question

Products that would be used in calculating US GDP in 2014 would include...

answer

Cars manufactured in Tennessee in 2014 at a factory owned by a Japanese automobile company and sold in 2015 in Canada

question

What is the general impact of a growing economy/increasing GDP?

answer

More jobs

question

In a typical business cycle, what stage immediately follows a peak?

answer

Contraction

question

Which of the following is an example of a final good or service?

answer

A cake purchased from a bakery by you for your birthday party or A cake purchased from a bakery for a wedding

question

A recession is a contraction of ________ but a contraction is a decrease in _________

answer

GDP, the rate of growth of GDP

question

GDP expressed in constant, or unchanging, prices is called

answer

Real GDP

question

What is the four part definition of GDP?

answer

1) Dollar Value 2) Produced in the country 3) Final Goods and Services 4) Amount of Time (quarterly)

question

Explain why final goods and services are included in the calculation of GDP and intermediate goods are not.

answer

Only final goods and services are counted to avoid the double-counting of goods and services in GDP.

question

What is the impact on GDP of a decrease in exports?

answer

It is bad for GDP because we want to have more exports because that means it is made in the country, which equals more jobs

question

In Naked Economics Chapter 9 Keeping Score: Is my economy bigger than your economy?, the author uses two nations to demonstrate that GDP per capita is a better way to measure a nation's standard of living. Name the two countries

answer

1) Israel 2) India

question

According to Naked Economics Chapter 9 Keeping Score: Is my economy bigger than your economy?, what is a flaw in using GDP as a measurement?

answer

GDP doesn't account for things that have to do with nature or deforestation. 1) environmental degregation 2) ignores black market transaction > illegal. >stay at home parent. >babysitting 3) intermediate goods

question

a system that collects macroeconomic statistics on production, income, investment, and savings

answer

National Income accounting

question

the dollar value of all final goods and services produced within a country's borders in a given year

answer

Gross domestic product (GDP)

question

consumer goods that last for a long time

answer

Durable goods

question

loss of the value of capital equipment that results from normal wear and tear

answer

depreciation

question

the average of all prices in the economy

answer

price level

question

What are intermediate goods?

answer

Goods used in the production of other goods

question

How does an economist calculate GDP for one year using the expenditure approach?

answer

add together all the amounts spent on final goods and services

question

What is the underground economy?

answer

the products and income that are not reported as income to the government

question

Which of the following is a nondurable good

answer

gasoline

question

What is the difference between real GDP and nominal GDP?

answer

Real GDP is based on constant prices; nominal GDP is based on the current year's prices

question

a period of macroeconomic expansion followed by a period of contraction

answer

Business cycle

question

a steady, long-term increase in real GDP

answer

Economic growth

question

the lowest point in an economic contraction

answer

trough

question

The highest point of an economic expansion

answer

peak

question

a prolonged contraction of GDP

answer

recession

question

What happens to consumer and business spending when the interest rates go up?

answer

both types of spending decrease

question

What are the leading economic indicators supposed to predict?

answer

business cycles

question

Which of the following finally brought the U.S. economy out of the Great Depression?

answer

World War II

question

Which of the following was a lasting effect of the OPEC embargo in the 1970s on the U.S. economy?

answer

reduced use of petroleum

question

What was the major change in the U.S. economy in the 1990s?

answer

higher impact of international trade (and/or) heavier reliance on services

question

Products that would be used in calculating GDP include

answer

cars manufactured in Tennessee at a factory owned by a Japanese automobile company or toys manufactured in Alabama at a factory owned by a U.S. company

question

An example of capital deepening would be

answer

paying for an employee to take college courses or an individual taking an online course

question

What is the difference between seasonal unemployment and structural unemployment?

answer

Seasonal unemployment occurs because of seasons, whereas structural occurs because people lack needed skills

question

According to the demand-pull theory, what is responsible for inflation?

answer

demand for goods and services exceeds existing supply

question

Which of the following is correct? The unemployment rate is

answer

unemployed/labor force

question

When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at large urban university, she is

answer

frictionally unemployed

question

The "market basket" that is used by the Bureau of Labor Statistics to calculate prices is made up of which of the following?

answer

typical goods and services for a household

question

If the number of people classified as unemployed is 50,000 and the number of people classified as employed is 200,000, what is the unemployment rate?

answer

20%

question

A shortcoming of using GDP as a measurement is that

answer

All of these: 1) it ignores negative externalities 2) it includes black market transactions 3) it includes quality of life measurements

question

The period of time when the rate of GDP growth is increasing is called

answer

an expansion

question

How is nominal GDP converted into real GDP?

answer

through eliminating the effects of price increases on GDP growth

question

An economy that experiences 2% growth in real GDP and 6% inflation is said to suffer from

answer

stagflation

question

When the economy is at full employment, what is the unemployment rate?

answer

4 to 6 percent

question

How has the distribution of income in the United States changed over the last 20 years?

answer

It has become less equal

question

if the number of people employed is 200,000 and the labor force is 220,000 the unemployment rate is

answer

10%

question

Economists look to which of the following explanations for inflation?

