Macro

Question 1

Microeconomics focuses on ??

Answer 1

the individual agent

 ex Households, workers, businesses

Question 2

Macroeconomics  focuses on the ??

Answer 2

the economy as a
whole
 Big issues: like Gross domestic product (GDP), unemployment,
inflation, government deficits, export/import levels

Question 3

Gross domestic product (GDP) ??

Answer 3

• value of all final goods and services produced within a country in a
  given year
• does not include
  intermediate goods

Question 4

GDP Equation: ?

Answer 4

GDP = C + I + G + (NX)

Question 5

what does c mean in the GDP equation??

Answer 5

Consumption is C in the GDP equation and represents consumer
expenditures

Question 6

Consumer expenditures account for about ??

Answer 6

two-thirds of US GDP

Question 7

Durable goods  goods that typically last ??

Answer 7

at least two to three years such
as cars and appliances

Question 8

Nondurable goods ??

Answer 8

consumable goods such as food and clothing

Question 9

are New home purchases included in consumption??

Answer 9

NO

Question 10

are Services is the largest category within consumer expenditures??

Answer 10

True

Question 11

Investment expenditure (I)

Answer 11

purchases of equipment and buildings, usually by
businesses

Question 12

What does business Capital include?

Answer 12

business structures, equipment, and intellectual property products

Question 13

what does residential capital include?

Answer 13

landlord’s apartment building; a homeowner’s personal
residence

Question 14

Investment expenditure typically accounts for how much %?

Answer 14

bout 15-18% of US GDP

Question 15

Government expenditure accounts for about ?%

Answer 15

20% of US GDP

Question 16

What does government expenditure include?

Answer 16

Includes infrastructure, defense, education, etc Includes federal, state, and local government expenditures

Question 17

Are transfer payments in GdP?

Answer 17

NO

Question 18

What are transfer payments?

Answer 18

Transfer payments  unemployment benefits, veteran’s benefits & SS;
**though this is a category of government spending, it is not included in
GDP*

Question 19

What are net exports?

Answer 19

Net exports = exports – imports
 Equation for net exports is NX = X – M

Question 20

Net exports are also referred to as ?

Answer 20

Trade balance

Question 21

Trade deficit

Answer 21

Trade deficit imports exceed exports

Question 22

Trade surplus

Answer 22

Trade surplus exports exceed imports

Question 23

Exports  spending on

Answer 23

domestically produced goods by foreigners

Question 24

imports spend on

Answer 24

Imports  spending on foreign goods by domestic residents

Question 25

nominal gDP is ?

Answer 25

Nominal GDP  the production of goods and services valued at current prices

Question 26

real gdp is

Answer 26

Real GDP  the production of goods and services valued at constant prices

Question 27

Gdp deflator is

Answer 27

GDP deflator  measures the current level of prices relative to the level of prices
in the base year

Question 28

inflation is

Answer 28

Inflation  increase in overall price level in the entire economy

Question 29

inflation rate

Answer 29

Inflation rate  percentage change in some measure of the price level from one
period to the next

Question 30

What happens during a recession?

Answer 30

Recession  two consecutive quarters of falling GDP
 Real GDP declines
 Lower income
 Rising unemployment
 Falling profits
 Increased bankruptcies

Question 31

Depression how long does it last?

Answer 31

Depression  severe and long-term recession; no agreed-upon minimum
amount of time for this; typically lasts years

Question 32

what does GDP is useful in measuring economic well-being??/

Answer 32

• Measures economy’s total income
   Measures economy’s total expenditures
   Measures our ability to obtain many of the inputs into a worthwhile life

Question 33

What GDP doesn’t include what?

Answer 33

• Leisure time
   More productive work hours
   Actual levels of environmental cleanliness, health, and learning
   Whether air/water is cleaner or dirtier
   Increase/decrease in life expectancy or infant mortality
   Literacy rates
   Under the table payments
   Levels of inequality in society
   What technology and products are available

Question 34

rich countries tend to have what?

Answer 34

• higher GDP per person
   Better life expectancy
   Higher literacy rates
   Higher rates of education
   Better nutrition

Question 35

Poor countries tend to have what?

Answer 35

Poor countries  lower GDP per person
 Worse life expectancy
 Lower literacy rates
 Lower rates of education
 High rates of malnutrition
 Lower birth rates
 Higher rates of infant and maternal mortality