Macro Economics Final 5-7

Keynesian economists believed that economic slowdowns are self-correcting. (T or F)

False

The total market value of all final goods and services produced...

GDP

Depreciation + NNP =

GNP (Gross national product)

A _______ is a formal statement of theory.

Model

Macroeconomic policies became more influenced by Keynes' theories starting with

The Great Depression

Fixed weight indexes can not account for new goods. (T or F)

True

GDP measured in current dollars is nominal GDP

True

If real GDP decreased during a year, then output must have decreased. (T or F)

True

Per capita output is a measure of economic welfare of a country. (T or F)

True

Better insurance benefits increase the incentive of some individuals to work. This statement is best described as

a positive statement (can be tested)

Economic growth most likely occurs when

a society learns to produce more using existing resources

US economy experiences stagflation during what year

1970's

It has become conventional to classify an economic downturn as a recession when aggregate output declines for

2 consecutive quarters

The price system

automatically distributes scarce goods

In the circular flow diagram, households ________ goods and services and ________ labor.

demand, supply

Not counting the value of intermediate goods avoids

double counting

If congress increases government spending, it is using

fiscal policy

Mike has graduated from college and is looking for a job but has not found one. This causes the unemployment rate to _________ and the labor force participation rate to _________.

increase, increase

1990's downsizing. One of the results of this was downsizing permanent reduction in middle management positions. This change in the way businesses operate would have

increased the natural rate of unemployment

If central bank decreases money supply, it is conducting

monetary policy

Government policymakers would like to have high __________ and low _______________& ______________.

output growth; unemployment and inflation

Deflation occurs when

the average price level declines

The base year of an index is

the year chosen for the weights in a fixed weight procedure

Unemployment rate=

unemployed/labor force

The largest income component of GDP

Compensation of employees

Single largest expenditure component of GDP is

consumption