Macro Economics Exam 1

an economy's total output

Gross domestic product (GDP) is a measure of:

absolute

If one country has a(n) _____________ advantage in the production of one item, it can always produce more of the item than another nation.

$140

If personal consumption is $100, investment is $25, gov. purchases total $25, imports equal $20, and exports equal $10, then GDP equals:

$11.3 trillion

If the GDP is $13 trillion for a given year and the GDP deflator for that year is 115, then the real GDP is:

disinflation.

If the cost of a during this period the typical market basket is 400 in 2018, 410 in economy is undergoing 2019, and 405 in 2020, then

increases consumption possibilities

International trade:

overstates

Most economists believe that the consumer price index __________the rate of inflation.

$13,241.7 billion

Nominal GDP in the first quarter of 2010 was $14,592.3 billion. The GDP deflator was 110.2 in the first quarter of 2010. Real GDP for the first quarter of 2010 was equal to:

10%

The nation of Workovia has a population of 15 million. 10 million are in the labor force and 9 million are working. The unemployment rate is:

rent

The payment to land is called:

spending; income

The simple circular flow diagram shows that economic aggregates can be calculated either by the ___________ flows in the product market or by the _________ flowing to households in the resource market.

John Maynard Keynes

The study of macroeconomics as a specific discipline is due primarily to:

Inflation and unemployment

The twin perils of the modern macro economy are said to be:

expenditure and income

The two approaches used by government in estimating GDP are:

fails to understand that all voluntary trades benefit both parties involved

"The economic wealth of this country was built primarily by some individuals profiting from a transaction, whereas others were harmed by that transaction." This statement indicates that the author:

peak

A ________ in the business cycle usually means the economy is operating at its capacity.

specialization, consumption, and international trade

Drivers of economic growth are:

unemployment drops

During a typical economic recovery:

inside the U.S. by foreign citizens

GNP does not include outputs produced ______________

outside the U.S. by U.S. citizens

GNP includes outputs produced __________

commustate economy

Government decides what a society wants:

GDP

the total market value of all final goods and services produced annually in an economy in the given country:

GNP (Gross National Product)

total dollar value of goods & services produced by a nation at home or away

cyclical unemployment

unemployment that rises during economic downturns and falls when the economy improves

the purchase of a new tv by a household

What is an example of personal consumption expenditures?

$41,666.67

What is your new salary if you earned $40,000 last year, the consumer price index went from 120 to 125, and your salary is adjusted by the rate of inflation annually?

cyclical unemployment is zero

When the economy is operating at the natural rate of employment:

services

Which component of GDP includes college tuition?

The Great Depression

Which event has significantly influenced the development of macroeconomic ideas?

They do not capture most nonmarket economic activity

Which is a criticism of the national income and product accounts?

Purchases of common stock by investors

Which is not included in the gross private domestic investment?

high level of comparative advantage

Which of the following does NOT impose a limit on the amount of international trade?

Many federal benefits and income tax rates are indexed to the consumer price index

Which of the following is NOT generally considered a problem with using the consumer price index to measure consumer prices?

Imported goods

Which of the following is not included in the GDP deflator?

Only the PPI measures net revenues received by firms

Which of the following statements describes a difference between the consumer price index (CPI) and the producer price index (PPI)?

spend the money or put it in savings

Which of the following two things can people do with money received as disposable personal income?

David Ricardo

Who developed the theory of comparative advantage?

Production efficiency

______ occurs when goods and services are produced with as few resources as possible

allocative efficiency

______ occurs when the mix of goods and services produced is most desired by society

cyclical

_________ unemployment is the result of changes in the business cycle.

Disinflation

__________ is a reduction in the rate of inflation

Distribution

__________ refers to the way an economy allocates goods and services to consumers:

6.5 %

An economy has a population of 226.500. Of them, seeking work, and 35,000 have given up looking part-time, and 151,000 people work full-time. This economy's unemployment rate 12,500 are unemployed and actively for a job. Also, 28,000 people work Round the percentage to one decimal place ; for example , 0.0436 is 4.4 % . )

Fell by 1%

Arlin's got a 5% raise while the rate of inflation was 6%. Arlina's standard of living:

capitalist economy

Consumers decided what products they want:

Food and energy

Core inflation is found by removing __________ from the consumer price index

shift to the right in the PPF

Economic growth is shown as:

land

Economists refer to "rent" as a payment to:

exist, and people are willing to take them, but it takes some time to bring the two together.

Frictional unemployment occurs when job openings:

$51,818

If your salary was $50,000 last year and this year you receive a cost-of-living increase tied to the consumer price index (CPI), what will your salary be, assuming the CPI has risen from 110 to 114

African Americans

In 2012, the group with the highest unemployment rate in the United States was:

market

In a _________ economy, individuals and firms own most resources

planned

In a __________ economy, the government controls most of the resources

frictionally unemployed

Jennifer did not work during college. She just obtained a bachelor's degree in marketing, and she is now looking for a marketing job in the retail industry. Jennifer is considered:

Frictionally unemployed

Jennifer did not work during college. She just obtained a bachelors degree in marketing and she is now looking for a marketing job in the retail industry. Jennifer is considered:

Jennifer is losing purchasing power by 2%

Jennifer just got news that she is getting a 5% raise. However, the Bureau of Labor Statistics just reported that prices are rising by 7%.

