8-11 Dynamic Study Modules (After ch 8 only misses)

To calculate personal income from national income, which of the following must be done by the BEA?

Add govt. transfer payments

How does the Bureau of Economic Analysis of the U.S. Department of Commerce measure GDP?

By adding the value in dollar terms of all the final goods and services produced domestically.

The process by which competition for monopoly profits leads to technological progress is called:

Creative Destruction

In the circular flow model, who supplies factors of production in exchange for income?

Households

The flow of funds from __________ into the financial system makes it possible for government and firms to borrow.

Households

Of the eight categories in the CPI market basket, which three categories make up more than 75% of the basket?

Housing, Transportation and food

Which of these is a function that the financial system provides for savers and borrowers?

Matching savers and borrowers

The GDP per capita is computed by dividing a country's:

Real GDP by it's population

Which market basket specifically targets intermediate goods?

The basket used by the producer price index

To obtain prices of a representative group of goods and services, the Bureau of Labor Statistics (BLS) conducts a monthly survey of __________ households nationwide on their spending habits. The results of this survey are used to construct a market basket of __________ types of goods and services purchased by the typical urban family of four.

14,000; 211

Which of the following goods and services would be excluded from personal consumption expenditures in the Bureau of Economic Analysis (BEA) statistics?

A new house

A federal government budget deficit will:

decrease the supply of loanable funds and increase the equilibrium interest rate

The best measure of the income households actually have available to spend is:

disposable personal income

Before capital accumulation can take place, __________.

household savings must be converted into business investment

The only way that the standard of living of the average person in a country can increase is by:

increasing production faster than population growth

The point where economic activity bottoms out in a full business cycle is known as:

the trough

The natural rate of unemployment is the __________.

unemployment rate that results when the economy produces the potential level of real GDP

The prediction that the per capita GDP of poor nations will eventually grow at a more rapid pace than the per capita GDP in rich nations is known as:

catch up

An increase in the real interest rate will:

cause a movement along the demand curve for loanable funds

QUESTION REVIEWING 3 OF 3 In measuring changes in the standard of living of a country, economists rely heavily on comparisons over time of real GDP per capita because:

despite its well-known flaws, it is the best means we have of comparing the performance of an economy over time

The consumer price index __________.

measures the cost of an unchanging basket of goods and services

Economic variables that are calculated in current year prices are referred to as __________ variables, while variables that have been corrected to account for the effects of inflation are __________ variables.

nominal; real

Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant? (Real, Nominal, or Net National Product?)

Real GDP

If a firm increases its use of capital while holding constant the number of workers employed, the firm is said to experience:

an increase in the physical capital.

At full employment, __________. (what type unemploy is at 0)

Cyclical

Which of these government policies can help economic growth?

Ensuring political stability and relatively little corruption

What is the relationship between investment and real interest rates, all other things being equal?

Lower interest rates stimulate investment.

Which of these factors does not contribute to economic growth?

Nationalization of Foreign Investments

If technological change increases the profitability of new investment to firms, which of these will occur?

The demand for loanable funds will increase.

The "normal or natural" underlying level of unemployment in the economy is the __________.

full employment rate of unemployment

If Americans still worked sixty hour weeks, as they did in 1890, __________.

the GDP would be much higher than it is but the well-being of the typical person would not necessarily be higher

Consider the following relationship: Y = f(K, L, A). To measure technological progress, we observe:

the impact of changes in A on K and L.

When an individual investor or another firm acquires more than 10 percent ownership in a foreign firm, it is known as:

Foreign Direct Investment

When a significant fraction of the domestic production takes place in foreign-owned facilities, a country's difference between GDP and GNP is as follows:

GDP will be much larger than GNP

Which of these is a function that the financial system provides for savers and borrowers?

Providing increased Liquidity for savers