Macro Economics Test 2 Part 2 Wiseman – Flashcards
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A system of private property rights
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encourages economic growth by creating incentives to invest in capital and to be innovative.
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The three stages of economic development include:
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Agricultural stage, manufacturing stage, and the service sector stage.
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In the factor market, households
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sell resources (labor)
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Typically, nominal interest rates and anticipated inflation rates
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move in the same direction
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Which of the following does not appear to contribute to economic growth?
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protectionism
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a persistently declining price level resulting from economic growth and unchanged aggregate demand is called
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secular deflation
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which of the following best represents economic growth?
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an outward, or equivalently, a rightward shift in the production possibilities curve.
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The term "creative destruction" refers to:
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the process by which new jobs are created, and old ones destroyed.
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The interest rate effects that helps explain the slope of the aggregate demand curve arises because
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an increase in the price level boosts interest rates, which discourages borrowing and hence reduces planned real expenditures.
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the faster the drop in the purchasing power of money, the faster the
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increase in inflation rate
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Which of the following describes an economy with full employment?
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"The level of unemployment that corresponds to the normal friction in the labor market."
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Gross domestic product measures
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the total market value of final goods and services produced within a nation's borders.
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a major element of the concepts of inflation and deflation is
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their dependence on average, rather than individual prices.
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the study of development economics is to understand
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why some countries are rich and others are poor.
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the price level has been rising 5% a year for 20 years and is expected to continue to do so. The nominal rate of interest is 8%. The real rate of interest is
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3%
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the natural rate of unemployment is the rate of unemployment that
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all workers and employees have fully adjusted to any changes in the economy.
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which of the following variables is used to measure economic growth?
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real GDP per capita
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suppose that in 2011, nominal GDP for the economy of Chiconia was $10 trillion and the GDP price index was 200.0. What is Chiconia's real GDP in 2011?
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$5 trillion
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If population growth is greater than the growth of real output
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real per capita GDP growth will be less than the growth of real GDP
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A lifeguard who is out of work in the winter is
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seasonally unemployed
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One reason the aggregate demand curve slopes down is because
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higher price levels reduce net exports
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the long - run aggregate supply curve is
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vertical
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The farmer pays $0.20 for the seed that is sold to the miller for $0.35; the miller makes flour and sells it to the baker for $0.55. The baker makes bread and sells it to the grocery store for $0.80, and the store sells it to consumers for $1.00. The contribution to GDP is
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$1.00
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Other things being equal, along the aggregate demand curve, a higher price level is associated with
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a lower real GDP
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The long-run aggregate supply curve
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indicates the level of output GDP that occurs when resources are fully employed.
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The rate of unemployment is calculated as the number of
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unemployed divided by the number of people in the civilian labor force.
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The real balance effect refers to
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the change in the value of cash balances due to price level changes.
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Which of the following is NOT a reason that free trade stimulates economic growth?
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Free trade keeps domestic prices up, enabling firms to make more profits that can be spent on research and development.
