Macro Chapters 5-7
What is a true measure of national output?
GDP in constant dollars
What is the main reason to expect convergence in the long run.
Low-productivity countries learning from high-productivity countries
The unemployment rate is the number of unemployed people, expressed as a ____________
a percentage of the labor force.
An economy could produce above its potential GDP for a short period of time by________________
adding extra shifts of work, such as overtime or night shifts.
What would shift the production function upward?
an increase in the level of technology
When nominal interest rates are held below inflation rates, then households will have an incentive to______________
consume
The shrinking gap between the income levels of poor and rich countries is known as the_____________
convergence hypothesis.
Full employment is defined by most economists as the minimization of
cyclical unemployment.
In general, as productivity levels increase, the potential for productivity growth__________
decreases
A productivity decrease would be illustrated by a shift in the production function _________
downward
Compared with the U.S. , developing countries__________
face geographic conditions that limit productivity.
Human capital differs from physical capital in that______________
human capital is intangible.
An increase in the capital stock would be expected to
increase real GDP per capita.
A rightward shift in the aggregate demand curve is most likely to result in____________
inflation
The phrase "capital formation" is synonymous with ______________
investment spending.
Potential GDP is an estimate of the economy's ability to produce goods and services if the
labor force is fully employed.
If the capital stock decreases, then the economy will produce ____ output with the ____ amount of labor.
less, same
If part of the labor force is unemployed, the foregone goods and services are_____________
lost forever.
As the unemployment rate rises, ___________ rises.
lost national output rises.
Compared to workers in richer countries, workers in developing countries have__________________
lower productivity and lower wages.
Gross Domestic Product is calculated by adding together the _____________ and _____________
money value of final goods and services.
Discouraged workers are included in the_____________
not in the labor force category.
Intermediate goods, like milk sold by a farmer to a supermarket, are______________
not included in GDP.
Government policy to reduce unemployment and increase national output can be illustrated by an
outward shift of the aggregate demand curve caused by an increase in government spending.
In the aggregate demand-aggregate supply model, economic growth can be illustrated by an___________ of the ____________
outward shift of the aggregate demand curve.
The amount of goods and services the economy could produce if the labor force is fully employed is called
potential GDP.
More education and training usually lead to higher levels of_______
productivity
Laws that assign owners the rights to use assets as they see fit are called__________
property rights.
The arithmetic difference between the nominal rate of interest and the expected rate of inflation is the______________
real interest rate.
When you subtract the expected rate of inflation from the nominal rate of interest, you calculate the________________
real rate of interest.
The principal benefit of unemployment insurance is that it
replaces income lost due to unemployment.
four types of unemployment
seasonal frictional structural cyclical
Gross Domestic Product is best described as the____________________
sum of money values of all final output produced in the domestic economy within the year.
The horizontal axis on the aggregate demand-aggregate supply model measures the ____________
the level of total output.
The unemployment rate is equal to________________
the number unemployed divided by the labor force.
The vertical axis of the aggregate demand-aggregate supply model measures the amount of _____________
the price level.
The definition of Gross Domestic Product is
the total of the money values of all final goods and services produced in the domestic economy within a specific time period.
An increase in capital stock will shift the production function______________
upward
What would impose the greatest costs to society?
variable rates of inflation
The definition of human capital refers to______________ and ________
worker education and worker training.
A good produced in 2009 and held in inventory until it is sold in 2010 would be included in which measure of GDP?
In 2009 GDP
What is an explanation for why some poor countries suffer from lower productivity growth?
Poor countries have lower capital stocks.
What determines the productivity growth rates of a country?
Rates of increase of capital, technology, and workforce quality
