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Macroeconomics > Exam 3 > Flashcards

Exam 3 Flashcards

Chapters: 8, 9

1
Q

During a business cycle expansion, total production ________ and total employment ________

A

increases; increases

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2
Q

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

A

employment in the economy

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3
Q

Macroeconomics, as opposed to microeconomics, includes the study of what determines the

A

average price levels of goods and services in the economy

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4
Q

Macroeconomics seeks to understand

A

economic growth, business cycles, and inflation

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5
Q

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

A

Real GDP grows by 2.3% in the second quarter

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6
Q

Which of the following is not directly counted in GDP?

A

intermediate goods

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7
Q

Value added equals the market price of the firm’s product minus

A

the price of intermediate goods

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8
Q

In the circular flow model, the value of total income for an economy ________ the value of total production

A

equals

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9
Q

In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services

A

equals

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10
Q

The purchase of a new automobile is included in

A

consumption expenditures on durable goods

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11
Q

Which of the following is not a durable good?

A

clothing

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12
Q

To calculate GDP by the expenditure method, one must add

A

consumption spending, investment spending, government purchases, and net exports

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13
Q

The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.

A

equals

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14
Q

Consider the table above showing three stages of production of an automobile. Refer to Table 19-5. The value of each automobile in gross domestic product equals

A

$25,000

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15
Q

CANOES-R-US makes canoes. It buys the shell of the canoe from another local firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1,200. Refer to Scenario 19-1. The value added of CANOES-R-US for each canoe equals

A

$500

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16
Q

A final good is one that

A

is purchased by its final user

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17
Q

An example of a final good would be

A

a soy latte sold by Starbucks to a student

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18
Q

Which of the following equations correctly measures GDP in an economy?

A

GDP = C + I + G + NX

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19
Q

To calculate GDP using the value-added method, one would add up

A

the value added by each firm involved in the production of final goods and services

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20
Q

Gross domestic product understates the total production of final goods and services because of the omission of

A

the underground economy

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21
Q

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

A

do not pay taxes to the government

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22
Q

GDP is not a perfect measure of well-being because

A

GDP is not adjusted for pollution

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23
Q

The “underground economy” is also referred to as

A

the informal sector

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24
Q

Nominal GDP is GDP in a given year

A

valued in the prices of that year

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25
Q

If real GDP in 2018 (using 2009 prices) is lower than nominal GDP of 2017, then

A

prices in 2018 are lower than prices in 2017

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26
Q

The GDP deflator is a measure of the

A

average level of prices of final goods and services in the economy

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27
Q

To make the calculation of real GDP more accurate, in 1996 the BEA switched to using

A

chain-weighted prices

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28
Q

When the BEA calculates real GDP using the average of prices in the current year and the year preceding it, and this average changes from year to year, this is called calculating GDP using

A

chained-weighted prices

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29
Q

The GDP deflator is equal to

A

nominal GDP divided by real GDP, multiplied by 100

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30
Q

Gross national product (GNP) of the United States is the market value of all final goods and services

A

produced by citizens of the United States anywhere in the world

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31
Q

National income equals gross domestic product minus

A

depreciation

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32
Q

National income equals gross domestic product

A

minus the consumption of fixed capital

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33
Q

Depreciation is

A

the value of worn-out equipment, machinery, and buildings

34
Q

The best measure of the income households actually have available to spend is

A

disposable personal income

35
Q

Disposable personal income equals personal income

A

minus personal tax payments

36
Q

National income is equal to

A

GDP minus depreciation

37
Q

U.S. gross national product is defined as

A

the value of final goods and services produced by residents of the United States even if the production takes place outside of the United States

38
Q

National income is defined as

A

gross domestic product less the consumption of fixed capital

39
Q

Personal income is defined as

A

national income less retained earnings plus transfer payments and plus interest on government bonds

