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Macroeconomics > mini midterm > Flashcards

mini midterm Flashcards

1
Q

The fact that real GDP per capita is significantly higher today than it was a few decades ago is due to which of the following?

A. Technological advancement
B. Capital accumulation
C. Population growth
D. Increased hours per person

A

A. Technological advancement
and
B. Capital accumulation

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2
Q

Unlike microeconomics, macroeconomics includes the study of what determines the level of…

A. Output of a specific firm
B. Employment in the whole economy
C. Employment in a specific industry
D. Output of a specific industry

A

B. Employment in the whole economy

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3
Q

Agents. From the point of view of economic production, select the two main agents that populate an economy

a. households
b. banks
c. the US treasury
d. the federal reserve
e. firms

A

a. households
e. firms

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4
Q

Agents. The equity of a balance sheet, such as a household’s net worth, is calculated by summing over all money and then subtracting all outstanding debts.

a. true
b. false

A

false

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5
Q

Markets. We use the terms supply and demand to describe quantities as a function of a particular price (e.g. D=10-P), whereas the terms quantity supplied and quantity demanded are used for specific numbers such as 5 or 27.

a. true
b. false

A

a. true

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6
Q

Markets. The law of supply asserts that as the price of a good or service increases, the supply of said good or service

a. also increases
b. is unchanged
c. either increases or decreases
d. decreases

A

a. also increases

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7
Q

Markets. Despite their name, the law of supply and the law of demand are merely theoretical propositions that may or may not hold true in a particular real-world market

a. true
b. false

A

a. true

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8
Q

Markets. Suppose a particular market, say the market for a specific pair of pants, features supply and demand functions that satisfy: S=20+2p, D=80-p. This market satisfies the law of supply, but not the law of demand.

a. true
b. false

A

b. false

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9
Q

Equilibrium. If a particular market is characterized by excess supply (i.e. supply exceeds demand at the prevailing price), then Walrasian logic dictates that the price in said market will

a. fall
b. rise
c. either rise or fall
d. stay unchanged

A

a. fall

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10
Q

Equilibrium. Walrasian equilibrium, also known as market-clearing equilibrium, is only one type of equilibrium. In particular, there also exist strategic equilibria, also known as Nash equilibria, in which the market for a particular good may not clear (i.e. supply is not equal to demand).

a. true
b. false

A

a. true

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11
Q

Gross Domestic Product. Gross domestic product is calculated by summing up

a. the total market value of goods and services in the economy
b.the total quantity of goods and services produced in the economy during a period of time
c. the total quantity of goods and services in the economy.
d. the total market value of final goods and services produced in the economy during a period of time.

A

d. the total market value of final goods and services produced in the economy during a period of time.

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12
Q

Gross Domestic Product. The nominal GDP of the U.S. in 2023 was approximately $28 trillion. This means that

a. the value of output in 2023 was around $28 trillion
b. all of these are true
c. total income in 2023 was around $28 trillion
d. total expenditures in 2023 was around $28 trillion

A

b. all of these are true

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13
Q

Gross Domestic Product. To sensibly compare output across two countries for a given year, we should to.

a. account for purchasing power across the two countries
b. account for inflation
c. translate GDP into the same unit of account

A

a. account for purchasing power across the two countries
c. translate GDP into the same unit of account

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14
Q

Gross Domestic Product. When studying a single country’s per capita output over the course of time, we should to

a. account for inflation
b. account for changing levels of the population
c. translate its GDP series into the same unit of account

A

a. account for inflation
b. account for changing levels of the population
c. translate its GDP series into the same unit of account

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15
Q

Gross domestic product. Which GDP measure, if any, do you appeal to when assessing whether workers today produce more per person relative to workers 50 years ago?

a. none of the above
b. real GDP per capita
c. real GDP
d. nominal GDP per capita

A

a. none of the above

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16
Q

Gross domestic product. Which GDP measure, if any, do you appeal to when assessing whether workers today work harder than workers 50 years ago?

a. none of the above
b. nominal GDP per capita
c. real GDP
d. reap GDP per capita

A

a. none of the above

17
Q

Growth. To calculate a variable’s growth rate, we use the following formula: (new - old)/new

a. true
b. false

A

b. false

18
Q

Factors of production. The factors of production include

a. capital
b. technology
c. consumption
d. labor

A

a. capital
b. technology
d. labor

19
Q

Investment. Unlike in Finance, economists use the term investment to describe the production of goods that are used to produce other goods (or services).

a. true
b. false

A

a. true

20
Q

Stocks vs. flows. Capital investment is a [A], output is a [B].

a. A: stock, B: stock
b. A: flow, B: stock
c. A: flow, B: flow
d. A: stock, B: flow

A

c. A: flow, B: flow

21
Q

Gross domestic product. Consider a car that is produced in 2022, but not sold until 2023. How is the sale recorded as part of GDP in 2023? (Hint: you should be selecting two answers)

a. With a positive sign in I
b. With a negative sign in C
c. With a positive sign in
d. With a negative sign in I

A

c. With a positive sign in
d. With a negative sign in I

22
Q

Expenditures. Investment, as defined by economists, would include the purchase of a

a. corporate bond.
b. share of stock in ExxonMobil.
c. computer by an accounting firm
d. government bond.

