ecn202 final - Assignment Essays

question

Investment (I) includes:

answer

the amount spent on new factories and machinery.

question

Consumption is the purchase of goods and services by:

answer

households

question

Income Mexican citizens earn in the U.S. counts in

answer

US GDP

question

The largest component of the expenditure side of GDP in the United States is:

answer

Consumption

question

The most volatile component of GDP in the United States and Europe is:

answer

Investment

question

The correct formula to calculate GDP based on its spending components is:

answer

Consumption + Investment + Government Spending + Exports - Imports

question

A company produced 8 dishwasher machines in 2010. The company sold 6 in 2010 and added 2 to its inventories. The market value of the dishwasher machines in 2010 was $200 per unit. What is the value of this company's output that will be included in the 2010 GDP?

answer

$1600

question

A company produced 5 dishwasher machines in 2010. The company sold 6 in 2010 (by selling 1 dishwasher machine from their inventory from last year.) The market value of the dishwasher machines in 2010 was $100 per unit. What is the value of this company's output that will be included in the 2010 GDP?

answer

$500

question

Consumption in the United States is about ____________ of GDP.

answer

68%

question

Shares of personal consumption in GDP has been ________ since 1980s in the US.

answer

increasing

question

Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then:

answer

imports exceed exports by $50 billion.

question

Trade deficit means

answer

imports higher than exports

question

In the US, shares of investment in GDP have been _________ .

answer

fluctuating

question

In the US, shares of investment in GDP have always _________ before economic recessions.

answer

declined

question

From the US GDP, shares of government spending have always ___________ during economic recessions.

answer

increased

question

In a closed economy with no government, aggregate expenditure is

answer

consumption plus investment.

question

Suppose the consumption function of the US economy is C = 10 + 0.8Y, when Y is total output or income. If we want to draw this function on the diagram when total output (Y) is on the X-axis, what is the Y-axis intercept (autonomous consumption) and what is the slope (marginal propensity to consume (MPC) of this consumption function, respectively?

answer

10 and .8

question

Suppose the consumption function of the US economy is C = 10 + 0.8Y, when Y is total output or income. What is the amount of consumption (in millions) when total output or income (Y) equals to 0 and when total output or income (Y) equals to 10, respectively?

answer

$10 million and $18 million

question

The Tiny Tots Toy Company manufactures only sleds. In 2010 Tiny Tots manufactured 10,000 sleds, but sold only 8,000 sleds. In 2010 Tiny Tots' change in inventory was

answer

2,000 sleds

question

The Jackson Tool Company manufactures only tools. In 2010 Jackson Tools manufactured 20,000 tools, but sold 21,000 tools. In 2010 Jackson Tools' change in inventory was

answer

-1,000 tools

question

Actual investment equals to the sum of planned investment and a change in inventory investment. Assume that in Scandia, planned investment is $80 billion but actual investment is $60 billion. Unplanned inventory investment is

answer

-$20 billion

question

Actual investment equals to the sum of planned investment and a change in inventory investment. In 2010 Happyland's planned investment was $90 billion and its actual investment was $140 billion. In 2010 Happyland's unplanned inventory change was

answer

$50 billion

question

Actual investment equals to the sum of planned investment and a change in inventory investment. If planned investment exceeds actual investment,

answer

there will be a decline in inventories.

question

Actual investment equals to the sum of planned investment and a change in inventory investment. If Inventory investment is higher than firms planned,

answer

actual investment is greater than planned investment.

question

In Keynesian macroeconomic model, equilibrium is defined as that point at which

answer

aggregate expenditure equals aggregate output.

question

Based on the table of Aggregate expenditure-output we practiced in class, if aggregate output is greater than planned spending, then

answer

unplanned inventory investment is positive.

question

national accounts

answer

keep track of the flows of money between different sectors of the economy

question

The multiplier represents the

answer

total amount of additional increases in consumption spending induced by an initial change in aggregate expenditure.

question

AD for Full economy

answer

AD = C + I + G + X -M

question

AD for closed economy with government

answer

AD = C + I + G

question

AD for Closed economy without government

answer

AD = C + I

question

Total income

answer

(Y) = C + S + T

question

Disposable income

answer

(Yd) = C + S

question

the economy's total production of goods and services for a given time period

answer

aggregate output

question

the amount of goods and services in the economy that will be purchased at all possible price levels

answer

aggregate demand

question

The total income received
by all factors of production in a given period.

