would remain unchanged.

The _______ represents the price of a loan.

interest rate

A domestically manufactured business computer

investment

A good produced in the current time period but put into a firm's inventory instead of being sold

is considered unsold inventory and counted as a part of investment in current GDP.

Due to an increase in revenues after a tax hike, the United States is able to eliminate the deficit and begins to maintain a balanced budget for the first time in several decades.

shift in demand

Growth rate of GDP (general)

GR= GDP(new year)- GDP( old year) —--------------------------------------- X 100 GDP(old year)

Intermediate goods

Goods that are sold to be bundled / processed with other goods to be sold once again

finished goods

Goods that are sold to final users/ use -case ( Ex:the car being complete and sold)

GDP-

Gross domestic product - total production of goods and services in a home country

Honda's assembly and sale of cars in the U.S.

Included in U.S. GDP

As interest rate decreases, what happens to the quantity of loanable funds demanded?

Qd increases

Real GDP per capita is NOT an adequate measure of

the well-being of each person in an economy.

Nx-

value of exports minus value of imports

incentive causes

more borrowing, demand shift out, companies take more loans

a dollhouse sold abroad

net exports

Angus buys a new tractor for his wheat farm

physical capital

Factor income Approach- add income generated by producing goods and services

y= EC+ Rent + Interest + profits EC= employee compensation

gap deflator

Nominal GDP/ Real GDP X 100

A previously-owned collectors' skateboard

Not included in GDP because of double-counting

A ticket for the X Games bought from a person on a street corner

Not included in GDP because of double-counting

A used copy of the Tony Hawk video game

Not included in GDP because of double-counting

A used skateboard you buy for your brother

Not included in GDP because of double-counting

The source of the _______ for loanable funds is investment.

demand

economies of scale

factors that cause a producer's average cost per unit to fall as output rises

Which best describes technological knowledge?

knowledge used to produce goods and services

Cecile buys text books and notebooks so she is ready for the new school year

physical capital

what happens to gdp When we get a price increase?

real GDP Deflates-goes down

Macroeconomic definition of recession

significant and widespread decline in real GDP and employment

What does the investment component of GDP measure?

spending on goods to be used in future production

The source of the _______ for loanable funds is saving.

supply

Assume people dislike inequality. If income inequality decreases,

GDP would remain unchanged, and living standards would rise.

Given improved production technologies,

GDP would rise, and living standards would rise.

GDP deflator measures

price level

Creates incentives for growth

private property ownership a market economy legally protected investments

C- private spending on finished goods and services

private spending on finished goods and services

I-

private spending on tools plant and equipment used to produce future output

a. Clearly defined property rights --------- economic growth.

promote

d. The creation of a system of patent law ______ economic growth.

promotes

Calopolis, a college town in Northern California, has for many years banned the presence of fast food restaurants in city limits. As of 2012, however, the city will allow several fast food companies to open franchised locations.

shift in demand

As a result of a stock market boom, individuals begin to feel richer and spend more while also saving less.

shift in supply

China decides to reduce its capital investment in the United States, as it expects low returns due to a weak U.S. economy.

shift in supply

G-

spending by all levels of government on finished goods and services. Transfers are nto included in Govt purchases

Suppose that the government changes the tax code to allow additional amounts of money to be placed in 401k retirement accounts, increasing the extent to which people can delay their tax obligation (effectively, this is a tax cut on retirement savings). Show the effect by shifting the appropriate curve in the market for savings.

supply curve shifts up demand stays same Private investment would increase as the cost of borrowing decreased.

GM's assembly and sale of cars in Mexico

Not included in U.S. GDP

Nominal GDP

GDP calculated using prices and quantities in that year

In what way(s) does GDP per capita not provide an accurate representation of living standards?

GDP per capita does not account for changes in environmental quality. GDP per capita does not measure production that occurs outside of the market economy. GDP per capita does not account for how people distribute their time between work and leisure.

If school quality were to increase as a result of parental involvement,

GDP would remain unchanged, and living standards would rise.

