question

The purchase of wheat from a wheat farmer by a bakery

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Is not the purchase of a final good

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The purchase of two new elementary school buildings by the state government

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Is the purchase of a final good

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The purchase of French wine by a U.S. Consumer

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Is the purchase of a final good

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The purchase of a new machine tool

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Is the purchase of a final good

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Four major categories of expenditure

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Consumption, investment, government purchases and net exports

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One major component of GDP that can be negative is

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Net exports

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GDP is

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The market value of all final goods and services produced in a country during a period of time

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A recession occurs when an economy experienced a period in which there is

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A decrease in total production

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The business cycle exists because

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Total production experiences periods of increases and decreases

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Which of the following is included in the economist's definition of investment?

answer

The purchase of new machines, factories, or houses

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In calculating GDP, which levels of government spending are included in govt purchases?

answer

Spending by federal, state, and local governments

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Why does inflation make nominal GFP a poor measure of the increase in total production from one year to the next?

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When nominal GDP increased from year to year, the increase is due partly to changes in prices and partly to changes in quantities

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GDP deflator=

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Nominal/real x 100

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Real GDP is

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The value of g & s evaluated at base year prices

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Over time, prices may change relative to each other. To take this change into account, the Bureau of Economic Analysis calculates

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Real GDP using chain weights

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Considers prosecutor that occurs outside he US

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GNP

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GNP

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Value of final goods and services produced by residents of the U.S.

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GNP of the U.S. is equal to

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The value of final goods and services produced by the U.S. factors of production

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Which of the following would be included in the GNP of the U.S.

answer

Production from a U.S. firm that operates in Mexico

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Potential real GDP

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Grows over time

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Which of the following does NOT lead to long-run economic growth?

answer

Increase in average wages

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Technological progress is affected by:

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-private property rights -investment in capital -new software developments -entrepreneurship

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Which of the following is most likely to lead to sustained long-run growth?

answer

Increases in human capital

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Potential GDP

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Increases over time as technological change occurs and labor force grows

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Which of the following does not cause an increase in the quantity of goods and services that can be produced by one worker, or in one hour of work?

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An increase in the number of workers

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Which of the following changes will ensure that an economy experiences sustained economic growth?

answer

Technological change

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Which of the following best describes the effect of the business cycle on the inflation rate and unemployment rate?

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The unemployment rate increases and the inflation rate falls during recessions

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Why might the unemployment rate continue to rise during the early stages of a recovery?

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Employment growth may be slow relative to the growth in labor force and some firms continue to operate well below their capacity even after a recession has ended

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Once economic activity picks up and your sales begin to increase, why might you not immediately start rehiring workers?

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Before rehiring you would like to make sure that this economic expansion lasts

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What is the general relationship between the business cycle and unemployment and inflation?

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During an expansion, unemployment falls and inflation increases

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At the peak of a business cycle, which of the following is most likely to be true?

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Interest rates are rising, and wages are rising faster than prices

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The agency that identifies a recession is the

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NBER- National Bureau of Economic Research

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Expansion

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-production, employment, and income increase

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Recssion

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Production, employment, and income decrease

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Recession

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Unemployment: ^ Durable goods production: D Inflation rate: D

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When a corp purchases or builds a facility in a foreign country, it is called

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Foreign direct investmemt

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Which counties have experienced faster economic growth?

answer

Countries that have been generally more open to foreign trade and investment

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Which of the following is a way in which govt can directly promote savings and investment?

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Govt can create tax incentives for both businesses and individuals

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By doing so, government can help promote growth because greater property rights

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Give entrepreneurs more incentive to take risks that create new products, ideas, and more technology

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An example of business fixed investment spending is

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A purchase of a computer by an accounting firm

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Nominal GDP is GDP in a given year

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valued in the prices of that year

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Real GDP is GDP in a given year

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Valued in the prices of the base year

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To examine how the total production of an economy has hanged over time, it would be better to examine

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Real GDP

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Real GDP will increase

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Only if the quantity of finals goods and services produced rises

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The measure of production that values production using current prices is called

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Nominal GDP

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True statement about real and nominal GDP

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If real GDP increases from one year to the next, we know that production of goods and services has risen

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GNP of the U.S. is the market value of all final goods and servixes

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Produced by U.S. residents anyway in the world

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Output of Mexican citizens who work in Texas would be included in the

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GNP of mexico

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The output of U.S. citizens who work in Canada would be included in the

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GDP of Canada

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If an American firm opens a production facility in India, the total value of the production will be included in the

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GDP of india

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Which of the following is included in both the U.S. GDP and U.S. GNP

answer

value of all cars produced in U.S.

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8.

answer

all the above

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12.

answer

outside US & residents smaller than

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13.

answer

US factors of production larger than

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Which of the following is most likely to lead to sustained long-run growth?

answer

technological change

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