Macro Chapter 2

In 2013 in the United States, total government purchases per person (in current dollars) amounted to approximately:

$9,900.

The marginal product of labor is:

additional output produced when one additional unit of labor is added.

Unlike the real world, the classical model with fixed output assumes that:

all factors of production are fully utilized.

If bread is produced by using a constant returns to scale production function, then if the:

amounts of equipment and workers are both doubled, twice as much bread will be produced.

In a classical model with fixed factors of production and flexible prices, the amount of consumption spending depends on _____ , the amount of investment spending depends on _____, and the amount of government spending is determined _____.

disposable income; the interest rate; exogenously

According to the definition used by the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they:

do not have a job, but have looked for work in the past 4 weeks.

Variables that a model takes as given are called:

exogenous.

Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation,

gives a better measure of ongoing, sustained price changes.

Public saving is:

government revenue minus government spending.

An example of an imputed value in the GDP is the:

housing services enjoyed by homeowners

An example of an imputed value in the GDP is the:

housing services enjoyed by homeowners.

in the national income accounts, goods bought for future use are classified as which type of expenditure?

investment

The demand for the economy's output:

is equal to consumption, investment, and government purchases.

When a firm sells a product out of inventory, GDP:

is not changed.

In the classical model with fixed income, a reduction in the government budget deficit will lead to a:

lower real interest rate.

Net national product equals GNP:

minus depreciation.

GNP equals GDP ______ income earned domestically by foreigners ______ income that nationals earn abroad.

minus; plus

In equilibrium, total investment equals:

national saving.

The panel of economists appointed by the Senate Finance Committee estimated that the CPI ______ inflation by approximately ______ percentage point(s) per year.

overestimates; 1

In the national income accounts, all of the following are classified as government purchases except:

payments made to Social Security recipients.

A competitive firm chooses the:

quantity of labor and capital to employ.

When studying the short-run behavior of the economy, an assumption of ______ is more plausible, in contrast to studying the long-run equilibrium behavior of an economy, when an assumption of ______ is more plausible.

sticky prices; flexible prices

An increase in the price of goods bought by firms and the government will show up in:

the GDP deflator but not in the CPI.

The employment statistics computed from the establishment survey do not include:

the self-employed.

an economy's_____ equals its____

total income; total expenditure on goods and services

The real wage is the return to labor measured in:

units of output.

Which of the following is a stock variable? wealth consumption investment income

wealth

Prices of items included in the CPI are:

weighted according to quantity of the item purchased by the typical household.

If the number of employed increases while the number of unemployed does not change, the unemployment rate:

will decrease.

The national income accounts identity, for an open economy, is:

Y = C + I + G + NX.

Assume that the market basket of goods and services purchased in 2004 by the average family in the United States costs $14,000 in 2004 prices, whereas the same basket costs $21,000 in 2009 prices. However, the basket of goods and services actually purchased by the average family in 2009 costs $20,000 in 2009 prices, whereas this same basket would have cost $15,000 in 2004 prices. Given this data, a Laspeyres price index of 2009 prices using 2004 as the base year would be:

1.50.

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 5 in 2009, then the GDP deflator in 2009, using a base year of 2002, was approximately:

1.7

If the unemployment rate is 6 percent and the number of employed is 188 million, then the labor force equals ______ million.

200

If 7 million workers are unemployed, 143 million workers are employed, and the adult population equals 200 million, then the unemployment rate equals approximately ______ percent.

4.7

The number of households interviewed in the monthly employment survey of the U.S. Bureau of Labor Statistics is approximately:

60,000.

IN the circular flow model, the flow of dollars from firms to households is paid_______ and the flow of dollars from households is paid

as wages and profits; for goods and services

According to the neoclassical theory of distribution, in an economy described by a Cobb-Douglas production function, workers should experience high rates of real wage growth when:

average labor productivity is growing rapidly.

An estimate of total employment in the economy can be obtained from:

both the household and establishment surveys.

The largest component of national income is:

compensation of employees.

Real GDP means the value of goods and services is measured in ______ prices.

constant

Nominal GDP means the value of goods and services is measured in ______ prices.

current

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner). She earns $1,000,000 per year both before and after her marriage. The marriage:

decreases GDP by $60,000.

Endogenous variables are:

determined within the model.