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Economic Principals And Concepts > Test 2 > Flashcards

Test 2 Flashcards

1
Q

Macro economics is the independent study of individual parts of the economy, true false

A

False

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2
Q

The gross domestic product is a dollar value of the total output of the economy in a year true false

A

True

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3
Q

The salaries paid to government employees are an example of government input true false

A

False

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4
Q

Net exports are calculated as exports minus imports, true false

A

True

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5
Q

The production by American companies in foreign countries count in US GDP true or false

A

False

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6
Q

The output of government is equal to government consumption plus government investment true false

A

True

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7
Q

Non-defense government spending as a percent of GDP has been trending blank since the 2010s and government social spending i.e. Social Security and government healthcare spending has been blank

A

Down trending up

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8
Q

Goods that are produced, but not immediately sold blank

A

Count in the GDP as a change in private inventories

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9
Q

And GDP calculations the work of stay at home parents is blank

A

Not counted

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10
Q

Volunteers in the workforce have what effect on the GDP

A

None because they are not counted

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11
Q

The GDP includes government consumption, such as blank

A

Office product

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12
Q

Net exports are

A

Export minus imports

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13
Q

Since the 1960s, the pattern of nonresidential investment blank

A

Has changed as US companies invest less in industrial equipment

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14
Q

The biggest category of business investment spending today is blank

A

Software

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15
Q

When a product is produced, but not immediately sold it’s value as blank

A

Added to change in private inventories

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16
Q

The GDP per capita tells us blank

A

The amount of output each person would get if the economic pie were sliced evenly

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17
Q

The term gross domestic purchases refers to blank

A

The amount spent by US consumers businesses and government on final goods and services

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18
Q

Imports enter the calculation of GDP blank

A

With a negative sign

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19
Q

Which of the following is not an element of the underground economy

A

Commission sales people

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20
Q

Which of the following does not count as personal consumption?

A

Tax payments

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21
Q

The average price level measures how much it cost to buy a market basket of common goods and services true false

A

True

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22
Q

The inflation rate is the annual percentage change in the average price level, true false

A

True

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23
Q

Inflation can be defined as blank

A

A sustained upward movement, the average level of prices

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24
Q

What is the CPI?

A

The consumer price index

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25
Q

Core inflation is defined as

A

Inflation that does not take energy and food into Account

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26
Q

Money illusion occurs when we compare dollar amounts blank

A

Without adjusting for inflation

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27
Q

The formula for a real percentage change is blank

A

The nominal percentage change minus the inflation rate

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28
Q

Expected inflation is blank

A

The inflation rate that consumers and businesses expect will hold for sometimes in the future

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29
Q

Hyper inflation is blank

A

A very rapid increase in prices from year to year

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30
Q

What is deflation?

A

A decrease in the average price level

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31
Q

What is the phrase owners equivalent rent mean?

A

It is the value of a year worth of housing services

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32
Q

Annual inflation equal to 1000% means the prices are rising by blank

A

10 times in a year

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33
Q

COLA provisions, automatically increase wages, or benefits to match blank

A

Inflation

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34
Q

In the aftermath of the great recession

A

Policy makers in the United States, Japan, and Europe, who worked hard to avoid deflation

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35
Q

Strong job growth in a certain metro areas likely to be correlated with blank

A

An increase in the demand for rental housing, pushing up its relative price

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36
Q

A relative price shift occurs when blank

A

The inflation rate of a good or service is significantly higher or lower than the overall inflation rate

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37
Q

Some goods have become less expensive due to

A

Globalization and technology

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38
Q

If unexpected inflation is good for borrowers unexpected deflation is good for blank

A

Lenders

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39
Q

Which is not a category of goods included in the BLS’s consumer market basket

A

Business office supplies

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40
Q

Certain behavior associated with expected inflation can

A

Actually increase the overall rate of inflation

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41
Q

An economy experiences growth if it produces more goods and services in a year than it did in the year prior true false

A

True

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42
Q

Knowledge is human capital plus business know how true false

A

False

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43
Q

Real GDP per capita is the real GDP divided by the number of workers in a country true false

A

False

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44
Q

Growth on a year-to-year basis is called long-term growth true false

A

False

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45
Q

The real growth rate is calculated by

A

The BEA adjusting the GDP for inflation

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46
Q

Investment in physical capital means blank

A

Purchasing equipment and buildings

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47
Q

What is one negative effect of growth

A

Obesity due to falling food prices

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48
Q

Raw materials include, which of the following

A

Oil

49
Q

Food production over the past 50 years has increased partially due to blank

A

Better seeds

50
Q

The United States has fewer workers than China, but has a bigger overall economy because the United States has blank

A

On average more productive workers

51
Q

Economic growth generally leads to blank

A

Higher living standards

52
Q

An increase in living standards is shown by which of the following

A

An increase in real GDP per capita

53
Q

The education of skills of workers are factors driving blank

A

Economic growth

54
Q

In a growing economy, blank enjoy a rising standard of living

A

Both rich and poor

55
Q

GDP statistics do not reveal anything about blank

A

Global warming impact on the economy

56
Q

GDP and real GDP are ways to measure blank

A

Economic output

57
Q

Which of the following is a potential downside of economic growth?

