ECON Exam 3 – Flashcards
Unlock all answers in this set
Unlock answersquestion
other things equal, relatively poor countries tend to grow
answer
faster than relatively rich countries; this is called the catch-up effect
question
inflation is defined as
answer
an increase in the overall level of prices in the economy
question
a nation's standard of living is determined by
answer
the productivity of its workers
question
changes in the producer price index are often thought to be useful in predicting changes in
answer
the consumer price index
question
which of the following is included in the investment component of GDP
answer
John's law firm buys him a new computer
question
what do we call financial institutions through which savers indirectly provide finds to borrowers
answer
financial intermediaries
question
if a firm wants to borrow it can
answer
supply bonds by selling them
question
over the last few decades, americans haven chosen to cook less at home and eat more at restaurants, this change in behavior itself has
answer
increased measured GDP by the value added by the restaurant's preparation and serving of the meals
question
the nominal interest rate is the
answer
interest rate as usually reported by banks
question
in national income accounting, we use which of the following pairs of terms interchangeably
answer
"public saving" and "government tax revenue minus government spending"
question
the CPI is a measure of the overall cost of the goods and services bought by
answer
a typical consumer
question
suppose that congress were to institute an investment tax credit. what would happen in the market for loanable funds
answer
the demand for loanable funds would shift right
question
a budget surplus
answer
reduces the government's debt
question
a farmer produces oranges and sells them to fresh juice which makes orange juice. the oranges produced by the farmer are called
answer
intermediate goods
question
for the purpose of calculating the consumer price index, the basket of goods
answer
is kept the same from year to year so that the effects of price changes are isolated from the effect of any quantity changes that might be occurring at the same time
question
banks
answer
play a role in creating an asset that people can use as a medium of exchange
question
fran buys 1,000 shares of stock issued by Miller Brewing. In turn, Miller uses the finds to buy new machinery for one of its breweries
answer
fran is saving;miller is investing
question
the real interest rate is the
answer
interest rate corrected for inflation
question
human capital and physical capital
answer
for a restaurant: the chefs' knowledge about preparing food and the equipment in the kitchen
question
included in government purchases
answer
the services of a U.S. government attorney valued at the cost of her salary
question
formula for the GDP deflator
answer
nominal gdp/real gdp times 100
question
four expenditure categories of GDP
answer
consumption, government purchases, investment, net-exports
question
investment component of GDP
answer
spending to build new houses
spending on business equipment such as welding equipment
spending to build new factories
question
the nominal interest rate tells you
answer
how fast the number of dollars in your bank account rises over time
question
GDP
answer
includes production of foreigners working in the U.S. but excludes production by U.S. residents working in foreign countries
question
given that Monika's income exceeds her expenditures, Monika is best described as a
answer
saver or as a supplier of funds
question
if the nominal interest rate is a 7 percent and the rate of inflation is a 3 percent, then the real interest rate is
answer
4 percent
question
which of the following headlines is more closely related to what microeconomists study than to what macroeconomists study
answer
the price of gasoline rises due to rising oil prices
question
included in government purchases
answer
the services of a U.S. government attorney valued at the cost of her salary
