macro test 1

Question 1

when the people loose hope in the economy so they store money in their homes and not the bank (deflation)

Answer 1

liquidity trap

Question 2

business men want prices to be ________; ______

buyers want prices to be _____; _____

economic shocks ______;______

Answer 2

Flexible; upwards

stable; downwards

flexible; upwards

Question 3

why is communism bad? (5)

Answer 3

freedom & independence r taken away
not genuine leaders, betray their ppl
people get dependent & comfortable
does not give incentives to make ppl try
kills production & growth

Question 4

nominal GDP

Real GDP

Answer 4

Current price x current quantity

Base yr price x current quantity

Question 5

Hugo chavez tool power in ____ and died in _____

Hugo Chavez introduced social programs (misiones) with ________ to use oil wealth to reduce poverty

Answer 5

1998; 2013

Cuba

Question 6

who was the next president after hugo chavez?

Answer 6

Maduro

Question 7

labor force participation rate

unemployment rate

Answer 7

labor force/ working-age population

unemployed/labor force x 100/1

Question 8

natural rate of unemployment is a mix of _______ and _________ unemployment

Answer 8

frictional & structural

Question 9

things that dont count in GDP (4)

Answer 9

Intermediate goods
used goods
transfer payments
Financial Transactions (stocks/bonds)

Question 10

limitations of GDP

Answer 10

P opulation
I nequality
E nvironment
S hadow economy

Question 11

why is free stuff bad?

Answer 11

because it doesn’t give any incentives to be better (no productivity/efficiency)