question

Nations GDP

answer

The dollar value of all final output produced within the borders of the nation in a given time period

question

Increased inventory

answer

what happens to inventories when businesses produce more than they well and the inventory is added to GDP

question

every dollar of spent by a buyer is a dollar of income for a seller

answer

For an economy as a whole, income must equal expenditure because..

question

GDP would be overstated

answer

If intermediate goods were included in GDP

question

Net investment is negative

answer

If depreciation exceeds gross domestic investment, we can conclude that

question

Not counted

answer

In calculating GDP, gov't transfer payments, like social security or unemployment compensation are..

question

May rise or fall

answer

If real GDP declines in a given year nominal GDP

question

Growth of RGDP per capita

answer

What best measures improvements in the standard of living of a nation

question

lessens the burden of scarcity

answer

Growth is an advantageous to a nation because it..

question

Its average annual rate of growth is about 4%

answer

If the economy's RGDP doubles in 18 years we can conclude that...

question

Labor productivity must be 50 cents

answer

Suppose total output (RGDP) is $10,000 and worker hours are 20,000 we can conclude that..

question

Agricultural commodities

answer

In which industry or sector of the economy is output least likely to be affected by the business cycle?

question

are not employed but seeking work

answer

The unemployed are those who:

question

6%

answer

A nation has a population of 260 million people. Of these, 60 million are retired, in the military, in institutions, or under 16 years old. There are 188 millon who are employed and 12 million who are unemployed. What is the unemployment rate?

question

Structural employment

answer

A worker who loses a job at a call center because business firms switch the call center to another country is an example of:

question

Natural rate of unemployment

answer

the full-employment rate of unemployed is also called the:

question

Food and energy prices

answer

Core inflation refers to the inflation picture after stripping away the:

question

Statistics from National Income accounting

answer

Are useful to assess the health of an economy; formulate policies to maintain and improve that health; and track the long-run course of the economy to see whether it has grown, been constant, or declined

question

It's impossible to add apples and oranges

answer

National income accountants compare the market value of the total outputs in various years rather than actual physical volumes of production because

question

Prices change over time

answer

Comparing market values over time has the disadvantage that:

question

multiple counting would occur

answer

Economists include only final goods in measuring GDP for a particular year because if intermediate goods were counted, then

question

investments and shouldn't be counted as final goods and services

answer

Gross domestic product does not include the value of stocks and bonds sold because these sales and purchases are not economic

question

it was counted in GDP a previous year

answer

When measuring GDP for a particular year, economists exclude the value of used furniture bought and sold because

question

imports are subtracted and exports are added

answer

U.S. exports and imports each affect domestic production because

question

+$2 billion

answer

Suppose foreigners spend $7 billion on American exports in a given year and Americans spend $5 billion on imports from abroad in the same year. What is the amount of America's net exports?

question

Nominal GDP

answer

The market or money value of all final goods and services produced by the economy in a given year, whereas real GDP is adjusted for inflation.

question

$120,000

answer

Assume that a grower of flower bulbs sells its annual output of bulbs to an Internet retailer for $70,000. The retailer, in turn, brings in $120,000 from selling the bulbs directly to final customers. What amount would these two transactions add to personal consumption expenditures and thus to GDP during the year?

question

Economic Growth

answer

A higher standard of living provided that the population does not grow even faster

question

1776 (inventor James Watt)

answer

According to economic historians, modern economic growth first happened in:

question

Property rights, patents and copyrights, efficient financial institutions, literacy and widespread education, free trade, and a competitive market system

answer

Major institutional structures that form the foundation for modern economic growth

question

Increase saving and investment, promote development of new technologies, and ensure that resources flow efficiently

answer

Characteristics of the major institutional structures that form the foundation for modern economic growth

question

Demand factor

answer

The level of purchases needed to maintain full employment

question

Efficiency Factor

answer

The level of economic efficiency and full employment needed to reach full production potentia

question

More labor

answer

Can explain some of the increases in U.S. real GDP during the last 50 years or so

question

Four supply factors of economic growth

answer

Quality and quantity of human resources, quality and quantity of natural resources, level of technology, stock of capital goods

question

Productivity growth

answer

Since at least 1995 the majority of increases in U.S. real GDP are from

question

False

answer

Technological advance, which to date has played a relatively small role in U.S. economic growth, is destined to play a more important role in the future. T or F?

