MACRO TEST TWO

economic growth is usually measured by the annual percent change in

real GDP per capita

economists typically measure economic growth by tracking

real GDP per capita

Which phase of the business cycle occurs immediately before a trough?

recession

The contradictory phase of the business cycle is characterized by

reduced output and increased unemployment

GDP can be found either by adding up all of the __ or __ in the economy

spending;income

disposable personal income can be either __ or __

spent;saved

As a result of __ unemployment, workers' jobs may become obsolete, they will need additional training to find new jobs

structeral

due to the invention of ATMs many bank tellers lost there jobs, this is an example of __

structural unemployment

How much the economy can produce at its natural rate of output depends on

technology, quantity of available resources, the productivity of labor, stock of available capital

Measures of employment and prices have been estimated on a monthly basis only since

the great depression

other things being equal, the higher the rate of savings across countries

the higher the rate of change of real GDP per capita

Personal consumption expenditures are goods and services purchased by residents of the united states

true

Scott has a Phd in sociology and drives a taxi cab for a living. Scott is categorized as

underemployed

Business Cycles

vary in duration and intensity

If the US imported 1.5 billion worth of goods and services and sold 2.9 billion worth of goods and services outside its borders , net exports would equal..

1.4 billion

If the labor force is 20 mil and the total employed is 18 mil, what is the unemployment rate

10%

The nation of workovia has a population of 15 mil, of which 10 mil are the labor force and 9 mil are working , workovias unemployment rate is

10%

Macroeconomics focuses on issues such as economic growth, the output of the entire economy and inflation rates

True

An example of an intermediate product is

a purchase of tires by a motor company to put on cars, wood for a home,leather for shoes

What is the primary goal of macroeconomic policy?

achieving low inflation

Included in the investment category under the expenditure approach to GDP accounting is

additions in inventory, machines and tools, newly constructed residential housing

Reduced levels of illiteracy

are, in part both a cause of economic growth and caused by economic growth

What is an example of a final good?

bacon purchased at a grocery store

Which of the following will cause the PPF to shift outwards

better public education, healthcare, and larger budgets for research/exploration

Alternating increases and decreases in economic activity are known as

business cycles

A recession is always followed by a depression

false

Both the initial development process and the sustained growth of an economy are dependent on a large natural resource base

false

Economic growth is usually measured by is usually measured by the annual percent change in the nominal output of goods an services per capita

false

Economic growth rates tend to be lower in countries where property rights are better enforced by government

false

Macroeconomics studies economic activity from the level of one individual or firm

false

a limited resource base is no obstacle to economic growth

false

GDP is calculated including

final products but not intermediate goods

Which of the following is considered a factor that contributes to economic growth?

government protection of property rights, increased specialization of labor, research and development, improved efficiencies through economies of scale

economic growth tends to be greater in countries where

government protects property rights,free trade, many resources towards research/development

The total market value of all final goods and services produced by resources in the US is called

gross domestic product

to be in the labor force you can...

have a temporary job, be retired, or actively seeking work

Other things equal, if a recession gets worse, the number of discouraged workers __ and those in the labor force __

increases;decreases

If a country increased its saving rate

its current consumption would have to fall, and its future consumption possibilities would rise

In the long run the most important determinant of a nations standard of living is

its rate of productivity growth

The main reason people were unemployed in the US in 2009 was because they...

lost their job

An economic policymaker discovers that structural unemployment has been rising relative to the other types of unemployment . She should recommend

more funding for job retraining to get employees into growing industries

Nominal GDP differs from real GDP in that

nominal GDP is measured in current year prices, real GDP is measured in base year prices

The unemployment rate is

one of the most important statistics for policy makers

we can be certain that net exports fall if

exports fall and imports rise

An increase in labor input does not necessarily increase output per capita

true

What do households supply?

Both labor and non labor resources

Which organization dates business cycles

National Bureau of Economic Research

Which category of consumption spending tends to be the most unstable over the business cycle?

durable consumer goods

An economy's PPF will shift outward over time if

either a tech. advance occurs or the productivity of labor increases

a business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle in order are

expansion, peak, contradiction, and trough

not included in government purchases

transfer payments

The event that stimulated the U.S government's commitment to tracking the economy's health through national income accounting system was the

Great Depression

__ are over 70% of GDP, while__ are nearly 11% of GDP

Personal consumption expenditures;gross private domestic investments

Which is not included in gross domestic product?

a construction firm's purchase of lumber to build a four bedroom home

Which of the following would be included in GDP calculations

a hamburger purchase by a hungry restaurant patron

disposable income is

a measure of the income households have to spend after paying taxes

Gross domestic product is a measure of

an economy's total output

investment in human capital

can be acquired through on the job training, and that it is an important source of economic growth

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

circular flow diagram

Net exports

exports minus imports

following the expenditure method GDP= C+ I+G+X

false

if the quantity of physical capital in a country increases at the same time that the quantity or quality of labor resources used falls that country would experience economic growth as a result

false

the correlation between per capita output and the proportion of the population that is unstable to read and write small

false

the distinction between weather a good is durable or non durable is clear and easy to apply

false

Investment includes

fixed investment plus additions to business inventories

A primary goal of a macroeconomic policymaker is to achieve

full employment

high rates of saving and investment in a country will result in

guaranteed rapid econ growth, will result in greater econ growth if accompanied by advances in technology/ human capital

The natural rate of employment

is the employment rate where the economy is producing at optimal level of output

In a country that has an unstable government or judiciary, would you expect to see more entrepreneurial activity or less?

less, because its an unreliable infrastructure for protecting property rights

French perfume that is purchased in the US is accounted for in which expenditure category of US GDP

net exports

Total spending in an economy is the sum of

personal consumption+gross private investment+government+net exports

Per capita real output would tend to rise, other things being equal if ____

the labor force participation rate in the country rose

The standard of living will decline if

the rate of population growth exceeds the rate of growth of real GDP

The nation's gross domestic product is equal to

the total market all final goods and services produced by resources in the united states

The labor force is defined as

the total number of employed and unemployed

in the great depression __ out of __ people in the labor force had jobs

three; four

What is not considered a factor payment

transfer payments

"jobless recovery" was a recent phenomenon during the recession of 2001 because the early rate of employment increase was well below the average of past recoveries

true

Human welfare is greatly influenced by long term changes in a nation's capacity to produce good and services

true

along the PPF, the economy is producing at its potential output , sometimes called its natural level of output

true

economic growth is a complex process involving many important factors, no one of which completely dominates

true

education is both a consequence of economic growth and also a cause

true

fixed investments include all spending on capital goods as well as on residential construction

true

free-trade policies will tend to increase the value of total output in an economy

true

greater stocks of land, labor, or capital can shift the PPF outward

true

if we counted the value of intermediate goods as well as the full value of the final product in GDP we would be double counting

true

in boom periods, expenditures on consumer durables often increase more than expenditures on non durables

true

one of the most important determinants of economic growth is saving rate

true

technological advances even without any change in the quantity or quality of the labor resources used tend to lead to economic growth

true

technological advances involve both invention and innovation

true

trade can make economies more productive , even if an individual enterprises don't become more efficient

true

In the income approach to measuring GDP, factor payments include

wages and salaries used for goods and services, rent for land, interest payments for the use of capital goods, profits for workers

If personal consumption= $100, investment=25, government purchases=$25, imports=$20, and exports=$10, then GDP=

$140