Macro test 2
If a $50 billion initial increase in spending leads to a $250 billion change in real GDP, how big is the multiplier?
5.0
Refer to the figure and assume that price is fixed at $37,000 and that Buzzer Auto needs 5 workers for every 1 automobile produced. If demand is DM and Buzzer wants to perfectly match its output and sales, how many cars will Buzzer produce and how many workers will it hire?
900 cars and 4,500 workers
Which of the following transactions are counted in GDP?
A Kerry buys a new sweater to wear this winter
Economists agree that __________ inflation reduces real output.
A cost push Inflation
If total spending is just sufficient to purchase an economy's output, then the economy is in:
equilibrium
Net exports are
exports less imports
If real GDP grows at 7 percent per year, then real GDP will double in approximately _________ years.
10
A country's current unemployment rate is 11 percent. Economists estimate that its natural rate of unemployment is 6 percent. About how large is this economy's negative GDP gap?
10 percent
Suppose that a country has 9 million people working full time. It also has 1 million people who are actively seeking work but are currently unemployed, along with 2 million discouraged workers who have given up looking for work and are currently unemployed. What is this economy's unemployment rate?
10%
If the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase by:
2 billion
Which of the following will increase and shift the aggregate supply curve?
A new networking technology increases productivity all over the economy
Gross Domestic Product may be calculated as the sum of
Consumption, investment, government purchases, and net exports.
Unemployment due to economic downturn and low demand is called
Cyclical Unemployment
If the MPS rises, then the MPC will?
Fall
If the demand for a firm's output unexpectedly decreases and prices are sticky, you would expect its inventory to:
Increase
Place the phases of the business cycle in order, starting with highest level of gdp
Peak, Recession, Trough, Expansion
Which of the following scenarios will shift the investment demand curve right?
The expected return on capital increases
Which of the following will reduce and shift the aggregate demand curve?
The government reduces personal income taxes
Most economists agree that the immediate cause of the large majority of cyclical changes in the levels of real output and employment is unexpected changes in ___________________.
The level of Total Spending
The unemployment rate that is consistent with full employment is _______________.
The natural rate of unemployment
Transfer payments are excluded when calculating the GDP because:
They do not reflect current production
Cost-of-living adjustment clauses (COLAs):
Tie wage increases to changes in the price level
Frictional and structural unemployment is inevitable in dynamic economy
True
Larger MPCs imply larger multipliers
true
Suppose that the CPI was 110 last year and is 108 this year. What is this called?
deflation
During periods of hyperinflation
people tend to hold goods rather than money
An increase in _______ GDP guarantees that more goods and services are being produced by an economy.
real
Cost-push inflation occurs in the presence of
rising per unit production costs
Full employment is when every worker is employed
true
Irving owns a chain of movie theaters. He is considering whether he should build a new theater downtown. The expected rate of return is 15 percent per year. He can borrow money at a 12 percent interest rate to finance the project. Should Irving proceed with this project?
yes