question

True

answer

Many public capital goods are complementary to private capital goods. T or F?

question

False

answer

Immigration has slowed economic growth in the United States. T or F?

question

10 years

answer

Assume that a "leader country" has real GDP per capita of $40,000, whereas a "follower country" has real GDP per capita of $20,000. Next suppose that the growth of real GDP per capita falls to zero percent in the leader country and rises to 7 percent in the follower country. If these rates continue for long periods of time, how many years will it take for the follower country to catch up to the living standard of the leader country?

question

peak, recession, trough, and expansion

answer

In sequential order, the four phases of the business cycle are:

question

Length of a complete business cycle

answer

Varies from about 2 to 3 years to as long as 15 years

question

These purchases can be postponed

answer

The business cycle affects output and employment in capital goods industries and consumer durable goods industries more severely than in industries producing nondurables because capital goods and durable goods last and..

question

Measures the labor force

answer

The U.S. Bureau of Labor Statistics (BLS)

question

Labor force

answer

People over 16 years of age who are actively seeking work

question

unemployment rate

answer

Number of unemployed persons divided by the labor force

question

frictional unemployment

answer

Workers who are either searching for jobs or waiting to take jobs in the near future

question

structural unemployment

answer

Workers whose skills aren't demanded by employers, who lack sufficient skill to obtain employment, or who can't easily move to locations where jobs are available

question

cyclical unemployment

answer

Unemployment that is caused by a decline in total spending

question

Unemployment rates are higher

answer

African Americans, Hispanics, workers in lower-skilled occupations, and less-educated workers

question

noneconomic effects of unemployment

answer

Idleness, loss of skills, loss of self-respect, plummeting morale, family disintegration and sociopolitical unrest. Increase poverty, heightens racial and ethnic tensions, and reduces hope for material advancement. Can lead to rapid and sometimes violent social and political change.

question

calculating the rate of inflation in year 5

answer

Subtracting the CPI of year 4 from the CPI of year 5, and then dividing by the CPI of year 4

question

inflation

answer

Reduces the purchasing power of the dollar

question

demand-pull inflation

answer

Prices rise because of an increase in aggregate spending not fully matched by an increase in aggregate output

question

5%

answer

If the CPI was 120 last year and is 126 this year, what is this year's rate of inflation?

question

$320 billion

answer

If the actual unemployment rate was 10%, the natural rate of unemployment was 6%, and the potential GDP was $4,000 billion, then according to Okun's law the economy would have sacrificed:

question

National Income Accounting

answer

Measures the economy's overall performance

question

Intermediate goods

answer

Products that are purchased for resale or further processing or manufacturing

question

Final goods

answer

Products that are purchased by their end users

question

Value added

answer

market value of a firm's output less the value of the inputs the firm has bought from others

question

Nonproduction transactions

answer

Excluded from GDP because they have nothing to do with the generation of final goods

question

real interest rate

answer

The percentage increase in the purchasing power of your bank accoung

question

nominal interest rate

answer

The percentage increase in the amount of money in the bank account

question

Durable goods

answer

Products that have expected lives of three or more years

question

Nondurable goods

answer

Products with less that three years of expected life

question

Services

answer

The work done by lawyers, hair stylists, doctors, mechanics, and other providers

question

Noninvestment transactions

answer

Transfer of paper assets (stocks, bonds), or the resale of tangible assets (houses, jewelry, boats, etc)

question

True

answer

Taxes on production and imports are part of national income (NI)

question

national income

answer

Employee compensation, rent, interest, proprietors' income, and corporate profits and taxes on production and imports

question

True

answer

One cannot readily compare the nominal GDPs from two different years to one another because it is impossible to determine whether changes occur due to quantity changes, price changes, or both. T or F?

question

False

answer

When people purchase alarms and other theft deterrent devices to combat crime GDP goes down because fewer goods are resold on the black market. T or F?

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