Macro

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

Constant

GDP is all of the following except the total

Expenditure of everyone in the economy

In computing GDP,

The value of intermediate goods is included in the market price of the final goods

A German citizen biys an automobile produced in the US by a Japanese Company. As a result.....

U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected

Since GSP includes only the additions to income, not transfers of assets, BLANK are not included in the computation of GDP

Used Goods

A risk-averse person has ____

a utility curve that slopes upward and a marginal utility curve that slopes downward.

Municipal bonds pay a relatively ____

low rate of interest because of their low-default risk and because the interest they pay is not subject to federal income tax.

Assume that an increase in consumer confidence raises consumers' expectations of future income and thus the amount they want to consume today for any given income. This shift will

lower investment and raise the interest rate.

Discouraged workers are counted as ____

out of the labor force.

The investment component of GDP includes all of the following except

purchases of corporate stock

In the model of loanable funds, if the government instituted an investment tax credit, then which of the following would be higher in equilibrium

saving and the interest rate

Economists call the changes in the composition of demand for workers among industries and regions ____

sectoral shifts.

The unemployment resulting from wage rigidity and job rationing is called ____ unemployment.

structural

An automobile manufacturer unexpectedly announces that it has hired a new chief executive officer. It is widely believed that the presence of this individual will raise the profitability of the corporation. At the same time interest rates unexpectedly rise. Which of the above would tend to make the price of the stock rise

the announcement but not the rise in interest rates

In the model of loanable funds, If the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, ____

there is a surplus and the interest rate is above the equilibrium level.

Mario was laid off two months ago. He has not searched for other work because he is expecting to be recalled to work. In the U.S. labor force statistics Mario is counted as

unemployed and in the labor force.

Unlike the GDP deflator, the CPI includes the prices of:

imported goods

Other things the same, which bond would you expect to pay the highest interest rate?

A bond issued by a new restaurant chain.

Darin grows and sells marijuana to Jennifer. Thomas is an organic farmer who sells broccoli to Jennifer. Marijuana is an illegal good and broccoli is a legal good. Assume that if Jennifer marries either, they give her what they use to sell her. Which of the following statements is consistent with the way GDP is computed?

GDP will fall if Jennifer marries Thomas but not if she marries Darin

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

GDP would definitely increase because GDP excludes leisure.

An economy's BLANK equals its BLANK

Income: expenditure on goods and services

Which of the following best illustrates diversification?

Instead of holding only the stocks of companies engaged in the banking business, a person decides to hold stock in a number of different companies producing different goods and services.

Black Oil Company considered building a service station in a new location. The owners and their accountants decided that this was the profitable thing to do. However, soon after they made this decision, both the interest rate and the cost of building the station changed. In which case do these changes both make it less likely that they will now build the station?

Interest rates rise and the cost of building the station rises.

Which of the following is the best example of structural unemployment?

Kirby is seeking a job as an airline pilot, but the high union wages in the industry have limited the number of jobs available.

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

Mexican GDP, but it is not included in U.S. GDP

In the model of loanable funds, if Congress reduced the tax rate on interest income, investment ____

and saving would increase.

The producer price index measures the cost of a basket of goods and services __

bought by firms.

An example of an imputed value in the GDP is the

housing services enjoyed by homeowners

Suppose that the government finds a major defect in one of a company's products and demands that it takes it off the market. We would expect that the ____

demand for existing shares of the stock and the price will both fall.

Megasoft wants to finance the purchase of new equipment for developing security software called Doors, but they have limited internal funds. Megasoft will likely

demand loanable funds by selling bonds.

Compared to bondholders, stockholders ____

face higher risk and have the potential for higher returns.