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