Chapter 6 – Macroeconomics – Flashcards
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Macroeconomics is mostly focused on:
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the economy as a whole.
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The two topics of primary concern in macroeconomics are:
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short-run fluctuations in output and employment and long-run economic growth.
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The business cycle depicts:
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short-run fluctuations in output and employment.
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The term "recession" describes a situation where:
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output and living standards decline.
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Which of the following is most closely related to recessions?
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Negative real growth in output.
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Which of the following statements is most accurate about advanced economies?
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Economies experience a positive growth trend over the long run but experience significant variability in the short run.
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Real GDP measures the:
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value of final goods and services produced within the borders of a country, corrected for price changes.
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If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?
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Nominal GDP would rise, but real GDP would be unchanged.
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Real GDP is preferred to nominal GDP as a measure of economic performance because:
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nominal GDP uses current prices and thus may over- or understate true changes in output.
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Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each. This year Harry's again produced 10,000 large pepperoni pizzas (identical to last year's pizzas) but sold them for $12 each. Based on this information we can conclude that Harry's production of large pepperoni pizzas:
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increased nominal GDP from last year, but real GDP was unaffected.
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Harry's Pepperoni Pizza Parlor produced 10,000 large pepperoni pizzas last year that sold for $10 each. This year Harry's again produced 10,000 large pepperoni pizzas (identical to last year's pizzas) but sold them for $12 each. Based on this information we can conclude that Harry's production of large pepperoni pizzas this year:
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increased nominal GDP by $20,000 but left real GDP unchanged.
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Why are high rates of unemployment of concern to economists?
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There is lost output that could have been produced if the unemployed had been working.
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Unemployment describes the condition where
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a person cannot get a job but is willing to work and is actively seeking work.
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Higher rates of unemployment are linked with:
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higher crime rates as the unemployed seek to replace lost income.