$23.10 an hour

Suppose Robert has a wage contract subject to an escalator clause. He earned $22 an hour last year; in that same year, the consumer price index rose from 120.0 to 126.0. What should his new wage be?

absolute advantage

Suppose the country of Alphaland can produce more cars than Omegaland can produce. An economist would conclude that Alphaland has a(n) ____________ in producing cars.

Final good and services produced by RESOURCES in the United States

The US gross domestic product is equal to the total market value of all:

cost of goods index

The current consumer price index is:

there is a fixed quantity of resources and technology available

The derivation of a production possibilities frontier assumes:

firms start to lay off workers to reduce costs

When a recession gets under way:

entails merely talking to friends about jobs

A passive job search:

Constant opportunity costs

A production possibilities frontier that is a straight line is the result of:

$180

A sheep ranch produces $30 worth of wool. A suit manufacturer produces $60 worth of suits. A retail outlet sells a suit to a customer for $180. The change in GDP would be:

frictional unemployment

A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.

deflation

From 1999 to 2002, the Japanese inflation rates were, respectively 0.3 % , 0.6 % , -0.7 % , and - 07 % . During this time , the Japanese economy underwent

Spending; income

GDP can be found either by adding up all of the __________ or all of the ___________ in the economy.

9.09 trillion

GDP is 10 trillion in 2001. The GDP deflator is 100 in 2000 and is 110 in 2001. What is real GDP?

capital; consumption

If a nation selects a product mix focused on ________ goods, the production possibilities frontier will expand at a great rate than if the nation produced mostly _________ goods:

Underutilized

If an economy is operating at a point that is inside of its production possibilities frontier, then it can be assumed that its resources are:

it is possible to produce more of one good without sacrificing some of the other

If an economy is producing at a point inside its ppf

opportunity cost

If you accept a job in Seattle as a financial analyst, you must give up the chance to accept a similar job in Australia. Giving up the job in Australia is your:

.Consumers demands for specific goods and services

In a capitalist economy, the answer to the question "What should be produced?" is determined by:

manufactured products used to produce other goods and services

In economics, the term capital refers to:

Education, on the job training, and professional training activities

Investment in human capital refers to:

Natural rate of employment

Is the rate at which the actual inflation rate is equal to people's inflationary expectations:

$44000

Jill has an escalator clause in her labor contract that gives her a raise commensurate with the consumer price index (CPI). Last year she earned $40,000 and the CPI was 100. If the CPI this year is 110, her new salary is:

$250

John earns $2000. His taxes are $250 and he spends $1500. Therefore, his savings must be:

8.7%

Last year the consumer price index (CPI) was 115 and this year's CPI is 125. The rate of inflation is:

Employed

Lexie works Monday to Friday from 4 pm to 6 pm in the after school program at a local elementary school. She began looking for a full-time job last week and has already scheduled three job interviews. According to the Bureau of Labor Statistics, Lexie is:

A lack of reliable economic data

National income and product accounts came about in the United States during the 1930s as a result of:

Land

Natural resources such as copper deposits are:

Is a part of U.S. GNP

The value of cars that the Ford Motor company produces in a German plant:

Imports

The GDP deflator is an index that includes the prices of all of the following except:

personal consumption expenditures

The expenditure category that accounts for the largest share of GDP is:

Reducing regulations, offering low=interest loans, and offering favorable tax treatment

The government can make owning a business easier or more profitable by doing what?

entrepreneurial activity

The household survey is a great source of discovering:

the labor market

The household survey provides a detailed demographic picture of:

Circular flow diagram

The idea that all income ultimately goes to households, which then use it to buy good and services from firms, is a central idea of the:

Consumption expenditure

The largest component on GDP is:

low; low

The nonaccelerating inflation rate of unemployment is the unemployment rate associated with ________ inflation and __________ unemployment:

industry and region

The payroll survey provides detailed information about:

Business cycle

The periodic fluctuation of economic activity

the number of unemployed divided by the labor force

The unemployment rate is:

For more efficient use of resources, for goods to be obtained at a lower opportunity cost, and for people to specialize in activities in which they have a comparative advantage.

Trade can benefit society as a whole because it allows:

expansions to be longer than recessions

U.S. business cycles since 1950 have shown:

structural

U.S. steelworkers who have lost their job to workers receiving lower wages overseas are part of ___________ unemployment:

structural

Unemployment caused by changes in consumer demographics and automation technology is known as ______________ unemployment.

structural unemployment

Unemployment caused by changes in the structure of demand for goods and in technology; workers who are unemployed because they do not match what is in demand by producers in the economy or whose skills have been left behind by economic advancement

Natural rate of unemployment

Unemployment level at which unemployment is only frictional and structural; cyclical unemployment is zero:

Lower than interest rates on short term bonds

We are most likely to see a recession if interest rates on long term bonds are:

what to produce, how to produce, and for whom to produce

What are the three basic economic questions each society must answer?

net exports

What component of U.S. GDP is usually negative in boom years?

exports

What does X represent in the following formula, used to calculate GDP? GDP= C+I+G+(X-M)