question

economic growth is best defined as the percentage increase in __________ over time.

answer

potential real GDP

question

Richland's real GDP is $40 billion and its economy is growing at an average rate of 2% per year. Poorland's real GDP is $2.5 billion and its economy is growing at an average annual rate of 10%. After 35 years, Richland's real GDP will be _____ billion, and Poorland's real GDP will be _____ billion.

answer

$80 $80

question

Between 1950 and 2009, U.S real GDP grew at an average annual rate of about:

answer

3.2 Percent

question

Which of the following is the best indicator of a nation's standard of living and economic well being

answer

real GDP per person

question

for a nation's real GDP per capita to rise over time:

answer

Real GDP must increase more rapidly than population

question

an outward shift of a nation's production possibilities curve:

answer

neither ensures the nation of an increase in real GDP nor of an increase in real GDP per capita

question

the achievement of full employment through time will:

answer

increase the realized rate of economic growth

question

Labor Productivity is measured by:

answer

Real output per worker hour

question

if the secular trend of labor productivity rises from 1.4 percent to 3.5 percent, the number of years that it will take for the standard of living to double will decline by about________ years.

answer

30

question

Human capital refers to:

answer

the skills and knowledge that people acquire from education and training.

question

which of the following is the most important source of economic growth in the US?

answer

Increases in labor productivity

question

which of the following is the primary determinant of increased labor productivity in the US?

answer

Technological advance

question

which of the following changes in economic circumstance, ceteris paribus, will not increase a nation's average labor productivity?

answer

An increase in the money supply

question

Which of the following statements concerning business cycles is false?

answer

business cycles are regular in duration and amplitude.

question

a recession is the phase of a business cycle where the economy experiences ____ unemployment and ___real GDP

answer

rising falling

question

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

answer

agricultural commodities

question

the unemployment rate is the:

answer

percentage of the labor force that is unemployed

question

frictional unemployment is the unemployment that results when workers:

answer

with marketable skills search for new jobs.

question

a headline states : "real GDP falls again as the economy slumps" this change in economic circumstance will cause what type of unemployment?

answer

cyclical unemployment

question

new college graduates looking for their first job would be classified in the BLS data as:

answer

Structurally unemployed

question

the nation of erehon has 5 million pople who work partime as a result of personal choice, 20 million full time workers and 2.5 million perople classified as unemployed. 3 mill of the full time become involunatary paart time. result of change in economic circumstance, ceteis perueibus, the:

answer

offical unemployment rate will not change

question

if unemployed workers become discouraged and stop looking for work, the unemployment rate _______, assuming other influenced on the labor market remain the same.

answer

DECREASES

question

a worker retires from their job. ceteris paribus, the labor force participation rate _______and the unemployment rate ______.

answer

Decreases increases 1

question

THE NATURAL REATE OF unemployment is

answer

achieved when the econonmy experiences only frictional and structural unemployment

question

at the natural rate of unemployment the economy is:

answer

producing its potential real GDP

question

if the official unemployment rate is above the natural rest of unemplyment , then:

answer

the economy is experiencing an economic boom

question

inflation refers to the:

answer

general level of prices in the economy rising, although some prices may be falling

question

the price of imported French champagne increases. this change in economic circumstance, ceteris paribus, would _____ the GDP price index and _______ the consumer price index (CPI)

answer

not change increase

question

if the consumer price index (CPI) falls from 150 to 100

answer

deflation of about 33% has occured.

question

demand pull inflation

answer

occurs when aggregate spending exceeds the economys capacity to produce

question

cost push inflation

answer

is caused by a negative supply shock which abruptly increases per unit production costs

question

if your nominal increases by 5% and the price index rises from 125 to 130, then your real income will

answer

increases by 1%

question

if the price level is expected to increase by 3% next year and a key market interest rate is 7%, the real rate of interest is:

answer

4 percent

question

unanticipated inflation is undesirable because it

answer

arbitrarily redistrubutes real income and wealth

question

the boeing company and its workers agree to a 3 year wage contract that gives workers a 3 % increase in wages per year. if the acutal inflation rate turns out to be 5% per year, the employer (boeing) _______ and employees _______

answer

loses lose

question

assume borrowers (debtors) and lenders (creditors) agree on a fixed nominal interest rate expecting 4% inflation. if the inflation rate turns out to be lower than lenders and borrowers anticipates, the nominal interest income of lenders will be_ _______ and their real interest income will be _____

answer

higher than expected lower than expected

question

which factor explains instability in the level of investment in the economy?

answer

expectations about future business conditions can change quickly

question

a media report states "a 10 billion jump in orders for commercial aircraft helped boost producers durable goods orders by 2.5 % in 2011. predict the anticipated impact of this change in economic circumstance on the economy. assume the economy MPC=0.80 and the multiplier is at full effect.

answer

GDP will increase by $50 billion

question

the aggregate demand curve:

answer

slopes downward because of the real balances, interest rate, and foreign purchases effects.

question

the upward slope of the short run aggregate supply curve is based on the assumption that:

answer

nominal wages and other resource prices are sticky in response to price level changes.

question

which of the following statements about the long run aggregate supply curve is true?

answer

all of the above are true

question

if the dollar-yen exchange rate changes from $0.02=Y1 to $0.01=Y1 (Or the yen-dollar exchange rate changes from Y50= $1 to Y100 =$1 ) then the dollar has _______ in value and the yen has _____ in value.

answer

appreciated depreciated

question

appreciation of the dollar:

answer

will increase the prices of american exports and decrease the prices of American imports.

question

a stronger dollar or appreciation of the dollar in the foreign exchange market will:

answer

decrease US net exports and therefore decrease US aggregate demand

question

which of the following changes in economic circumstance will increase aggregate demand?

answer

an increase in excess production capacity

question

which of the following changes in economic circumstance will decrease aggregate demand?

answer

news of a reduction in social security benefits

question

which of the following changes in economic circumstance will increase short run aggregate supply?

answer

AN INCREASE in average labor productivity.

question

which of the following changes in economic circumstance will decrease short run aggregate supply?

answer

an increase in wages

question

in the short run, cost push inflation will ____ the price level and ________ real GDP

answer

increase decrease 2

question

assume an ecomony is initially operating at its potential real GDP. Technological advance substantially increases average labor productivity. in the long run this change in economic circumstance, ceteris paribus, will __________ the level and _______ potential real GDp

answer

Decrease INcrease 2

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