Test 2 Flashcards
Macro economics is the independent study of individual parts of the economy, true false
False
The gross domestic product is a dollar value of the total output of the economy in a year true false
True
The salaries paid to government employees are an example of government input true false
False
Net exports are calculated as exports minus imports, true false
True
The production by American companies in foreign countries count in US GDP true or false
False
The output of government is equal to government consumption plus government investment true false
True
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
Down trending up
Goods that are produced, but not immediately sold blank
Count in the GDP as a change in private inventories
And GDP calculations the work of stay at home parents is blank
Not counted
Volunteers in the workforce have what effect on the GDP
None because they are not counted
The GDP includes government consumption, such as blank
Office product
Net exports are
Export minus imports
Since the 1960s, the pattern of nonresidential investment blank
Has changed as US companies invest less in industrial equipment
The biggest category of business investment spending today is blank
Software
When a product is produced, but not immediately sold it’s value as blank
Added to change in private inventories
The GDP per capita tells us blank
The amount of output each person would get if the economic pie were sliced evenly
The term gross domestic purchases refers to blank
The amount spent by US consumers businesses and government on final goods and services
Imports enter the calculation of GDP blank
With a negative sign
Which of the following is not an element of the underground economy
Commission sales people
Which of the following does not count as personal consumption?
Tax payments
The average price level measures how much it cost to buy a market basket of common goods and services true false
True
The inflation rate is the annual percentage change in the average price level, true false
True
Inflation can be defined as blank
A sustained upward movement, the average level of prices
What is the CPI?
The consumer price index
Core inflation is defined as
Inflation that does not take energy and food into Account
Money illusion occurs when we compare dollar amounts blank
Without adjusting for inflation
The formula for a real percentage change is blank
The nominal percentage change minus the inflation rate
Expected inflation is blank
The inflation rate that consumers and businesses expect will hold for sometimes in the future
Hyper inflation is blank
A very rapid increase in prices from year to year
What is deflation?
A decrease in the average price level
What is the phrase owners equivalent rent mean?
It is the value of a year worth of housing services
Annual inflation equal to 1000% means the prices are rising by blank
10 times in a year
COLA provisions, automatically increase wages, or benefits to match blank
Inflation
In the aftermath of the great recession
Policy makers in the United States, Japan, and Europe, who worked hard to avoid deflation
Strong job growth in a certain metro areas likely to be correlated with blank
An increase in the demand for rental housing, pushing up its relative price
A relative price shift occurs when blank
The inflation rate of a good or service is significantly higher or lower than the overall inflation rate
Some goods have become less expensive due to
Globalization and technology
If unexpected inflation is good for borrowers unexpected deflation is good for blank
Lenders
Which is not a category of goods included in the BLS’s consumer market basket
Business office supplies
Certain behavior associated with expected inflation can
Actually increase the overall rate of inflation
An economy experiences growth if it produces more goods and services in a year than it did in the year prior true false
True
Knowledge is human capital plus business know how true false
False
Real GDP per capita is the real GDP divided by the number of workers in a country true false
False
Growth on a year-to-year basis is called long-term growth true false
False
The real growth rate is calculated by
The BEA adjusting the GDP for inflation
Investment in physical capital means blank
Purchasing equipment and buildings
What is one negative effect of growth
Obesity due to falling food prices
Raw materials include, which of the following
Oil
Food production over the past 50 years has increased partially due to blank
Better seeds
The United States has fewer workers than China, but has a bigger overall economy because the United States has blank
On average more productive workers
Economic growth generally leads to blank
Higher living standards
An increase in living standards is shown by which of the following
An increase in real GDP per capita
The education of skills of workers are factors driving blank
Economic growth
In a growing economy, blank enjoy a rising standard of living
Both rich and poor
GDP statistics do not reveal anything about blank
Global warming impact on the economy
GDP and real GDP are ways to measure blank
Economic output
Which of the following is a potential downside of economic growth?
