MACRO 6,7,8

In feb. 2012 the bureau of labor statistics calculated the unemployment rate to be 8.3%. If frictional unemployment was 2% and structural unemployment was 3.2% then cyclical unemployment would be

3.1%

the business cycle

is the short run alteration between recessions and expansions

long run- economic growth

is the sustained upward trend in th economy's output over time

A country's GNP

is the total factor income earned by residents of a country

which of the following is an intermediate good

tires purchased from Goodyear by General Motors for newly produced electric cars

when the value of goods and services bought from foreigners is more than the value of goods and services it sells to them

trade deficit

when the value of goods and services bought from foreigners is less than the value of the goods and services it sells them

trade surplus

a worker classified as frictionally unemployed is one who is

unemployed while working looking for a job that demands his/her skills

the percentage of labor force that is unemployed is the

unemployment rate

discouraged workers are those individuals

who haven given up looking for a job

you are a college student and looking for work

you are not part of the labor force

changing the level of government spending is an example of

fiscal policy

the modern tools o macroeconomic policy are

fiscal policy and monetary policy

the modern tools of macroeconomic policy are

fiscal policy and monetary policy

structural unemployment can be caused by all except

fluctuations in the business cycle

households receive income in the form of all EXCPET

investment spending

John Maynard Keynes believed that the

government should actively try to migrate the effects of the recession by using fiscal and monetary policies

a recession leads to all EXCEPT

higher unemployment

in the paradox of thrift:

increased saving by individuals increases their chances of becoming unemployed

the topics studied in macroeconomics include

inflation, unemployment, and economic growth

gross domestic product is the economy's total production of ____ for a given period

final goods and services

Consider an economy that produces only two goods: a DVD player and DVD'S. Last year, 10 dvds were sold at $20 each, and dvd players were sold at $50 each. Real GDP that year using last year as the base is

$1300

consider an economy that produces only two goods: DVDs and DVD players. If 10 DVD's are sold at $20 each and 5 dvd players are sold at $100 each, then the nominal GDP is

$700

a survey reveals that on a small island 1,000 people have jobs, 200 people are looking for jobs, and 200 people are neither working nor looking for work. the unemployment rate on the island is

16.7%

when the great depression reached its trough in 1933, the unemployment rate was approximatley

25%

in the United States

GDP is about twice GNP

the economist whose writings in the 1930's concluded that the cause if an economic depression is inadequate spending was:

John Maynard Keynes

an independent panel of economic experts at the ___ analyzes the macroeconomy and determines when recessions begin and end

National Bureau of Economic Research

economic theory in 1936 changed dramatically with the publication of

The General Theory of Employment, Interest, and Money, By John Maynard Keynes

the short-run alteration between economic downturns and recession, then economic upturns and expansions are known as

business cycle

the point at which the economy turns from expansion to rcession

business cycle peak

the sequence of a business cycle phase is

business cycle peak, recession, business cycle trough, expansion

the point at which the economy turns from recession to expansion

business cycle trough

Keynesians argue that low levels of spending

can lead to prolonged recessions

the trough of the business cycle

comes right after the expansion phase

gross domestic product is defined as

consumer spending + government purchases + investment spending + exports- imports

a drop in inflation rate is called

disinflation

goods that are produced in a particular period but NOT sold in that period:

end up in inventory and are included in investment

a country's gnp

excludes factor income earned abroad by Americans

controlling interest rates is an example of

monetary policy

the sum of frictional and structural unemployment make up the

natural rate of unemployment

recessions

or contractions, are periods of economic downturn when output and employment are falling

expansions

or recoveries, are periods of economic upturn when out put and employment are rising

an expansion is a period in which

output rises

GDP is the sum of

personal consumption, investment, government purchases, and net exports

the economy has ___ when the overall level of prices changes slowly or not at all

price stability

in a typical business cycle, the business-cycle peak is immediately followed by

recession

according to the Congressional Budget Office, the natural rate of unemployment

rose until the end of the 1970s and has declined since

an example of intermediate good is

steel purchased by aircraft manufacturers

Keynesian economics promotes economic ideas

that the government can help a depressed economy via fiscal and monetary policies

the widely held view that the government should take an active role in the macroeconomy dates to

the Great Depression

fiscal policy refers to

the control of government spending and taxation

GDP excludes all of the following except

the value of owner-occupied housing

In an open economy

there is trade in goods, services, or assets with other countries