answer

all of the above: 1) producers raise prices in order to meet increased costs 2) too much money in the economy 3) demand for goods exceeds supply, as in wartime

question

If Bob loses his job at the GM plant because car manufacturing is slow due to a downturn in the economy, you can conclude that he is

answer

cyclically unemployed

question

Approximately, what is the current unemployment rate?

answer

6%

question

Who generally bears most of a sales tax when the demand for the good taxed is inelastic?

answer

the consumer

question

Which is an example of discretionary spending?

answer

education

question

Mandatory spending represents approximately what percent of the federal budget?

answer

67%

question

The largest expense for the federal government is

answer

social security

question

Suppose your total taxable income this year is $75,000. You are taxed at a rate of 10% on the first $25,000, 20% on the next $25,000, and 30% on the final $25,000. What type of tax structure is this? What is your total income tax?

answer

Progressive, $15,000

question

An example of expansionary fiscal policy would be

answer

cutting taxes

question

Keynesian economics

answer

is the basis for fiscal policy

question

The purpose of expansionary fiscal policy is to

answer

increase GDP and employment or increase output

question

An example of an automatic stabilizer is

answer

decreased tax revenue in a recession

question

Why does the Federal Reserve alter monetary policy?

answer

to maintain price stability and promote economic growth

question

How many Federal Reserve Districts are there?

answer

12

question

What does "lender of last resort" mean with respect to the Federal Reserve?

answer

it will lend money to a bank in a financial emergency

question

What type of policy does the Federal Reserve use to counteract an expansion that is causing high interest rates?

answer

Tight money policy

question

What is one possible effect of an easy money policy?

answer

increasing inflation

question

Which of the following tools is NOT used by the Federal Reserve to effect the economy?

answer

government spending

question

Which of these situations is most likely to cause the Fed to introduce a tight money supply?

answer

The economy is expanding quickly and inflation is a concern

question

Which of these tools in an example of monetary policy?

answer

changing interest rates

question

Which of these is an example of a lag in monetary policy?

answer

Borrowers do not immediately borrow addition money when interest rates decrease

question

The best way but boat a perfect way to measure a nation's economic well being is:

answer

Real GDP per capita

question

The Federal Reserve was established in ______ and it's power has ________ over time.

answer

1913, decreased

question

The Federal debt is approximately $_________ and the federal deficit is approximately $__________. The federal debt represents approximately what percent of GDP? ______

answer

18 Trillion, 500 billion, 100%

question

Explain why the FOMC buying bonds is likely to increase GDP

answer

The FOMC buying bonds increases money into the banks, more loans to consumers, and more consumption which equals GDP goes up

question

What is one shortcoming or flaw in using GDP as a sole measurement of the economy?

answer

It does not account for environment degradation

question

The current Fed Chairman is

answer

Janet Yellen

question

In three words, explain what is happening in the following headline... "Fed Raises Interest Rates in response to Inflation."

answer

Contractionary Monetary Policy

question

The calculation of US GDP for 2012 would include

answer

the purchase of a Ford built in Detroit in 2012 but sold in 2013

question

How do fears of future economic problems affect GDP?

answer

consumers will spend less an save money in case future economic problems affect them; GDP will be reduced

question

Which of the following would cause the aggregate demand curve to shift to the left?

answer

decreases in taxes

question

An economy that experiences decreasing real GDP and increasing prices is said to suffer from

answer

stagflation

question

How has the distribution of income (income equality) in the U.S. changed over the last 20 years?

answer

It has become less equal

question

If the number of people employed is 90,000 and the number unemployed 10,000, the unemployment rate is

answer

10.00%

question

Poverty is measured as which of the following?

answer

the percentage of the population that earns too little to sustain themselves

question

The Gini Index measures_________ and 1 is total _______

answer

Economic Equality, inequality

question

The following economist developed the theories that support fiscal policy?

answer

John Maynard Keynes

question

When revenues exceed expenditures,

answer

there is a budget surplus

question

The Laffer curve predicts the effects of changes in the tax rate on

answer

tax revenues

question

Which of these is a contractionary fiscal policy?

answer

The President and Congress pass a new two-cent-per-gallon gasoline tax

question

The current budget deficit is________and getting_____

answer

500 billion, bigger

question

All other things equal, the impact of large budget deficits is as follows:

answer

higher interest rates and slower GDP growth

question

The federal government spends the largest amount of its budget on which item?

answer

social security

question

We learned that there are several shortcomings or flaws to using GDP as a measurement of economic well being. Name one.

answer

Nonmarket Activities/ Underground Economy

question

What is monetary policy?

answer

Monetary policy is run by the Federal Reserve Bank, specifically Fed chairman women Janet Yellen, to control inflation, manage GDP growth, and manage jobs (in that order). Its goals deal with money supply, interest rates, and the FOMC. --->Expansion: (increases) money supply, (decreases) interest rates, FOMC buys bonds --->Contraction: (decreases) money supply, (increases) interest rates, FOMC sells bonds

question

Currently, the unemployment rate in the U.S. is approximately __________ while GDP growth is approximately _________

answer

6%, 2(1?)%

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