Macro Final

The broadest-based price index available is the

GDP deflator.

The equation for GDP using the expenditure approach is

GDP = C + I + G + EX - IM.

If the number of people classified as unemployed is 20,000 and the number of people classified as employed is 620,000, what is the unemployment rate?

3.1%

Estimates for the natural rate of unemployment in the United States range from

4% to 6%.

While targeting the deficit, which of the following is likely to occur after a positive aggregate demand shock?

AD↑ ⇒ Y↑ ⇒ T↑ ⇒ deficit↓ ⇒ G↑ ⇒ AD↑ ⇒ Y↑

Which of the following is a true statement?

Economic theory does not assume that people are more interested in money compared to love, wisdom, or honor.

Gross domestic product measures

The total spending of everyone in the economy, the total income of everyone in the economy, and the value of all output in the economy.

A checking deposit in a bank is considered ________ of that bank.

a liability

A price ceiling is

a maximum price sellers are allowed to charge for a good or service.

A decrease in supply means

a shift to the left of the entire supply curve.

The quantity of output supplied at different price levels is represented by the

aggregate supply curve.

An increase in aggregate demand when the economy is operating at high levels of output is likely to result in

an increase in the overall price level but little or no increase in output.

Diminishing returns to a factor implies that with capital fixed,

as labor increases, labor productivity eventually decreases.

When the Fed raises the required reserve ratio, the banks' excess reserves will initially ________ and the money supply ________.

decrease; decreases

Among the factors that determine the price of a share of stock in a firm is

expected dividends.

A firm might issue stock to

finance a capital project.

Nominal GDP is gross domestic product measured

in current dollars.

An economy is not able to develop because of a lack of capital. Which of the following strategies would you suggest this economy pursue?

increase the political stability of the economy

studying how Joshua allocates his time between school and video games is an example of

microeconomics

If the central bank decreases the money supply, it is conducting

monetary policy.

Convergence theory suggests that gaps in ________ tend to close over time.

national income

The transactions demand for money is

negatively related to the interest rate.

Labor productivity growth is the growth rate of output

per worker in the economy.

If unplanned inventory investment is positive, then

planned aggregate spending must be less than aggregate output.

When there is a shortage of a product in an unregulated market, there is a tendency for

price to rise.

According to the law of demand, as prices rise,

quantity demanded decreases.

The reason that opportunity costs arise is that

resources are scarce.

Positive economics is an approach to economics that

seeks to understand behavior and the operation of systems without making judgments.

An individual who cannot find a job because his or her job skills have become obsolete is an example of

structural unemployment.

Opportunity cost is

that which we forgo, or give up, when we make a choice or a decision.

Economists study

the actions, interactions, and consequences that emerge when people face scarcity.

If no foreign companies produce in a country, but many of the country's companies produce abroad, then

the country's GNP will tend to exceed its GDP.

Which of the following is NOT a tool available to the Fed to change the supply of money?

the income tax rate

The number of people unemployed equals

the labor force minus the number of people employed.

A "brain drain" is

the tendency of talented people in developing countries to get education in developed countries and to stay there after graduation.

The government decides to impose a price ceiling on a good because it thinks the market-determined price is "too high." If it imposes the price ceiling above the equilibrium price

there will be no change to either the price or quantity in the market.

When two people trade

they both expect to be made better off by the exchange

In the circular flow diagram, the different payments made by firms to households include

wages and profits.