Lesson 5-
44g: The abbreviation DI stands for:
disposable income.
12c: A common denominator for aggregating production when measuring GDP is achieved by:
measuring GDP in terms of market value.
43a: The difference between exports and imports is termed:
net exports.
22i: In the two-sector, three-market circular flow model, the __________ sector is on the demand side of the __________ markets.
household, financial
12g: In the simple two-sector, two-market circular flow, the __________ sector is on the supply side of the __________ markets.
household, resource
44d: An important implication of the investment cause of business-cycle instability is that:
the economy will be unstable if government does nothing.
35c: In the three-sector, three-market circular flow model, gross domestic product is purchased by:
the household, business, and government sectors.
51a: In the complete four-sector, three-market circular flow model, gross domestic product is purchased by:
the household, business, government, and foreign sectors.
22f: If I earn and receive $1000 of income this month, spend $250 for food, $400 for rent on my apartment, $150 for shares of Microsoft stock, $50 for cable television services, and deposit $150 in my savings account, my saving for the month is:
$300.
21g: Selling a legal claim is equivalent to:
borrowing.
33e: The government sector uses taxes for:
transfer payments and purchases.
36a: An economic contraction predicted by leading economic indicators that did not occur was in the mid:
1960s.
24f: If you buy a pizza from a restaurant rather than making the identical product at home:
GDP increases.
31h: The appropriate policy to reduce inflation is to try to induce:
a business-cycle contraction.
51b: One of two important reasons to study the measurement of GDP is:
a way to track economic instability and business cycles.
52c: One of three important qualifications for the measurement of GDP is that it:
also requires a theoretical basis for interpretation.
13a: GDP measures only the value of FINAL goods and services to:
avoid double counting.
42e: On the spectrum of political philosophies, conservative Republicans tend to:
be anti-government.
42a: On the spectrum of political philosophies, liberal Democrats tend to:
be pro-government
11a: Irregular, nonperiodic fluctuations in aggregate economic activity are:
business cycles.
52a: In the complete four-sector, three-market circular flow model, private saving is used by the financial markets for:
business investment and the government deficit.
35b: Gross domestic product can be calculated by adding __________ to net domestic product.
capital consumption adjustment
11c: The basic economic function of the household sector is:
consumption.
31e: A general period of decreasing economic activity is termed a business cycle:
contraction
12a: The bad part of contractionary bad times is a(n):
decrease in production.
13a: The good part of expansionary good times is a(n):
decrease in unemployment.
52b: Expansionary fiscal policy includes:
decreasing taxes.
21e: An example of economic activity on the "paper" side of the economy, in contrast to the "real" side of the economy, is:
depositing money in a bank.
51a: One of two reasons for differing political views is:
different beliefs held by different people.
44a: The total income that can be used by the domestic household sector for either consumption or saving during a given time period is:
disposable income.
17l: The wages earned by a Canadian citizen who is employed in Canada would be:
excluded from both U.S. GDP and U.S. GNP.
24a: The part of a business cycle characterized by several years of rising economic activity is the:
expansion.
33a: Payments made to resource owners in exchange for the use of productive services are:
factor payments.
41e: The two most noted stabilization policies are:
fiscal and monetary.
42d: In the four-sector, three-market circular flow model, exports flow:
from the foreign sector.
15a: The federal, state, and local government rule makers and regulators make up the:
government sector.
14a: In terms of the simple two-sector, two-market circular flow, the revenue the business sector receives from selling production is:
gross domestic product.
12c: Consumption activities are undertaken by the __________ sector.;
household
24a: Productive nonmarket activities that are EXCLUDED from GDP include:
household production.
16e: Goods purchased by the domestic economy that are produced by the foreign sector are:
imports.
34h: Net foreign factor income represents the difference between:
income received by domestic citizens for foreign production and the income foreign citizens receive for domestic production.
33f: A business-cycle contraction can result from a(n):
increase in imports.
43e: A decrease in the total volume of the circular flow results from a(n):
increase in imports.
31d: If I buy a Stuffed Amigo (a popular stuffed animal) for $5, the measurement of GDP from the supply-side:
increases by $5.
52a: Expansionary fiscal policy includes:
increasing government purchases.
24a: A persistent increase in the economy's average price level is:
inflation
13d: Goods that are sold as inputs with plans for further transformation before they are resold are:
intermediate goods.
25b: A concern about the macroeconomy, other than production, unemployment, and inflation, is:
international competition.
43a: The investment explanation of business-cycle instability depends on the notion that:
investment expenditures are sensitive to interest rates.
14c: Spending by the business sector on final goods and services is:
investment expenditures.
34e: An interest rate measure is one of several statistics used as a:
lagging economic indicator.
34a: Seven economic statistics that tend to move up and down a few months after the expansions and contractions of the business cycle are termed:
lagging economic indicators.
32a: Eleven economic statistics that tend to move up and down a few months before the expansions and contractions of the business cycle are termed:
leading economic indicators.
23c: A key problem resulting from unemployed labor is:
lost production.
52a: One of two reasons why competing macroeconomic theories exist to explain the same phenomenon is:
macroeconomic hypotheses are not easily verifiable.
21b: The first step in the measurement of economic production for the economy is by identifying:
market transactions.
15a: The total market value, measured in current prices, of all final goods and services produced in the economy in a given time period is termed:
nominal GDP.
25a: The part of a business cycle characterized by the transition from rising economic activity to declining economic activity is the:
peak.
12c: The flow of factor services from the household sector to the business sector is part of the:
physical flow.
21f: The macro goal of growth is best achieved if:
production capabilities are increased.
14a: GDP is a measure of the production of goods and services over a GIVEN TIME PERIOD because:
production is a flow variable.
21c: Markets, exchanges, and other activity that deal directly with the physical assets is commonly termed the:
real economy.
22i: Another term for a business-cycle contraction is:
recession.
23b: An example of a productive nonmarket activity that is INCLUDED in GDP is:
rent of owner-occupied housing.
12e: In terms of the circular flow, markets in which households supply factors of production demanded by firms are:
resource markets.
43g: Fiscal policy tends to be preferred by people who:
see government as the answer not the problem.
11d: A notable period of economic good times in the United States was the:
the decade of the 1990s.
42c: The investment explanation of business-cycle instability is based on the proposition that:
the volume of the circular flow shrinks when investment declines.
43g: The three common types of income received but not earned are also termed:
transfer payments.
23a: The part of a business cycle characterized by the transition from declining economic activity to rising economic activity is the:
trough.
24c: A key problem resulting from inflation is:
uncertainty of future prices.
