Macroeconomics Exam 2

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