It can have a negative impact on the environment
Which of the following would cause an increase in human capital
An increase in the number of college students
Productivity growth is usually an indicator of blank
An increase in the health and prosperity of the economy
Long-term growth is measured by blank
Looking at real GDP over at least five or 10 years
Calculating real GDP growth requires blank
Adjusting GDP for changes in the average level of prices
The production possibility frontier represents blank
The different possible combinations of output
A zero sum economy would result from blank
Lack of real economic growth
The economy is growing, if and only if
Real GDP is rising
Most economists favored less interference in the marketplace by government because blank
They believe that corporations and individuals know better which investments are most likely to pay off
How did a great expansion of globalization in the late 1990s increase productivity
Businesses learned how to use foreign suppliers to cut costs
Potential GDP is the output of the economy along a smooth path of growth without strains on production or unused resources, true or false
True
The pattern of our session recovery and expansion is called the business cycle true false
True
The natural rate of unemployment is blank
The level were inflation is more or less stable
Blank are organized groups of workers that bargain collectively with employers
Unions
What does the phrase wages are sticky mean?
It is difficult to change wages in the short term
Cyclical unemployment happens because blank
Of the ups and downs of the business cycle
Structural unemployment exists when blank
There is a mismatch between worker skills and employer needs
Frictional unemployment occurs when blank
Workers move from one job into another
The unemployment rate is calculated as blank
The number of unemployed divided by the labor force
The underemployed are those people who are blank
Working at a job below their skill level while looking for a better job
A blank is defined as a significant decline in economic activity spread across the economy, lasting more than a few months
Recession
The blank is the beginning of a recession
Peak
The date a recession is most severe is called the blank
Trough
The pattern of our session, recovery and expansion is known as the blank
Business cycle
Which of the following is most likely to be a recession resistant industry
Healthcare
Blank policies of the government can cause recessions
Inflation fighting
The rate at which potential GDP rises is called the blank
Potential growth rate
Which of the following is the formula for the potential growth rate?
The long-term labor, force growth plus the long-term productivity growth rate
The difference between actual and potential GDP is called blank
An output gap
When unemployment is below the natural rate blank
The inflation rate tends to increase
When unemployment is above the natural rate blank
The inflation rate tends to fall
When real GDP goes below potential GDP it means that blank
Economic activity has slowed
When real GDP is lower than potential GDP the output gap is blank
Negative
How are potential GDP in real GDP alike?
They are both adjusted for inflation
If there was a mismatch between the skills of unemployed workers in the needs of the employers economist say that there is blank
Structural unemployment
If the average price level is rising, then we can guess that blank
All of these answer choices would be true
Which of the following would be considered an inflation fighting policy and could potentially cause a recession
The federal reserve raises interest rates to intentionally slow down the economy
The great recession was primarily caused by blank
Problems in financial markets
The government funds it spending through taxation and borrowing true false
True
The multiplier effect can be expressed as both a job multiplier and a spending multiplier, true false
True
The portion of each additional dollar income that household spend is called blank
The marginal propensity to consume
The transfer of domestic economic stimulus to foreign markets is known as blank
Overseas leakage
During a recession government spending to push up output and reduce unemployment is called blank
Stimulative
The single biggest federal tax is the blank
Federal income tax
The amount of income people have left after taxes is called blank
Disposal income
The tax you pay on your last dollar of income is called the blank
Marginal tax rate
The excess of the federal governments spending over its revenues is called the blank
Budget deficit
When government revenues exceeded spending that is called a blank
Budget surplus
When the government competes with the private sector for loans, this is called blank
Crowding out
Government spending is funded by a system of blank
Taxation and borrowing
The effective crowding out over the long run is blank
Bad because businesses have less access to loans
Tax cuts tend to boost blank
Disposable income
An attempt to use government spending to boost the economy, may bring blank
Inflation
Domestic fiscal stimulus is more likely to lead to blank when production is outsourced
Increased imports
The blank is the overall economic effect of government spending increases
Multiplier effect
The higher, the marginal propensity to consume blank
The bigger the multiplier effect will be
The wealthy have a blank marginal propensity to consume
Lower
The multiplier effect of government spending can be stated as a blank multiplier or a blank multiplier
Spending job
The two primary factors that determine the size of the multiplier are the blank
Marginal propensity to consume in the amount of overseas leakage
An increase in government spending is more likely to have a positive impact on jobs and output when blank
The economy is in a recession
An increasing government spending is likely to lead to decreasing inflation blank
Under no circumstances
An increase in government spending is likely to lead to increasing inflation blank
If the economy is doing well