A

It can have a negative impact on the environment

58
Q

Which of the following would cause an increase in human capital

A

An increase in the number of college students

59
Q

Productivity growth is usually an indicator of blank

A

An increase in the health and prosperity of the economy

60
Q

Long-term growth is measured by blank

A

Looking at real GDP over at least five or 10 years

61
Q

Calculating real GDP growth requires blank

A

Adjusting GDP for changes in the average level of prices

62
Q

The production possibility frontier represents blank

A

The different possible combinations of output

63
Q

A zero sum economy would result from blank

A

Lack of real economic growth

64
Q

The economy is growing, if and only if

A

Real GDP is rising

65
Q

Most economists favored less interference in the marketplace by government because blank

A

They believe that corporations and individuals know better which investments are most likely to pay off

66
Q

How did a great expansion of globalization in the late 1990s increase productivity

A

Businesses learned how to use foreign suppliers to cut costs

67
Q

Potential GDP is the output of the economy along a smooth path of growth without strains on production or unused resources, true or false

A

True

68
Q

The pattern of our session recovery and expansion is called the business cycle true false

A

True

69
Q

The natural rate of unemployment is blank

A

The level were inflation is more or less stable

70
Q

Blank are organized groups of workers that bargain collectively with employers

A

Unions

71
Q

What does the phrase wages are sticky mean?

A

It is difficult to change wages in the short term

72
Q

Cyclical unemployment happens because blank

A

Of the ups and downs of the business cycle

73
Q

Structural unemployment exists when blank

A

There is a mismatch between worker skills and employer needs

74
Q

Frictional unemployment occurs when blank

A

Workers move from one job into another

75
Q

The unemployment rate is calculated as blank

A

The number of unemployed divided by the labor force

76
Q

The underemployed are those people who are blank

A

Working at a job below their skill level while looking for a better job

77
Q

A blank is defined as a significant decline in economic activity spread across the economy, lasting more than a few months

A

Recession

78
Q

The blank is the beginning of a recession

A

Peak

79
Q

The date a recession is most severe is called the blank

A

Trough

80
Q

The pattern of our session, recovery and expansion is known as the blank

A

Business cycle

81
Q

Which of the following is most likely to be a recession resistant industry

A

Healthcare

82
Q

Blank policies of the government can cause recessions

A

Inflation fighting

83
Q

The rate at which potential GDP rises is called the blank

A

Potential growth rate

84
Q

Which of the following is the formula for the potential growth rate?

A

The long-term labor, force growth plus the long-term productivity growth rate

85
Q

The difference between actual and potential GDP is called blank

A

An output gap

86
Q

When unemployment is below the natural rate blank

A

The inflation rate tends to increase

87
Q

When unemployment is above the natural rate blank

A

The inflation rate tends to fall

88
Q

When real GDP goes below potential GDP it means that blank

A

Economic activity has slowed

89
Q

When real GDP is lower than potential GDP the output gap is blank

A

Negative

90
Q

How are potential GDP in real GDP alike?

A

They are both adjusted for inflation

91
Q

If there was a mismatch between the skills of unemployed workers in the needs of the employers economist say that there is blank

A

Structural unemployment

92
Q

If the average price level is rising, then we can guess that blank

A

All of these answer choices would be true

93
Q

Which of the following would be considered an inflation fighting policy and could potentially cause a recession

A

The federal reserve raises interest rates to intentionally slow down the economy

94
Q

The great recession was primarily caused by blank

A

Problems in financial markets

95
Q

The government funds it spending through taxation and borrowing true false

A

True

96
Q

The multiplier effect can be expressed as both a job multiplier and a spending multiplier, true false

A

True

97
Q

The portion of each additional dollar income that household spend is called blank

A

The marginal propensity to consume

98
Q

The transfer of domestic economic stimulus to foreign markets is known as blank

A

Overseas leakage

99
Q

During a recession government spending to push up output and reduce unemployment is called blank

A

Stimulative

100
Q

The single biggest federal tax is the blank

A

Federal income tax

101
Q

The amount of income people have left after taxes is called blank

A

Disposal income

102
Q

The tax you pay on your last dollar of income is called the blank

A

Marginal tax rate

103
Q

The excess of the federal governments spending over its revenues is called the blank

A

Budget deficit

104
Q

When government revenues exceeded spending that is called a blank

A

Budget surplus

105
Q

When the government competes with the private sector for loans, this is called blank

A

Crowding out

106
Q

Government spending is funded by a system of blank

A

Taxation and borrowing

107
Q

The effective crowding out over the long run is blank

A

Bad because businesses have less access to loans

108
Q

Tax cuts tend to boost blank

A

Disposable income

109
Q

An attempt to use government spending to boost the economy, may bring blank

A

Inflation

110
Q

Domestic fiscal stimulus is more likely to lead to blank when production is outsourced

A

Increased imports

111
Q

The blank is the overall economic effect of government spending increases

A

Multiplier effect

112
Q

The higher, the marginal propensity to consume blank

A

The bigger the multiplier effect will be

113
Q

The wealthy have a blank marginal propensity to consume

A

Lower

114
Q

The multiplier effect of government spending can be stated as a blank multiplier or a blank multiplier

A

Spending job

115
Q

The two primary factors that determine the size of the multiplier are the blank

A

Marginal propensity to consume in the amount of overseas leakage

116
Q

An increase in government spending is more likely to have a positive impact on jobs and output when blank

A

The economy is in a recession

117
Q

An increasing government spending is likely to lead to decreasing inflation blank

A

Under no circumstances

118
Q

An increase in government spending is likely to lead to increasing inflation blank

A

If the economy is doing well

Economic Principals And Concepts (3 decks)

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