Chapter 12-13 Test – Flashcards
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An example of a durable good would be
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a used car
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Compared with the expenditure approach to calculating GDP, the income approach is
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more accurate
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The main economic variables that affect business cycles include all fo the following EXCEPT
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personal savings levels
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The agency that maintains the National Income and Product Accounts (NIPA)
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the US Department of Commerce
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An example of capital deepening would be
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paying for an employee to take college course
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All of the following actions promote capital deepening EXCEPT
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saving less and spending more of one's disposable income
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Compared with the income approach to calculating GDP, the expenditure approach is
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more practical
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GDP expressed in constant, or unchanging, prices is called
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real GDP
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The amount of money a person has left of his or her income after taxes is called
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disposable personal income
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An accurate statement about the Great Depression would be that
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it ended largely because of an increase in defense spending related to WWII
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how is nominal GDP converted into real GDP
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through eliminating the effects of price increases on GDP growth
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Which of the following is an example of a final good or service?
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A cake purchased from a bakery for a wedding
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In atypical business cycle, what stage immediately follows a peak?
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contraction
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Which of these is an example of depreciation?
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A construction worker's truck breaks down more often after 80,000 miles of work-related driving
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What do economists believe about the future of business cycles to an end.
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Business cycles will continue to drive our economy in the future, but the Federal Reserve may be able to better cushion the economy from the worst extremes
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What is an example of a positive external shock to aggregate supply
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Good weather leads to an unusually productive harvest for corn farmers
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An economy that experiences the decreases real GDP and increasing prices is said to suffer from
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stagflation
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Higher savings leads to higher GDP in the future because
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more capital is available for investment, leading to higher output through capital deepening
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When the economy is working properly, what is the employment rate?
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4 to 6 percent
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The "market basket" that is used by the Bureau of Labor Statistics to calculate prices is made of the following?
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typical goods and services for an urban household
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What is a major problem for businesses during a period of chronic inflation?
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They cannot anticipate their costs
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According to the cost-push theory, what is responsible for inflation?
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Producers raise prices to meet increased costs
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Which of the following is correct? The unemployment rate is
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(labor force-employed)/labor force x 100
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If the number of people employed is 150,000 and the labor force is 160,000 the unemployment is
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6.25%
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When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at a large urban university, she is
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frictionally umeployed
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A knitting factory worker who loses her job because the company has relocated the plant to another country is an example of
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structural umemployment
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If jackson is paid an interest rate of 10% on his savings, but the inflation rate has risen to 20%, the purchasing power of his savings is
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decreased by 10%
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What is the possible consequence of the following scenario? Because of high unemployment rates in the country of Lavernia, employers offer higher wages. To meet their higher payroll costs and maintain profits, they charge consumers more for goods and services
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a wage-price spiral of ever-increasing prices
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Which of the following people is most likely to be classified as "working poor"?
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Jim, who is a full-time student with a work study in the college library
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Which of the following is the most likely to be worried about high inflation?
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a retired couple on a fixed income
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a system that collects marcoeconomic statistics on production, income, investment, and savings
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national income accounting
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the dollar value of all final goods and services produced within a country's borders in a given year
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GDP
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the total amount of goods and services in the economy available at all possible price levels
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aggregate supply
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the loss of the value of capital equipment that results from normal wear and tear
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depreciation
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a decline in GDP combined with a rise in the price level
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stagflation
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a prolonged economic contraction
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recession
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the lowest point in the economic contraction, when real GDP stops falling
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trough
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an increase in efficiency gained by producing more output without using more inputs
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technological progress
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a system that collects macroeconomic statistics on production, income, investment, and savings
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national income accounting
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the annual income earned by US owned firms and US residents
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GNP
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the amount of goods and services in the economy that will be purchased at all possible price levels
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aggregate demand
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the loss of the value of capital equipmnt that results from normal wear and tear
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depreciation
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a decline in GDP combined with a rise in the price level
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stagflation
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key economic variables that economists use to predict a new phase of a business cycle
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leading indicators
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an increase in efficiency gained by producing more output without using more inputs
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technological process
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percentage of the nation's labor force that is not employed
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unemployment rate
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a general increase in prices
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inflation
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income that does not increase even when prices go p
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fixed income
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area where companies can locate free of certain local, state, and federal taxes and restrictions
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enterprise zone
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a person who wants a job but has given up looking
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discouraged worker
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a measurement that shows how the average price of a standard group of goods changes over time
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price index
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government issued coupons that are exchanged for food
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food stamps
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an official count of the population
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census
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what occurs when people take time to find a job
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fictional employment
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the ability to buy goods and services
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purchasing power
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inflation that remains low for a long time
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creeping inflation
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a sustained drop in the price level
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deflation
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inflation that rises steadily from month to month over a long period
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chronic inflation
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the income level below which income is insufficient to support a family or a household
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poverty threshold
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federal funds given to the states in lump sums
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block grant
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the idea that too much money in the economy causes inflation
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quantity theory