If school quality increased as a result of the procurement of new equipment,

GDP would rise, and living standards would rise.

If volunteers cleaned a river used for swimming,

GDP would remain unchanged, and living standards would rise.

If workers worked less but produced the same amount,

GDP would remain unchanged, and living standards would rise.

If unpaid housework were formalized in GDP,

GDP would rise, and living standards would remain unchanged.

What is the difference between real and nominal gross domestic product (GDP)?

Nominal GDP for a given year is measured in dollars of that year, whereas real GDP is measured in dollars of some base year.

Wheels used to produce a skateboard that will be sold new

Not included in GDP because of double-counting

Ocean Spray purchases plastic to make bottles

Not included in U.S. GDP

resale of used textbooks to college students

Not included in U.S. GDP

sale of wheat to Mrs. Baird's Bakery

Not included in U.S. GDP

ice cream

consumption

NOMINAL=

Real X deflator/ 100

Rule of 70

A method for determining the number of years it will take for some measure to double, given its annual percentage increase. Example: To determine the number of years it will take for the price level to double, divide 70 by the annual rate of inflation.

To avoid double counting, only ------------ are included in GDP

finished goods

bruce goes back to school to learn a new computer programming language

human capital investement

Daniel is trained to use machine at local sugar factory

human capital investment

Ethel learns to use a keyboard so she can type faster than when she wrote by hand

human capital investment

Buisness fluctuations

- short movements in real GDP around the long term trend can be positive and negative

demand has to do with

borrowers and investors

REAL GDP=

NOMINAL/DEFLATOR X 100

All else equal, which scenario would exhibit a country with the most economic growth?

Froland, a country known to be able to resolve most trials and legal issues within a year

. A new building for Tony Hawk Industries

included in GDP

The commission paid to the seller of a previously-owned collectors' skateboard

included in GDP

a new skateboard that you buy for your niece

included in GDP

Increases the interest rate

An investment in tax credit. An increase in large investments.

What effect will an increase in interest rates have on the quantity of loanable funds supplied?

Quantity supplied will increase.

Real GDP per capita

Real GDP per capita is a rough measure of a country's standard of living

Which statement accurately characterizes the distribution of real GDP per capita internationally?

Real GDP per capita varies greatly across countries.

55 cent taco

consumption

National spending approach- add components of spending Y= C+T+G+Nx

Y=GDP C=consumer spending I= investing spending G= Govt spending Nx= net imports

Which of the following best defines a financial intermediary

a financial institution that transforms investor funds into financial assets

A domestically manufactured personal computer

consumption

A ticket to a local sporting event.

consumption

The U.S. nominal gross domestic product is

all final goods and services legally produced within the territorial boundaries of the United States within a given timeperiod and valued at the prices at which the goods or services are sold.

Identify an example of consumption smoothing. taking student loans depositing a portion of one's salary into a retirement account acquiring a mortgage to purchase a house

all of them

Select the definition of consumption smoothing.

borrowing in periods of low income and saving in periods of high income to make consumption less variable than income

Growth in real GDP per capita is usually the best reflection of??

changing living standards

Does not create incentives for growth

command economy civil conflict

cab fare for personal use

consumption

GDP per capita

GDP divided by population

Old Navy purchases mannequins to display clothes

included in US GDP

machinery and equipment used to produce other goods included in GDP T or F

true

Margaret owns a stuffed animal shop. At first, it is just her daughter Allison and her hand‑sewing stuffed bears, stuffed sharks, and stuffed giraffes in the spare bedroom. Over time, Margaret decides to rent a larger shop and hire more workers to help out, increasing to a staff of 20 people. Everything is still hand sewn. She notices, however, that her stuffed animal output increased much more than tenfold despite her work force increasing by that amount. However, any more than 20 workers slows down production.

economies of scale

decreases interest rates

increase in savings decrease in investor optimism

. Capital gains taxed at 90%______economic growth.

inhibits

c. The creation of a price ceiling on gold _____ economic growth.

inhibits

e. Governmental corruption _____ economic growth.

inhibits