Macroeconomics Exam 2 Answers – Flashcards

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question
An economic recovery that produces too few jobs to significantly reduce the unemployment rate is known as a(n):
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Jobless Recovery
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The study of macroeconomics as a specific discipline is due primarily to:
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John Maynard Keynes
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During a typical economic recovery:
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Unemployment Drops
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Alternating periods of macroeconomic expansion and contraction are known as:
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Business Cycles
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When a recession gets under way:
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firms start to lay off workers to reduce costs
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According to the circular flow model, the value of the household sector and the value of the business sector will:
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always be equal
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A simple circular flow diagram show that the factors of production are:
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purchased by the businesses
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The two approaches used by government in estimating GDP are:
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expenditure and income
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Gross domestic product is the total market value of all:
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final goods and services produced in the United States by labor and property
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The twin perils of the modern macroeconomy are said to be:
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inflation and unemployment
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Arlina got a 5% raise while the rate of inflation was 6%. Arlina's standard of living:
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fell by about 1%
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_____ is a reduction in the rate of inflation:
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Disinflation
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The conversion formula for the current dollar value to constant dollar value is:
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nominal*(base year index/current year index)
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Retirees and creditors:
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are hurt by inflation because their purchasing power drops
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Lexie works Monday to Friday from 4pm to 6pm, in the after school program at a local elementary school. She began looking for a full time job last week and has already scheduled three job interviews. According to the Bureau of Labor Statistics, Lexie is:
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employed
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In 2012, the group with the highest unemployment rate in the US was:
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African Americans
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The mortgage crisis caused a lot of consumers to stop spending money. The decrease in spending led to a decrease in production. Which type of unemployment resulted?
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cyclical
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If the growth rate in an economy is 3.5% then its GDP will double in about:
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20 years
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If a country's population increases at a higher rate than the growth in its real GDP:
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the standard of living in the country has declined
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If output equals A*(5K + 2L), what is output if A equals 2,000, capital equals 10, and labor equals 100?
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500,000
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Schumpter's term CREATIVE DESTRUCTION describes the:
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innovative dynamism of capitalism
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the higher the productivity of a nation, the:
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higher is its standard of living
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Labor productivity is a major determinant of:
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living standards
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According to Malthus, a fixed quantity of land and a growing human population will eventually produce:
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a stationary state in which growth will cease
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When the government records a deed showing that ownership of a piece of property has passed from one party to another, it is acting in its role to promote economic by:
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ensuring a stable legal system
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The historical evidence shows that:
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a country's degree of freedom is related to the level of economic growth
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Which of the following did classical economists believe would happen if the product markets accrued surpluses?
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wage rates would fall
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in the Keynesian aggregate expenditure model, which variable is assumed to be fixed?
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the price level
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If disposable income is 3,000 and saving is 1,200, how much is consumption?
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1800
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In the Keynesian model, the principal determinant of saving is:
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income
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If income is 50,000, consumption is 47,500, and saving is 2,500, then the marginal propensity to consume is:
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there is not enough info to answer the question
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Personal consumption expenditures:
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can be found by subtracting saving from disposable income
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As income increases, consumption ________________
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increases at a slower rate
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If the stock marker collapses, consumption will:
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decrease because people fell less wealthy
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Firms decide how much to invest by comparing the rate of return on their projects with:
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the interest rate
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John Maynard Keynes focused on ______ to explain how the economy reaches short-term equilibrium employment, output, and income
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aggregate spending
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According to Keynes, what determines the level of employment and income?
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aggregate expenditures
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The collapse of home values that began in 2008 led to ______ in Americans' saving rates, shifting aggregate demand to the ______
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an increase; left
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The ___________ effect is a reason for the negative slope of the aggregate demand curve
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interest rate
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Which of the following events causes a decrease in aggregate demand?
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taxes increase
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The aggregate demand curve displays:
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real GDP demanded at various price levels
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When government spending rises:
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aggregate demand rises
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As the aggregate price level declines:
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there is a movement down along the aggregate demand curve
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If Europe has a large increase in income, what will happen in the United States?
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The aggregate demand curve will shift to the right
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The _______ shows the amount of output that firms are willing to produce at various price levels?
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aggregate supply curve
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