Macro Final Exam- Review Sheet 1 – Flashcards
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GDP is calculated by summing up
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the total market value of final goods and services produced in the economy during a period of time
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Which of the following transactions represents the purchase of a final good
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Your father buys a new John Deere riding lawn mower
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Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the below table, nominal GDP for this simple economy equals: Product Quantity Price Sweatshirts 50 $35.00 Dental Exams 40 $75.00 Coffee Drinks 1,000 $4.00 Coffee Beans 2,000 $0.50
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$8,750
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In the circular flow model, the value of total production for an economy _______ the value of total expenditures on final goods and services
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equals
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to calculate GDP by the expenditure method, one must add
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consumption spending, investment spending, government spending and net exports
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the purchase of a new house is included in
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investment expenditures
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the purchase by a foreign government of an airplane produced in the US is included in U.S
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net exports
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when consumers are less confident about their jobs or incomes, they are more likely to
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reduce purchases of durable goods than nondurable goods
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the GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is
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5% higher than in year 2 than in year 1
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Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2012 equals Year Nominal GDP Real GDP 2011 $13,399 $12,976 2012 $14,078 $13,254 2013 $14,441 $13,312
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105.1
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The labor force equals the number of people
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employed plus unemployed
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Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S Bureau of Labor would equal
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(20/100) x 100
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the labor force participation rate equals the
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labor force divided by the working-age population x 100
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Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?
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discouraged workers
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Mike has been unemployed for over a year. He hasn't looked for a job in the last three months, but he's just started looking for work again. Because Mike started looking for a new job,
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the unemployment rate increased
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Jack was unemployed two weeks ago but just started a new job. As a result of this increase in the number of employed workers, which of the following occurred?
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the unemployment rate decreased
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A student who just graduated from college but has not found a job would most likely be
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frictionally unemployed
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If the federal government implements programs so that the unemployed are more quickly matched with jobs, then
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the natural rate of unemployment will decrease
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when the labor market is at full employment
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there is no cyclical unemployment in the economy
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An efficiency wage
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is higher than the market wage and tends to increase productivity
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If real GDP in a small country in 2012 is $8 billion and real GDP in the same country in 2013 is $8.3 billion, the growth rate of real GDP between 2012 and 2013
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3.75%
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If real GDP grows by 3% in 2011, 3.2% in 2012, and 2.5% in 2013, what is the average annual growth rate of real GDP?
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2.9%
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According to the "Rule of 70", how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?
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14 years
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Which of the following increases labor productivity?
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inventions of new machinery, equipment, or software
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Consider the following data for a closed economy Y= $12 trillion C= $8 trillion I= $2 trillion G= $2 trillion TR= $2 trillion T= $3 trillion Based on the information above, what is the level of private saving in the economy?
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$3 trillion
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If government saving is negative, then
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T-TR < G
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In comparison to a government that runs a balanced budget, when the government runs a budget deficit,
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business investment will fall
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______ is the ease with which a financial security can be exchanged for money
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Liquidity
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Using the market for loanable funds, which of the following has the potential to raise the real interest rate?
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an increase in the demand for loanable funds
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When an economy faces diminishing returns
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the slope of the per-worker production function becomes flatter as capital per hour worked increases
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If the per-worker production function shifts down
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it now takes more capital per hour worked to get the same amount of real GPD per hour worked
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According to new growth theory,
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technological change is influenced by economic incentives
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The per-worker production function shows the relationship between ___ per hour worked and ____ per hour worked, holding ____ constant
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capital; real GDP; technology
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a small economy increased its capital per hour worked (K/L) from $40,000 to $50,000. As a result, real GDP per worker (Y/L) grew from $20,000 to $25,000. If the economy increases its capital per hour worked by another $10,000 to $60,000, but there is no change in technology, by how much more and in what direction will output per worker change?
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Output per worker will increase by less than $5,000
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If there is a change in the ability of a firm to produce a given level of output with a given level of inputs, we say there is
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technological change
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In the long run, a country will experience an increasing standard of living only if it experiences
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continuous technological change
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An economy can improve its standard of living by
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increasing the amount of capital available per hour worked
