Econ

The value of GDP will be. ___________. for the base year.

100

The real-world, more complex GDP price index used in the United States is called the chain-type annual _________ price index.

weighted

If the market price of a market basket of goods in year 1 is $10 and $25 in year 3 and the base year is year 1, the price index for year 3 is ____________

250

More abundant leisure increases ___________ but it __________ real GDP. a. nominal GDP; leaves unchanged b. social welfare; decreases c. nominal GDP; decreases d. economic welfare; decreases

b. social welfare; decreases

The GDP price index is always 100 for the _______ year

base

True or false: in general, GDP includes unpaid work.

False

GDP is equal to C + Ig + _________ + Xn.

G or government

Identify each of the following quotes as being an example of either the invisible hand or creative destruction. "If you compare a list of today's most powerful and profitable companies with a similar list from 30 years ago, you will see lots of new entries."

Creative destruction

Because members of the underground economy do not report their full income to the Internal Revenue Service, their economic activities are not included in the calculation of _____________.

GDP or real GDP

Identify each of the following quotes as being an example of either the invisible hand or creative destruction. "Each day, central planners in the old soviet union were tasked with setting 27 million prices-correctly".

Invisible hand

Decide whether each of the following descriptions most closely corresponds to being part of a command system, a market system, or a laissez-faire system The only taxes levied by the government are to pay for national defense, law enforcement and a legal system designed to enforce contracts between private citizens.

Laissez-faire system

_____________ and ____________ give a strong financial incentive to investors and authors to invent and create.

Patents Copyrights/Trademarks

The fraction of the _______ population that is the labor force is called the labor-force participation rate. a. labor-force b. local-fee c. working-age d. middle-age

c. working-age

What are leader countries? a. Countries that develop and use the most advanced technologies b. Countries that adopt advanced technologies c. countries that experience extremely rapid catch-up growth d. countries that experience consistently high growth rates

a. Countries that develop and use the most advanced technologies

The price of a market basket of goods in a specific year. divided by the price of. the same market basket. of goods in the basket year multiplied by. 100 is called ______________ . a. a price index b. real GDP c. nominal GDP d. net domestic product

a. a price index

Which of the following are used by economists to define and measure economic growth? a. an increase in real GDP per capita occurring over some time period b. an increase in nominal GDP per capita occurring over some time period c. an increase in real GDP occurring over some time period d. an increase in nominal GDP occurring over some time period

a. an increase in real GDP per capita occurring over some time period c. an increase in real GDP occurring over some time period

Other than a higher standard of living and more innovations, which of the following are true of the impacts of modern economic growth in industrialized nations? a. elimination of archaic social norms b. Increase in communistic economies c. Increased leisure time and arts d. Increase in unemployment e. Increase in democracies

a. elimination of archaic social norms c. Increased leisure time and arts e. Increase in democracies

Which of these are components of government purchases in GDP? a. expenditures for goods and services that the government consumes in providing public services b. expenditures for publicly owned capital c. expenditures for intermediate goods d. expenditures and government receipts that consist of transfer payments to households

a. expenditures for goods and services that the government consumes in providing public services b. expenditures for publicly owned capital

Efficiency factor is when an economy must achieve economic efficiency as well as ______________ to reach its full production potential. a. full employment b. lower costs c. higher costs d. higher wages

a. full employment

Identify the supply factors that are "determinants" of economic growth. a. increases in the supply of capital goods b. improvements in technology c. increases in the quantity and quality of human resources d. Increases in the purchases of goods and services e. Increases in the real wage rate f. Increases in the quantity and quality natural resources

a. increases in the supply of capital goods b. improvements in technology c. increases in the quantity and quality of human resources f. Increases in the quantity and quality natural resources

Which of these explain why growth is an important. economic goal? a. it increases real wages and incomes b. it increases standards of living c. it results in deflation or disinflation d. it increases a society's ability to resolve socioeconomic problems

a. it increases real wages and incomes b. it increases standards of living d. it increases a society's ability to resolve socioeconomic problems

