Econ set 1 – Flashcards
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GDP may be defined as
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Monetary value of all final domestic goods and services produced within a nation in a given year
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The term final goods and services refers to
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Goods and services purchased by ultimate users as opposed to resell or further processing
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If intermediate goods and services were included in GDP:
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The GDP would be overstated
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GDP include:
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Final but not intermediate goods
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Net exports are a negative figure when
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The nations imports exceeds its exports
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Which of the following is not considered to be an investment
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The purchase of 100 shares of AT&T by retired business executive
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The nation's gross domestic product:
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Is the dollar value of the total output produced within the borders of the nation
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In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are:
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Not counted
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The largest component of total expenditures is
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Consumption
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Transferred payment are
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Excluded when calculating GDP because they do not reflect current production
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The value of American imports is
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Subtracted from exports when calculating GDP because imports do not entail production in the United States
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Consumption of fixed capital depreciation can be determined by
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Subtracting net investment from gross investment
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The largest component of national income is
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Compensation of employees
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The total income earned in any given year by American resource suppliers as measured by
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NI
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Which of the following best defines disposable income
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Income received by households less personal taxes
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A price index is
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A comparison of the price of a market basket from the fixed point of reference
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The GDP deflator:
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Includes all goods compromising the nations domestic output
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If the consumer price index falls from 150 to 100 in the nations particular.:
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Deflation about 33% has occurred
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Real GDP measures
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Current output at base year prices
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The term real GDP refers to
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GDP data which have been adjusted for changes in the price level
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Nominal GDP is:
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The sum of all monetary transactions involving final goods and services which occur in the economy on a given year
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Real GDP is
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The nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation
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The consumer price index
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Measures changes in the prices of a market basket of some 300 good and services purchased by urban consumers
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The consumer price index has been criticized because it fails to account for
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Changed spending patterns, quality improvements, new products, and price discounting
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The immediate determinant of the volume of output and employment is the
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Level of total spending
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The phase of the business cycle where real domestic output declines is called
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A recession
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The phase of the business cycle where real domestic output is at the minimum is called
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The trough
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The production of durable goods is more variable then the production of nondurable goods because
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Durable purchases or postponable and producers of durables have monopoly power
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The United States economy is considered to be at full employment when
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About 5.5 to 6% of the labor force is unemployed
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Kimberly voluntarily quit her job as an insurance agent to return to school full-time to get earn an MBA. With degree in hand she is now searching for a precision a management Kimberly presently is in
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Fractionally unemployed
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The natural rate of unemployment is
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The rate of employment occurring when the economy is at its potential output
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The labor force includes
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Employed workers in persons who are officially unemployed
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If the unemployment rate is 9% and the natural rate of unemployment is 5.5% then the
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Cyclical unemployment is 3.5%
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Official unemployment statistics
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Understate unemployment because discourage workers are not counted as employed
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Demand pull inflation
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Occurs when total spending exceeds the number the economy's ability to provide output at the existing price level
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The aggregate demand curve is
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Downsloping because of the interest rate, wealth or Real balances, and foreign purchase effects
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The interest rate affect suggest that
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An increase in the price level will increase the demand for money, increase interest rates and decrease consumption in investment spending
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The wealth or real balances effect indicates that
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A higher price level will decrease the real value have many financial assets and therefore reduce spending
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Real Per capita GDP will increase
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When real GDP increases at a faster rate than population increase
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Economic growth is often measured by increases in real GDP. historically, in the United States
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Real GDP has risen in more years than it has fallen since 1900
