Econ Exam 1 Review

Whats the correct ranks from smallest to largest for: - average labor productivity - total output - output per person

Output per person, average labor productivity, total output

In the 1950's and 1960's the European unemployment rate tended to be ______ the U.S. unemployment rate, while in the 1990's the European unemployment rate tended to be ____ the U.S. unemployment rate.

lower than; higher than

If prices in the current year are higher on average than in the base year, real GDP in the current year ______ nominal GDP in the current year.

is less than

The value of unpaid childcare services provided by a stay-at-home dad ______ included in GDP; the value of daycare services purchased from a licensed childcare provider ______ included in GDP.

is not; is

A measure of the average price of a given class of goods or services relative to the price of the same goods and services in a base year is called a:

price index.

Macroeconomic issues include all of the following:

productivity, economic growth, and recessions and expansions.

GDP can be measured as each of the following:

total business revenues.

If its exports are greater than its imports, then a country has a:

trade surplus.

Decisions to determine the government's budget are called:

fiscal policy.

A key indicator of the hardship experienced during the Great Depression is the:

high rate of unemployment.

Although GDP is not the same as economic well-being, high levels of GDP are positively correlated with all of the following:

higher material standards of living, higher rates of literacy, and longer life expectancies.

If living standards in a country, as measured by output per person, decrease, then total output must have:

increased more slowly than population increased.

Since 1950, the standard of living in the United States has:

increased when measured by both total output and output per person.

What is Indexing?

increases a nominal quantity each period by the percentage increase in a specific price index

If average labor productivity increases while population and the number of employed workers remain constant, then output per person:

increases.

The rate at which prices in general are increasing is called the:

inflation rate.

Goods and services that are used up in the production of other goods and services are called ______ goods and services.

intermediate

GDP equals the value added by producers of:

intermediate goods and services, as well as final goods and services.

If a pizza maker pays $1 for tomatoes, $1 for cheese, $2 for sausage, and sells the pizza made with these ingredients for $7, then each pizza sold contributes how much to GDP?

$7

When comparing the standard of living in two countries it is important to adjust total output for differences in:

population.

Example of structural policy?

A decision by a developing country to reduce government control of the economy and to become more market-oriented.

Whats an example of a classified good?

A new computer sold to a business firm

In which of the following situations would GDP not change?

As domestic consumers buy fewer tobacco products, tobacco manufacturers instead sell their products, at the same price, to foreign buyers.

All of the following are examples of positive statements:

Higher interest rates reduce construction activity, Higher interest rates are achieved by slowing the growth of the money supply, and Historically higher rates of money growth are associated with higher rates of inflation.

Example of someone who would be classified as employed:

Mario Faubert, a NHL hockey player at home sick with the flu

Example of a statement thats normative:

Large budget deficits should be avoided.

In a debate on the state of the economy Senator X pointed out that the unemployment rates for teenagers, blacks, and hispanics had increased over the last year, while Senator Y stated that the unemployment rate in the United States was at its lowest level in more than 30 years. In this example, aggregate data is being used by:

Senator Y

A trade deficit occurs when:

exports are less than imports.

What could increase the consumption component of U.S. GDP?

You purchase a vacation at Disney World in Florida.

The consumer price index measures the cost of:

a fixed basket of goods and services.

Output per employed worker is called:

average labor productivity.

Profits, rents, interest, and royalties are examples of:

capital income.

What does indexing adjust automatically?

certain values; such as: social security payments, by the inflation

The four components of aggregate expenditures are:

consumption, investment, government spending, and net exports.

The value of goods produced, but unsold, in the current period is:

counted in GDP as inventory investment.

The consumer price index for the current year measures the cost of a standard basket in the ______ year relative to the cost of the same basket in the ______ year.

current; base

If total output increases from $1 trillion to $2 trillion as population increases from 100 million to 250 million, then output per person:

decreases

How is the real waged calculated?

dividing the nominal wage by the CPI for that period

Income lost by the unemployed is an example of the ______ cost of unemployment, while the additional spending to control crime is an example of the _____ cost of unemployment.

economic; social

Each person who is 16 years or older is considered to be in one of the following categories:

employed, unemployed, or out of the labor force.

When jobs are easy to find, wage increases are frequently given, and businesses are doing well, the economy is most likely in a(n):

expansion.

If tax revenues equal 25 percent of total output and government expenditures equal 20 percent of total output, then there is a:

government budget surplus.

The Federal Reserve makes decisions regarding _____ policy while Congress makes decisions regarding _____ policy.

monetary; fiscal

A measure of GDP in which quantities produced are valued at current-year prices is called:

nominal GDP.

"Privatization of government owned industries is a more desirable way to operate an economy" is a _______ statement about ______ policy.

normative; structural

A drawback of using market values to aggregate the quantities of goods and services produced in an economy is that:

not all economically valuable goods and services are bought and sold in markets.

If an economy produces 3 million oranges that sell for $0.25 each and 100,000 cars that sell for $25,000 each, then when the market value of total output is calculated:

oranges receive a smaller weight than cars.

Average consumption in an economy is best measured by _____, while average productivity in an economy is best measured by _____.

output per person; output per worker

To compare the change in physical production (GDP) between 2012 and 2018, we should compare ______ GDP in 2012 with ______ GDP in 2018.

real; real

The value added by any firm equals the firm's ______ from selling the product minus _______.

revenue; the cost of inputs purchased from other firms

Unemployment typically _______ during a recession.

rises

What does indexing prevent

the purchasing power of the nominal quantity form being eroded by inflation.

Whats the real wage?

the wage paid to the worker measured in terms of purchasing power.

After increasing at more than 2 percent per year between 1950 and 1973, the growth rate of average labor productivity _____ between 1973 and 1995, and ____ between 1996 to 2007.

slowed; picked up

One way to avoid counting the prices of intermediate goods multiple times in computing the value of GDP is to:

sum the value added of producers of both intermediate and final goods and services.

Decisions to reduce the money supply are made by _____ and are an example of _____ policy.

the Federal Reserve; monetary

If two countries are economically identical except that citizens in one country have more leisure time, then the level of GDP:

will be the same in both countries.