Which of these explain why growth is an important economic goal? a. it increases standards of living b. it increases real wages and incomes c. It results in deflation or disinflation d. It increases a society's ability to resolve socioeconomic problems

a. it increases standards of living b. it increases real wages and incomes d. It increases a society's ability to resolve socioeconomic problems

By ignoring the value of leisure time, how does national income accounting affect our well-being? a. it understates our well-being b. it accurately states our well-being c. it overstates our well-being d. it has no effect on our well-being

a. it understates our well-being

The demand factor involves households, businesses, and government purchases the economy's expanding output of goods and services so that there will be ______________ . a. no unplanned increase in inventories and resources will remain fully employed b. unplanned decreases in inventories and resources will be overemployed c. unplanned increases in inventories and resources will be unemployed d. zero increase in inventories and resources will remain constant

a. no unplanned increase in inventories and resources will remain fully employed

Real GDP is equal to _____________. a. nominal GDP divided by a price index (in hundredths) b. nominal GDP divided by price c. price index (in hundredths) divided by nominal GDP d. nominal GDP times price index (in hundredths)

a. nominal GDP divided by a price index (in hundredths)

Economic growth made possible by the four supply factors is illustrated by the _______ the production possibilities curve. a. outward shifting of b. movement downward along c. movement upward along d. inward shifting of

a. outward shifting of

What noneconomic sources of well-being that are not considered in a country's GDP? a. Peaceful international relations b. reduction of drug and alcohol abuse c. reduction of crime d. government spending on infrastructure

a. peaceful international relations b. reduction of drug and alcohol abuse c. reduction of crime

The market system depends on. private property and the protection of property rights to a. provide an incentive to maintain the property and allow for the orderly transfer of property ownership. b. ensure that those people who own property use it wisely. c. establish the cost for the administration and orderly transfer of property. d. make sure that there are adequate safeguards against theft.

a. provide an incentive to maintain the property and allow for the orderly transfer of property ownership.

Nominal GDP divided by price index (in hundredths) equals ____________. a. real GDP b. inflation c. national income d. net exports

a. real GDP

The term "division of labor" means that workers: a. specialize in tasks that take advantage of their individual abilities and skills b. identify the products that can be produced so that they can take advantage of their individual abilities and skills c. develop the skills needed to complete a job d. share the labor needed to complete the job

a. specialize in tasks that take advantage of their individual abilities and skills

The determinants that directly affect economic growth can be grouped into which of the following categories? a. supply b. spending c. efficiency d. demand

a. supply c. efficiency d. demand

True of false: The competitive market system tends to drive the economy toward productive and allocative efficiency. a. true b. false

a. true

The emergence of self driving cars is an example. of. "creative destruction" because a. the firms that produce cars today will likely be the main producers of self-driving cars. b. self-driving cars will likely replace most cars that require drivers. c. It shows that the automobile industry is becoming more efficient. d. self-driving cars will be less expensive to build than current cars.

b. self-driving cars will likely replace most cars that require drivers.

Economic growth

an increase in real GDP per capita over some period of time

What are the two ways to adjust nominal GDP to reflect price changes? a. divide the price index by nominal GDP b. Multiply the current year's output by the price of the output in the base year. c. Multiply the base year's output by the current year's price of the output. d. divide nominal GDP by the price index

b. Multiply the current year's output by the price of the output in the base year. d. divide nominal GDP by the price index

Which of the following summarize how the social-cultural-political environment of the United States has encouraged economic growth? a. A negative attitude toward risk taking b. No social or moral taboos on production c. A competitive market system d. Wealth creation an antisocial goal

b. No social or moral taboos on production c. A competitive market system

Which of the following institutional structures promote and sustain modern economic growth? a. a system of tariffs and complete government autonomy promoting domestic product and positive net exports. b. Strong property rights that gave citizens the right to own investments and property. c. Widespread education for the workforce will promote new technology innovations and implementation. d. Financial institutions that channel the savings generated by households toward businesses, entrepreneurs and inventors. e. Patents and copyrights giving inventors and authors the exclusive rights to market and sell their creations for a period of time.

b. Strong property rights that gave citizens the right to own investments and property. e. Patents and copyrights giving inventors and authors the exclusive rights to market and sell their creations for a period of time. d. Financial institutions that channel the savings generated households toward businesses, entrepreneurs and inventors. c. Widespread education for the workforce. will promote new technology innovations and implementation.

