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F
answer
Gross domestic product is the total dollar value at current prices of all final and intermediate goods produced by a nation during a given time period.
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F
answer
The circular flow model illustrates that aggregate spending in the product markets equals 70 percent of aggregate income earned in the factor markets.
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T
answer
Personal consumption expenditures is the largest component of total spending.
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T
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Fixed investment is the dollar amount businesses are adding to our nation's amount of plant and equipment.
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F
answer
Gross domestic product (GDP) is a satisfactory measure of both economic "goods" and "bads"
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T
answer
The difference between gross domestic product and national income is an estimate of the depreciation of fixed capital.
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T
answer
Nominal values are values measured in terms of the prices at which goods and services are actually sold.
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F
answer
All changes in nominal GDP are due to price changes.
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T
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If the GDP chain price index in a given year is less than 100, real GDP in that year would be greater than nominal GDP.
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T
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A GDP price chain price index number of 120.0 for a given year indicates that prices in that year are 20 percent higher than prices in the base year.
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T
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Over time, nominal GDP rises faster than real GDP because of the effects of inflation as measured by the GDP chain price index.
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T
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In any year, nominal GDP divided by the GDP chain price index multiplied by 100 equals real GDP.
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T
answer
Business cycles are recurring periods of economic growth and decline in an economy's real GDP.
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F
answer
The term "recovery" refers to the maximum point of the business cycle.
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T
answer
A person who has lost his or her job because it is now performed by a robot is structurally unemployed.
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F
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Structural unemployment refers to short periods of unemployment needed to match jobs and job seekers.
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T
answer
To be counted as unemployed, a person must be looking for a job.
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F
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The civilian labor force includes only the employed.
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T
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The official unemployment rate can be criticized for both understating and overstating the true number of unemployed.
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T
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When actual real GDP output is below full-employment real GDP, the GDP measures the cost of cyclical unemployment.
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T
answer
The natural rate of unemployment exists when cyclical unemployment
equals zero.
equals zero.
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F
answer
Full employment, which is always expected to occur, consists of the
frictionally and cyclically unemployed.
frictionally and cyclically unemployed.
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