A

c. computer by an accounting firm

23
Q

Net exports. Because the US has been running current account deficits (i.e. the value of its imports has exceeded the value of its exports), its trading partners have accumulated a substantial amount of US dollars which allows them to purchase US-based assets such as US government debt or US stocks.

a. true
b. false

A

a. true

24
Q

Inflation. Inflation is measured by calculating the (monthly, quarterly, or yearly) growth rate of various price indices such as the Consumer Price Index (CPI), the Personal Consumption Expenditure Index (PCE), the Producer Price Index (PPI), and the GDP Deflator.

a. true
b. false

A

a. true

25
Q

Inflation. The Fisher equation helps us calculate

a. real growth as a function of nominal growth and inflation
b. inflation as a function of real growth and nominal growth
c. No answer text provided.
d. nominal growth as a function of real growth and inflation

A

a. real growth as a function of nominal growth and inflation

26
Q

Inflation. On February 13th, the BLS published its newest CPI report which was received negatively by US financial markets because it came in `above expectations’ at 3.1% year-over-year. Select all that apply:

a. all the above
b. Prices rose faster than anticipated
c. The Fed is more likely to raise rates (or at least leave them at an elevated level for longer)
d. Prices rose faster than the Fed’s long-run target

A

a. all the above

27
Q

Inflation. The primary reason why virtually all countries’ central banks target a positive rate of inflation is to create a buffer to shield them from deflation (because inflation is perceived as the `lesser of two evils’).

a. true
b. false

A

a. true

28
Q

Deflation. Economists’ negative perception of deflation is largely shaped by which of the following historical episodes?

a. Volcker Disinflation
b. Great Depression
c. Coronavirus Recession
d. Great Recession

A

b. Great Depression

29
Q

Factors of Production

A
  1. Labor
    -Labor is the effort or work that individuals contribute to the production of goods and services
  2. Capital
    -Capital is goods that are used in the production of other goods and inventories
  3. Technology
    -Technology measures how efficiently an economy uses capital and labor to produce output
30
Q

Expenditures

A
  1. Consumption
    -Consumption is what households spend on goods and services.
  2. Investment
    -Investment is what businesses spend on capital goods
  3. Government Spending
    -Government spending is what the government spends on goods and services
  4. Net exports
    -the difference in a country’s net exports and imports
31
Q

Why is there no single, objectively ‘true’ rate inflation that is applicable to all households (not even CPI inflation)? In your answer, be sure to use the term weights.

A

-Inflation can be influenced by many factors
-Weights are used in macroeconomics to show the importance of different goods and services, measured by their shares in the total consumption of households
-Inflation is usually measured using the CPI, which tracks the price changes in household items
-households purchase different items or spend different amounts of their incomes on different things
-

32
Q

Annual growth rate formula

A

(Y’N - YN)/(YN)
y’n = initial yn = new

33
Q

Four types of GDP

A
  1. Nominal GDP
    -A weight assigned to represent the importance of a final good or service
    -The expenditure approach (sum of all purchases made by firms, households, governments etc)
    -Income approach (the sum of income earned by labor and capital + taxation)
    -production/value added approach (the sum of value added at each stage of production)
    2.NGDP per capita
    -Used to allow for comparison across countries
  2. Real GDP
    -Allows for a comparison of output over the course of time, we require a measure that accounts for the fact that the value of the dollar depreciates
    -A GDP deflator is used to account for inflation
  3. RGDP per capita
    -accounts for the fact that real GDP is affected by changes in he population
34
Q

Despite the various real economic costs associated with inflation, virtually all central banks in the world target a positive rate of inflation - why?

A

-Historically inflation has been seen to increase economic growth
- It encourages spending and investment because people are not incentivized to hold onto their money
-stable inflation rate can provide stability

35
Q

Annual Interest Formula

A

x(1 + i)

36
Q

Compound interest Formula

A

x(1 + i)^n

Macroeconomics (4 decks)

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