Which of the following are growth-promoting institutional structures? a. Government control b. Competitive market system c. free trade d. strong property rights e. patents and copyrights f. political instability g. efficient financial situations

b. competitive. market system c. free trade d. strong property rights e. patents and copyrights g. efficient financial situations

The purchase of the economy's expanding goods and services by households, businesses, and the government is know as the ____________ factor. a. productivity b. demand c. efficiency d. supply

b. demand

Economic growth is realized when the production possibilities curve shifts because of changes in which of the following factors? a. real GDP b. demad c. efficiency d. output

b. demand c. efficiency

Government consumption expenditures and gross investment include which of the following? a. government transfer payments b. direct purchases of resources c. expenditures on final goods

b. direct purchases of resources c. expenditures on final goods

The four supply factors that constitute changes in physical and technical agents of production _________. a. constrain an economy to its current GDP b. enable economy to expand its potential GDP c. increase total spending, which expands GDP d. decrease total spending, which constrains GDP

b. enable economy to expand its potential GDP

Those countries which experience modern economic growth earlier than other countries now have significantly. a. higher availability of natural resources b. higher standard of living c. lower population d. lower health standards

b. higher standard of living

An advantage of using capital in the production process is that it: a. replaces labor b. improves efficiency, increases output, and provides growth c. is more expensive than labor d. improves efficiency, reduces output, and provides growth

b. improves efficiency, increases output, and provides growth.

Which of the following is true of GDP as a measure? a. it does not take into account the amount of services produced in an economy. b. it. fails to capture the full value of improvements in product quality. c. it fails to capture any changes in the prices of goods and services produced in an economy. d. It is qualitative rather than quantitative.

b. it. fails to capture the full value of improvements in product quality.

Which are examples of negative gross domestic by-products? a. Bribery b. Noise c. congestion d. polluted water e. the underground economy

b. noise c. congestion d. polluted water

GDP may be understated because ________________ . a. the environment is not accounted in GDP. b. nonmarket activities are not included in GDP. c. GDP does not include the value of secondhand sales. d. leisure time is decreasing.

b. nonmarket activities are not included in GDP.

Which of the following are components of the expenditure approach to measuring GDP? a. personal and business savings b. personal consumption expenditures c. gross private domestic investment d. government purchases

b. personal consumption expenditures c. gross private domestic investment d. government purchases

The formula for calculating a price index is _____________ . a. the price of the market basket in the base year divided by the price of the same market based in a specific year multiplied by 100 b. the price of a market basket in a specific year divided by the price of the same market basket in the base year multiplied by 100 c. real GDP minus nominal GDP d. real GDP divided by nominal GDP

b. the price of a market basket in a specific year divided by the price of the same market basket in the base year multiplied by 100

When an economy relies on specialization, a. there will be more efficiency in production, but there will be disruptions in the distribution of goods. b. trade enables individuals to obtain the goods in which they do not have a specialization c. centralized coordination is needed to ensure that everyone obtains the goods they need d. trade is established according to the value of the specialized product

b. trade enables individuals to obtain the goods in which they do not have a specialization

The _______ sector of the economy is hard to track and therefore not included in ____________. a. foreign; GDP b. underground; GDP c. foreign; net exports d. domestic; net exports

b. underground; GDP

In a command economy, scarce goods are allocated by a. an elected planning board based on the board's preferences. b. a government-appointed planning board based on the board's preferences. c. a government-appointed planning board based on the board's long-term priorities. d. an elected planning board based on the board's long-term priorities.

c. a government-appointed planning board based on the board's long-term priorities.

