Macroeconomics Midterm
In the calculation of GDP by the expenditure approach, exports from the United States must be
added.
28. Component Amount (dollars) Net taxes 10 Personal consumption expenditure 50 Depreciation 8 Government expenditure 20 Gross investment 26 Net exports -10 Compensation of exmployees 65 Using the information in the table above, calculate gross domestic product
$86
#8
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Assume that the total labor force is 100 individuals with 10 unemployed. The unemployment rate is ________. Now assume that 10 people drop out of the labor force and that 10 remain unemployed. The new unemployment rate is ________.
10 percent; 11 percent
If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the labor force is
1100.
Category Number (millions) Discouraged workers 15 Unemployed workers 40 Employed workers 100 Population (16 years and over) 225 In the above table, the working age population i
225 million.
The population of Tiny Town is 100 people and the labor force is made up of 75 people. If 5 of these people are unemployed, the unemployment rate is
5/75 × 100.
If Nike, an American corporation, produces sneakers in Thailand this would
add to Thailand's GDP but not to U.S. GDP.
The calculation of the final goods and services sold in an economy would NOT include
General Motors' purchases of tires for new automobiles.
________ is gross investment minus ________.
Net investment; depreciation
Of the following, which is correct?
Nominal GDP increases when the prices of goods and services increase.
Which one of the following transactions in a particular year is included in gross domestic product for that year?
The government pays a computer services company that assisted in the delivery of Social Security payments to retirees.
All of the following are components of the expenditure approach to measuring GDP EXCEPT
a Senator from Iowa being paid the monthly salary.
A common definition of a recession is a time with
a decrease in real GDP for two or more successive quarters
The circular flow shows that
aggregate production equals aggregate expenditure. GDP equals aggregate income.
An example of "investment" in computing real GDP using the expenditure approach is the purchase of
a new set of tools by an auto mechanic, for use in repairing cars.
On a time-series graph, time is typically shown
along the x-axis.
In the country of Darrowby, net domestic income at factor cost is $2.0 million. Gross domestic product is $3.0 million, and depreciation is $0.5 million. Indirect taxes less subsidies ________.
are $0.5 million
Purchasing power parity prices are used to construct GDP data that
can be used to make more valid comparisons between one country and another
The expenditure approach measures GDP by adding
consumption expenditure, gross private domestic investment, net exports of goods and services, and government expenditure on goods and services.
Transfer payments are not part of government expenditure on goods and services because transfer payments
do not represent the purchase of a final good or service.
Real GDP can be criticized as a measure of economic welfare because it
does not include the value of products produced in the household. does not take account of the degradation of environmental quality does not include leisure time available to a society.
The relationship between the unemployment rate and the natural unemployment rate is that the unemployment rate
fluctuates about the natural rate.
Unemployment caused by people voluntarily leaving their jobs is classified as
frictional unemployment.
Proprietors' income is a component of which approach to measuring GDP?
incomes approach
If Frito Lay, an American snack company, opens a new manufacturing facility in Mexico and produces snacks which are distributed in South America, then Mexico's GDP ________ and U.S. GDP ________.
increases; does not change
Double counting (counting the same thing twice) in GDP accounting is avoided by not including
intermediate goods.
The business cycle is the
irregular fluctuations of real GDP around potential GDP.
An expansion
is defined as a period of real GDP increases.
Gross domestic product
measures the value of the aggregate production of goods and services in a country during a given time period
In 2013, Ozzie purchased a 2010 Ford Escort from his neighbor for his son, purchased a 2009 "one owner" Camry from Larchmont Toyota for his wife, bought a 2013 new Ford for himself, and sold his 2002 Dodge Caravan to his teenage nephew. Which, if any, of these transactions will be included in GDP in 2013?
only the purchase of the Ford
Because pollution reduces economic welfare, on this count real GDP as measured
overstates economic welfare
The unemployment rate measures the percentage of
people in the labor force who can't find a job.
The largest component of GDP is
personal consumption expenditures.
A graph shows the wages of factory workers. The slope of the line is positive for periods when the wage rate is
rising.
Inflation climbed steadily from 1952 to 1972. A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show
that inflation had a positive trend.
Potential GDP is
the maximum amount of GDP that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation.
A time-series graph showing total production in Japan from 1960 to 2010 shows a positive trend. It is the case that total production
was higher in 2010 than in 1960.