Macro Economics Test 2 Part 2 Wiseman

A system of private property rights
encourages economic growth by creating incentives to invest in capital and to be innovative.

The three stages of economic development include:
Agricultural stage, manufacturing stage, and the service sector stage.

In the factor market, households
sell resources (labor)

Typically, nominal interest rates and anticipated inflation rates
move in the same direction

Which of the following does not appear to contribute to economic growth?
protectionism

a persistently declining price level resulting from economic growth and unchanged aggregate demand is called
secular deflation

which of the following best represents economic growth?
an outward, or equivalently, a rightward shift in the production possibilities curve.

The term “creative destruction” refers to:
the process by which new jobs are created, and old ones destroyed.

The interest rate effects that helps explain the slope of the aggregate demand curve arises because
an increase in the price level boosts interest rates, which discourages borrowing and hence reduces planned real expenditures.

the faster the drop in the purchasing power of money, the faster the
increase in inflation rate

Which of the following describes an economy with full employment?
“The level of unemployment that corresponds to the normal friction in the labor market.”

Gross domestic product measures
the total market value of final goods and services produced within a nation’s borders.

a major element of the concepts of inflation and deflation is
their dependence on average, rather than individual prices.

the study of development economics is to understand
why some countries are rich and others are poor.

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
3%

the natural rate of unemployment is the rate of unemployment that
all workers and employees have fully adjusted to any changes in the economy.

which of the following variables is used to measure economic growth?
real GDP per capita

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?
$5 trillion

If population growth is greater than the growth of real output
real per capita GDP growth will be less than the growth of real GDP

A lifeguard who is out of work in the winter is
seasonally unemployed

One reason the aggregate demand curve slopes down is because
higher price levels reduce net exports

the long – run aggregate supply curve is
vertical

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
$1.00

Other things being equal, along the aggregate demand curve, a higher price level is associated with
a lower real GDP

The long-run aggregate supply curve
indicates the level of output GDP that occurs when resources are fully employed.

The rate of unemployment is calculated as the number of
unemployed divided by the number of people in the civilian labor force.

The real balance effect refers to
the change in the value of cash balances due to price level changes.

Which of the following is NOT a reason that free trade stimulates economic growth?
Free trade keeps domestic prices up, enabling firms to make more profits that can be spent on research and development.