The growth-promoting institutional structures that involve banks and the stock and bond markets are called _____________. a. competitive market system b. the securities and exchange commission c. financial institutions d. foreign exchange market

c. financial institutions

Strong property rights, _________ trade, patents and __________ market systems are all growth-promoting institution structures. a. restricted; competitive b. restricted; monopolistic c. free; competitive d. free; monopolistic

c. free; competitive

One of the flaws of GDP is that it _________ . a. accounts for changes in the leisure and product quality b. accounts for environmental effects of pollution c. ignores transactions that takes place in illegal markets or nonmarkets d. includes transactions of the underground economy

c. ignores transactions that takes place in illegal markets or nonmarkets

The two main supply-side elements that contribute to changes in real GDP are increases in hours worked and increases in ______________ . a. stock of capital b. hourly wages c. labor productivity d. quantity of natural resources

c. labor productivity

In a market system, scarce goods are allocated by a. estimated prices that are determined by consumers and producers acting in their own self-interest. b. market prices that are determined by consumers and producers acting in the public interest. c. market prices that are determined by consumers and producers acting in their own self interest. d. fixed prices that are determined by consumers and producers acting in the public interest.

c. market prices that are determined by consumers and producers acting in their own self interest.

What are the reasons that the underground economy exists? a. people hope to distort GDP. b. people do not like to use a price index. c. people are engaged in illegal activities. d. people want to avoid taxes.

c. people are engaged in illegal activities. d. people want to avoid taxes.

Real GDP divided by the size of the population is called __________ a. real economic growth b. nominal economic growth c. real GDP per capita d. nominal GDP per capita

c. real GDP per capita

Labor productivity is: a. additional output per worker b. total real output of population c. real output per hour of work d. real output per person

c. real output per hour of work

For the purposes of GDP accounting, what do government purchases include? a. social security payments b. unemployment insurance payments c. spending on highway construction d. the purchase of new military equipment

c. spending on highway construction d. the purchase of new military equipment

Because people will not invest if they believe that thieves, bandits, or a rapacious and tyrannical government will steal their investments or their expected returns, _______________ are important. a. efficient financial institutions b. free trade c. strong property rights d. patents and copyrights

c. strong property rights

Economic growth is made possible due to ____________ that shift the production possibilities curve outward. a. demand and supply b. inflationary pressures c. the factors of production d. growth differences

c. the factors of production

Why do economist pay so so much attention to small changes in the rate of economic growth? a. these changes reflect a larger failure of economic policy. b. these changes make it impossible to calculate real GDP. c. these changes have large effects on the volume of output. d. these changes lessen the burden of scarcity.

c. these changes have large effects on the volume of the output.

The efficiency factor involves both productive and allocative efficiency, which means in order to reach its full productive potential an economy must ____________. . a. use its resources to maximize profits at any cost b. use the most resources to get the most goods and services for the most people c. use its resources in the least costly way to produce the specific mix of goods that maximizes people's well-being d. use its resources in the most costly way to produce the specific mix of goods that maximizes people's well-being

c. use its resources in the least costly way to produce the specific mix of goods that maximizes people's well-being

In order to construct a reliable price index, government accountants must assign a __________ to each of several categories of goods and services. a. monetary value b. sector c. weight d. price index

c. weight

Which of the following growth-promoting institutional structures creates a highly educated workforce? a. A competitive market system b. efficient final institutions c. widespread education d. property rights

c. widespread education

Decide whether each of the following descriptions most closely corresponds to being part of a command system, a market system, or a laissez-faire system. A woman who wants to start a flower shop finds she cannot do so unless the central government has already decided to allow a flower shop in her area.

command system

Modern economic growth has significantly increased the standard of living as well as ____________ cultural, social, and political.

cultural

One of the shortcomings of GDP is that it doesn't reveal anything about which of the following? a. Government Purchases b. Net exports c. Investment spending d. The distribution of output e. Household consumption

d. The distribution of output

Which of the following is one of the five fundamental questions? a. Which products will be in scarce supply and which in excess supply? b. Who should appoint the head of the central bank? c. How much should society save? d. What goods and services will be produced?

d. What goods and services will be produced?

