Review Chapter 6,7,8,9
(Table: Kenya's Economy in 2010) Look at the table Kenya's Economy in 2010. Aggregate output at the end of 2010, assuming no changes in the price level, was about
$32,632 billion
If real GDP in country A is $500 billion one year and is $540 billion the following year, this means the growth rate for this country between the two years is
8%
(Figure:The Labor Market) Look at the figure The Labor Market. What will be the level of unemployment if firms decide to pay an efficiency wage of $16?
80,000
A trade surplus occurs
when the value of imports is less than the value exports
The key measure used to track economic growth is
real GDP per capita
The convergence hypothesis
seems to hold only when other things such as education and infrastructure are held equal
If the population and GDP increase by the same percentage, then real GDP per capita
stays the same
The real interest rate is the nominal interest rate less the rate of inflation
True
The three main reasons that the average U.S. worker today produces far more than his or her counterpart a century ago are more physical capital, more human capital, and a great deal of technological progress
True
Total factor productivity is the amount of output that can be achieved with a given amount of factor inputs
True
The percentage of the labor force that is unemployed is the
Unemployment rate
An example of physical capita is
a truck a company purchases for deliveries
(Figure:The Labor Market) Look at the figure The Labor Market. The level of employment at the equilibrium wage rate is
100,000
(Figure:The Labor Market) Look at the figure The Labor Market. The size of the labor force at the equilibrium wage rate is
100,000
(Scenario: Market Basket) Look at the Scenario Market Basket. What is the rate of inflation between 2010 and 2011?
11%
(Figure:The Labor Market) Look at the figure The Labor Market. What is the size of the labor force at an efficiency wage of $16?
110,000
(Scenario: Market Basket) Look at the Scenario Market Basket. What is the value of the price index in 2011?
111
(Table: Price Levels) Look at the table Price Levels. What is the rate of inflation from 2012 to 2013?
2.0%
(Table: Price Levels) Look at the table Price Levels. What is the rate of inflation from 2011 to 2012?
2.9%
If real GDP grows at an average rate of 3% per year, it will double in approximately _____ years.
23
(Scenario: Capital) Look at the scenario Capital. In three years' time, what is the level of physical capital per worker in this economy?
266.2
(Figure:The Labor Market) Look at the figure The Labor Market. What is the unemployment rate at an efficiency wage of $16?
27%
(Scenario: Growth Rates) Look at the scenario Growth Rates. How long will it take real GDP per capita of the United States to double?
35 years
If real GDP grows at an annual rate of 1%, it will double in approximately ____ years.
70
Keynesians argue that low levels of spending
Can lead to prolonged recessions
Which country had the fastest growth rate of real GDP per capita between 1980 and 2010?
China
Growth accounting estimated the contribution of each major factor in the aggregate production function to economic growth
True
The convergence hypothesis says international difference in real GDP per capita tend to increase over time
False
Which of the following changes would contribute to a nation's rapid long-run economic growth?
Faster technological progress
The modern macroeconomic tools used by the government are______ policy and ____ policy.
Fiscal; Monetary
A business cycle is a
Short-run alternation between economic upturns and downturns
Purchases of imported products are
Subtracted from GDP
Fiscal policy attempts to affect the level of overall spending by making changes in
Taxes and Spending
The review that the government should take an active role in the macroeconomy dates to
The Great Depression
Macroeconomics focuses on
The economy as a whole.
Wages
The income households earn by selling their labor
Private saving by households is
The portion of disposable income not spent on goods and services
Final goods and services are sold to the final or end user
True
Which of the following will NOT increase the productivity of labor?
an increase in the size of the labor force
(Scenario: Capital) Look at the scenario Capital. If there is no inflation and output per worker is initially $1,000, what does the estimated output per worker equal after one year?
$1,025
(Figure:The Labor Market) Look at the figure The Labor Market. The equilibrium wage rate is
$15
If a country has a population of 1,000 and area of 100 square miles, and a GDP of $5 million, then its GDP per capita is
$5,000
(Table: Kenya's Economy in 2010) Look at the table Kenya's Economy in 2010. Aggregate output per capita at the beginning of 2010 was:
$775
(Figure:The Labor Market) Look at the figure The Labor Market. The unemployment rate at the equilibrium wage rate is
0%
(Table: Price Levels) Look at the table Price Levels. What is the rate of inflation from 2013 to 2014?
1.1%
(Scenario: Market Basket) Look at the Scenario Market Basket. What is the value of the price index in 2011?
100
Investment spending refers to the
Addition to the economy's supply of productive capital
Deflation
An overall decrease in the price level
The GDP deflator
Equal to 100 in the base year
The rule of 70 is most useful in
Estimating the doubling time of real GDP for a given growth rate
When an economy is expanding, unemployment tends to____ and overall prices tend to _____
Fall; Rise
A high unemployment rate implies a high level of GDP
False
Disinflation is a drop in the price level
False
If the price level at the end of year 1 is 150 and the price level at the end of year 2 is 160, the inflation rate in year 2 is 10%
False
Inflation reduces nominal interest rate.
False
Which of the following is FALSE? GDP can calculated by summing
Government spending and tax revenues
Disposable income
Household income and government transfers less taxes
Unexpected inflation ____ lenders and _____borrowers
Hurts; benefits
In the paradox of thrift
Increased saving by individuals increases their chances of becoming unemployed.
Monetary policy attempts to affect overall level of spending by making changes in
Interest rates and quantity of money
The construction of new housing is considered part of
Investment spending
The General Theory of Employment, Interest, and Money was written by
John Maynard Keynes
GDP for given period measures the
Market value of the final goods and services produced within the borders of a country
If real GDP falls when nominal GDP increases, then prices have increased
True
An expansion is a period in which
Output rises
Real per capita GDP is
Real GDP divided by the population
The standard of living in a country can be best measured by
Real GDP per capita
Periods in which output and employment are falling are
Recessions
Unanticipated inflation
Reduces the real value of debt
Economists say the long-run economic growth is almost entirely due to
Rising productivity
Inflation
When overall price levels rise over time
Which of the following is NOT included in the calculation of GDP?
Your granny's monthly Social Security payment
When inflation rises quickly, borrowers will ____ and lenders will ____
benefit; be hurt
The term human capital describes improvement
in a worker's skills made possible by education, training, and knowledge
Physical capital includes
machine tools
