question

Through world trade, an economy can reach a point beyond its domestic production possibilities curve

answer

true

question

Higher unemployment rates are linked with higher crime rates and higher rates of physical and mental illness.

answer

true

question

Barriers to free trade impair efficiency in the international allocation of resources

answer

true

question

An increase in incomes in the United States would tend to cause the dollar price of the Japanese yen to fall

answer

false

question

Prices tend to be stickier in the shorter run than in the longer run

answer

true

question

In the short run, firms are more likely to respond to demand shocks by altering inventory levels than by changing how much they produce

answer

true

question

The "sticky price" model is the only one used by macroeconomists

answer

false

question

Disposable income measures the before-tax income received by resource suppliers

answer

false

question

At the end of the summer driving season, the demand for gasoline typically declines. This is an example of a negative demand shock

answer

False

question

Banks and other financial institutions provide the link between savers and economic investors in the macroeconomy

answer

true

question

In determining GDP by the expenditures method it is appropriate to use net investment rather than gross investment as a measure of investment spending

answer

false

question

Personal income usually exceeds disposable income.

answer

True

question

The expenditures and income approaches to GDP are expected to yield identical results because goods that are not sold in one year will be sold in some following year.

answer

false

question

The simplest way to calculate GDP is to sum the total sales of all business firms.

answer

false

question

A demand shock occurs when large numbers of consumers unexpectedly reduce their purchases of goods and services.

answer

true

question

Negative demand shocks have a more significant impact on output and employment when prices are flexible.

answer

false

question

The business cycle reflects both short-run fluctuations in output and long-run economic growth.

answer

True

question

Interest on the public debt is included as a part of government purchases in determining GDP by the expenditures method.

answer

false

question

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity.

answer

true

question

The amount of investment in an economy is ultimately limited by the amount of savings in that economy.

answer

True

question

When the dollar depreciates relative to the value of the currencies of the trading partners of the United States, then goods imported into the United States will tend to become more expensive.

answer

true

question

When the dollar price of yen rises, the dollar appreciates in value relative to the yen.

answer

False

question

If a farmer purchases 10 acres of farmland from a neighboring farmer, this would be considered an economic investment.

answer

False

question

Within the circular flow model, the level of total resource income and total spending on output will be approximately equal.

answer

true

question

A price index is 100 times the ratio of real GDP to nominal GDP.

answer

false

question

Economists believe that expectations have little impact on macroeconomic outcomes

answer

false

question

Welfare payments to low-income families are included in national income.

answer

false

question

A nation has a comparative advantage in some products when it can produce that good at a lower domestic opportunity cost than can a potential trading partner.

answer

true

question

Shocks occur when actual events do not match expectations.

answer

true

question

The economic integration of nations creates larger markets for firms within the nations that integrate and makes it possible for these firms and their customers to benefit from the economies of large-scale (mass) production.

answer

true

question

NDP can be determined by adding taxes on production and imports to GDP.

answer

false

question

All expenditures on new construction are included as investment in calculating GDP.

answer

true

question

Output per person has grown steadily since the beginning of the Roman Empire.

answer

false

question

Nominal GDP measures a nation's output in current year prices.

answer

true

question

Prices tend to be sticky because sellers know that consumers prefer stable prices.

answer

true

question

Economists and policymakers are generally more concerned about nominal GDP than real GDP

answer

false

question

Any person without a job is considered to be unemployed.

answer

False

question

Exports are subtracted from imports in calculating U.S. GDP because exports are not available for domestic consumption.

answer

false

question

The Smoot-Hawley Tariff Act of 1930 reduced tariffs in the United States to the lowest level ever in an attempt to pull the nation out of the Great Depression.

answer

false

question

Mexican importers are suppliers of pesos in the foreign exchange market.

answer

true

question

In 2007, unemployment rates in the United States exceeded the rates in Germany, India, and Poland.

answer

false

question

Modern economic growth refers to any situation where a nation's output increases.

answer

false

question

The purchase of Wal-Mart stock is a part of gross investment, but not of net investment

answer

false

question

A nation that wants to invest in more newly created capital in the present must be willing to forgo present consumption.

answer

true

question

China's GDP per person in 2007 was a little more than one-tenth of U.S. GDP per person in the same year.

answer

false

question

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

answer

true

question

Import quotas are taxes or duties on imported products.

answer

false

question

In order to achieve modern economic growth, a nation's output must grow faster than its population.

answer

true

question

In the very short run, firms tend to respond to demand shocks by changing their prices.

answer

false

question

A nation that realizes a 3 percent increase in its output per person is experiencing modern economic growth.

answer

True

question

Milk prices tend to be stickier than gasoline prices.

answer

True

question

If nominal GDP is 150 and the GDP price index is 200, real GDP is 75

answer

true

question

The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories, tools, and warehouses.

answer

true

question

The United States exports a higher U. S. dollar volume of goods to Canada than to any other nation.

answer

true

question

Real GDP measures the change in the price level over time.

answer

false

question

"Supply shocks" occur any time there is a change in the supply of goods and services.

answer

false

question

Increasing investment in the present means forgoing future consumption.

answer

False

question

Economists refer to purchases of stocks and bonds as "investment."

answer

false

question

Prices tend to be more flexible when there are only two or three rival firms rather than a large number of sellers in the market.

answer

false

question

Demand shocks cause problems in the macroeconomy primarily because prices are sticky.

answer

true

question

In the very short run, demand shocks will tend to change the level of output but have little effect on prices.

answer

True

question

Economists believe that most short-run fluctuations in output are the result of supply shocks.

answer

false

question

Specialized production and international trade increase a nation's productivity and increase the availability of goods and services.

answer

true

question

Inflation reduces the purchasing power of a person's income and savings.

answer

true

question

Demand shocks may be positive or negative.

answer

true

question

One reason that trade restrictions get public support is that the alleged benefits of the restrictions are often immediate and clear-cut, but the adverse affects are often obscure and dispersed over the economy.

answer

true

question

If Ford Motor Company purchases factory equipment previously used by General Motors, this would be considered an economic investment.

answer

false

Ch. 23 & 24 True False – Flashcards

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