Economic growth is calculated ____________ a. an average rate of growth over five to ten years b. a percentage rate of growth per month c. an average rate of growth per month or per 6 months d. a percentage rate of growth per quarter or per year

d. a percentage rate of growth per quarter or per year

Gross domestic product (GDP) may be calculated as the sum of ___________. a. consumer spending, investment spending, government purchases of goods and services, and exports b. consumer spending, investment spending, government transfer payments, and exports minus imports c. exports and imports only d. consumer spending, investment spending, government purchases of goods and services, and net exports

d. consumer spending, investment spending, government purchases of goods and services, and net exports

Which of the following is NOT a characteristic of a laissez-faire system? a. public ownership of all capital b. protecting private property rights c. minimal government intervention d. Enforcement of contracts

d. enforcement of contracts

An economy that is experiencing economic growth ________ is better able to meet people's wants and resolve socioeconomic problems. a. stagnation b. decline c. inflation d. growth

d. growth

By ignoring the value of leisure time, how does national income account affect our well-being? a. it overstates our well being b. it has no effect on well-being c. it accurately states our well being d. it understates our well being

d. it understates our well being

Output per hour work is the definition of: a. diminishing b. increasing returns to labor c. the marginal product of labor d. labor productivity

d. labor productivity

The growth-promoting institutional structure that involves giving inventors and authors the exclusive right to market and sell their creations is ______________ . a. equal rights b. free trade c. property rights d. patents and copyrights

d. patents and copyrights

Real GDP per capita means GDP ____________ a. per country b. in real terms c. divided by capital stock d. per person

d. per person

From society's point of view, the economic function of profits and losses is to a. promote the equal distribution of real assets and wealth b. achieve full employment and price level stability c. contribute to a more equal distribution of income d. reallocate resources from less-desired to more-desired uses.

d. reallocate resources from less-desired to more-desired uses.

The main reason to participate in the underground economy is to avoid _____________ . a. reporting actual savings and paying interest. b. engaging in illegal activities and paying fines. c. reporting actual revenue and paying interest. d. reporting actual income and paying income taxes.

d. reporting actual income and paying income taxes.

Literacy and widespread __________ education is the growth - promoting institutional structure that contributes to a productive labor force.

education or knowledge

True or false: Countries that experienced economic growth earlier than other countries have lower average incomes today.

false

True or false: GDP is a perfect and complete measure of the well-being of a country.

false

Efficiency factor is when an economy must achieve economic efficiency as well as __________ ____________ to reach its full production.

full employment

Identify each of the following quotes as being an example of either the invisible hand or creative destruction. "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest".

invisible hand

Identify each of the following quotes as being an example of either the invisible hand or creative destruction. "Managers in the old Soviet Union often sacrificed product quality and variety because they were being awarded bonuses for quantitative, not qualitative, targets."

invisible hand

Countries that develop and use the most advanced technologies, which then became available to follower countries, are known as ________ countries.

leader, leading, lead

Decide whether each of the following descriptions most closely corresponds to being part of a command system, a market system, or a laissez-faire system Shops stock and sell the goods their customers want, but the government levies a sales tax on each transaction in order to fund elementary schools, public libraries, and welfare programs for the poor.

market system

Economies growth can be illustrated when the demand factors and the efficiency factor shift the production _______ curve outward.

possibilities

A(n) _______ __________ is a measure of a specified collection of goods and services in a given year as compared to the value of a highly similar collection of goods and services in a reference year.

price index

The competitive market system tends to drive the economy toward __________ efficiency and ___________ .

productive allocative

The growth-promoting institution structure that involves the ability of citizens to own land, houses and businesses is called private ____________ rights.

property

GDP does not capture the full value of improvements in product quality because GDP is a(n) ___________ instead of a qualitative measure.

quantitative

The _____________ (social/opportunity) costs of negative gross domestic by-products reduce a nation's. economic well-being.

social

Economists pay attention to small changes in economic growth because small changes in economic growth can make a big difference in the living _________ of a country.

standards

The six determinants of economic growth are grouped into three categories; one demand factor, four __________ factors, and one efficiency factor.

supply

True or false: GDP reveals nothing about the way output is. distributed.

true

Economic growth is normally calculated as a percentage rate of growth per quarter or per

year