40
Q

Disposable personal income is defined as

A

personal income less personal taxes

41
Q

The natural rate of unemployment is

A

that rate of unemployment occurring when the economy is at its potential output

42
Q

Part-time workers who want full-time work are counted as

A

fully employed, and therefore the official unemployment rate may understate the level of unemployment

43
Q

The entry of women into the workforce since the 1960s resulted in

A

a shift outward in the production possibilities curve of the United States

44
Q

Due to lowering its prices to compete with its rivals, increased competition from Airbus, and cuts to military spending, Boeing announced it would ________ the number of persons it employed in 2017 and this would ________ the total number of persons unemployed in the economy

A

decrease; increase

45
Q

The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect

A

that stock prices are more likely to fall

46
Q

The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill

A

employed

47
Q

The Bureau of Labor Statistics would categorize a retiree who is not working as

A

out of the labor force

48
Q

The labor force equals the number of people

A

employed plus unemployed

49
Q

The unemployment rate equals the number of unemployed divided by the ________, all times 100

A

labor force

50
Q

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

A

not in the labor force

51
Q

The labor force participation rate equals the

A

(labor force divided by working-age population) × 100

52
Q

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

A

labor force participation rate

53
Q

Which of the following explains the changes in the U.S. adult male labor force participation rate since 1948?

A

Younger men are remaining in school longer as compared to the past

54
Q

Since 1948, the labor force participation rate for adult men has ________ and for adult women has ________

A

decreased; increased

55
Q

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed, the BLS estimates the unemployment rate in April 2017 would have ________ compared to the measured unemployment rate

A

almost doubled

56
Q

An advantage of the establishment survey over the household survey of the labor market is that the establishment survey

A

is based on actual payrolls, rather than on unverified answers

57
Q

An advantage of the household survey over the establishment survey of the labor market is that the household survey

A

includes the number of self-employed persons

58
Q

Which of the following statements is true about the U.S. economy?

A

Each year, many new jobs are created and many existing jobs are destroyed

59
Q

The labor force is the sum of

A

employed workers and unemployed workers

60
Q

A full-time student who is not working is categorized as

A

not in the labor force

60
Q

Upon your graduation from college, you find that the economy is in recession and the unemployment rate is relatively high. Nonetheless, most Americans in this situation would continue along their career paths looking for a new job because

A

high unemployment rates do not usually last for very long

61
Q

Discouraged workers are classified by the BLS as

A

not in the labor force

62
Q

If you have trouble finding a job because of a slowdown in the overall economy, we would say that you are

A

cyclically unemployed

63
Q

The short-term unemployment arising from the process of matching workers with jobs is called

A

frictional unemployment

64
Q

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called

A

structural unemployment

65
Q

The natural rate of unemployment is made up of

A

frictional and structural unemployment

66
Q

Which of the following would decrease the unemployment rate?

A

government aid to retrain unemployed workers

67
Q

An efficiency wage

A

is higher than the market wage and tends to increase productivity

68
Q

The average price of goods and services in the economy is also known as

A

the price level

69
Q

Which of the following price indices comes closest to measuring the cost of living of the typical household?

A

consumer price index

70
Q

The percent increase in the CPI from one year to the next is a measure of the

A

inflation rate

71
Q

To reduce the bias in the consumer price index, the Bureau of Labor Statistics

A

updates the market basket every two years, rather than every 10 years

72
Q

The producer price index measures the prices that firms

A

receive for the goods and services they use at all stages of production

73
Q

The broadest measure of the price level that includes all final goods and services is

A

the GDP deflator

74
Q

What does the PPI measure?

A

the average of the prices received by producers of goods and services at all stages of the production process

75
Q

The real wage equals the nominal wage ________ the CPI, all times 100

A

divided by

76
Q

The real interest rate equals the nominal interest rate ________ the inflation rate

A

minus

77
Q

The stated interest rate on a loan is the

A

nominal interest rate

78
Q

Deflation occurs when

A

there is a decline in the price level

79
Q

The costs to firms of changing prices are called

A

menu costs

Macroeconomics (6 decks)

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