answer

aggregate income

question

the fixed amount one will spend, independent of income

answer

Autonomous consumption

question

Those additions to capital stock and
inventory that are planned by firms.

answer

planned investment

question

The actual amount of investment that takes
place; it includes items such as unplanned changes in inventories.

answer

actual investment

question

A variable that is assumed not to depend on the state of the economy—that is, it does not change when the economy changes.

answer

exogenous variable

question

an increase in general price level

answer

inflation

question

a constant price level from year to year

answer

zero inflation

question

a decrease in the general price level

answer

deflation

question

a decrease in the rate of inflation

answer

disinflation

question

real interest rate = nominal interest rate - inflation rate

answer

fischer equation

question

Higher employment may result in inflation

answer

phillips curve

question

The difference between the real wage required to incentivize effort, and the real wage that gives firms enough profits to stay in business.

answer

bargaining gap

question

the unemployment rate which
keeps inflation constant.

answer

inflation stabilizing rate

question

unexpected change on the supply side of the economy

answer

supply shock

question

In the short run, what is one of the most important issues for macroeconomics?

answer

relationship between fluctuations in demand and output

question

In the medium run, what is one of the most important issues for macroeconomics?

answer

inflation/deflation

question

In the long run, what is one of the most important issues for macroeconomics?

answer

labor productivity, institutions, technological progress

question

According to Financial Time's article written by Larry Summers, why he claimed the Phillips curve is already broken down?

answer

lower unemployment has not resulted in higher inflation in the past few years.

question

According to Financial Time's article written by Larry Summers, gig economy and automation cause a _________ in labor's bargaining power.

answer

decrease

question

According to Financial Time's article written by Larry Summers, another reason that has decreased the bargaining power of labor in the U.S. is that _______.

answer

labor unions shrink down.

question

While _____ is considered as a flow variable, ____ is considered as a stock variable.

answer

investment; capital

question

flow variables

answer

measured per period of time (GDP, income, saving, investment)

question

stock variables

answer

measured at a point in time (quantity of money, value of houses, capital stock)

question

When you try to measure ______, it must be at a specific date such as the 1st January of 1999. But when you measure _______, it must be just a certain period of time such as during 1999.

answer

wealth; income

question

Inequality can be good for the society because _______.

answer

inequality incentivizes people to work harder.

question

Inequality can be bad for the society because _______.

answer

huge inequality may disincentivize people to work harder since they realize it became harder to have upward social mobility.

question

What is the measurement that economists use to measure income/wealth inequality?

answer

Gini coefficient

question

To draw a Lorenz curve, we must put the _____ of the society to the left of the horizontal line.

answer

poorest

question

On the Lorenz curve diagram, the 45 degree line represents a _________.

answer

perfect equality

question

If only one person in the society owns all income, the Gini coefficient will equal to _______. That represents a maximum inequality.

answer

question

If everyone in the society receives the same amount of income, the Gini coefficient will equal to _______. The reflects a perfect equality.

answer

question

In macroeconomics, the ________ is used to analyze fluctuations of demand in the short-run.

answer

Keynesian-cross model

question

In macroeconomics, the _________ is (are) used to construct the Phillips Curve (the relation ship between inflation and unemployment) in the medium run.

answer

Keynesian-cross model and WS-PS model

question

In the Keynesian-cross model, __________ are assumed to be constant as to show the short-run case.

answer

wage & price

question

In the long run, the main factor that can increase labor productivity is ___________.

answer

technological progress

question

According to the original Phillips curve, if the bargaining gap equals to 3% in the first year and so on, inflation would equal to _______ in the third year.

answer

question

According to the original Phillips curve, if the bargaining gap equals to 2% in the first year and so on, inflation would equal to _______ in the fourth year.

answer

question

According to the original Phillips curve, if the bargaining gap equals to 2% in the first year and so on, inflation would equal to _______ in the third year.

answer

question

According to the expectation-augmented Phillips curve, if the bargaining gap equals to 2% in the first year and inflation equals to 1% in a year before (expected inflation), inflation would equal to _______ in the fourth year (assuming that the bargaining gap never changes).

answer

question

According to the expectation-augmented Phillips curve, if the bargaining gap equals to 1% in the first year and inflation equals to 3% in a year before (expected inflation), inflation would equal to _______ in the third year (assuming that the bargaining gap never changes).

answer

question

The productivity of workers is defined as the

answer

output produced by a worker per hour

question

Labor productivity can be decreased by

answer

decrease in output

question

If a firm can produce total output valued at $8000 by employing 50 people, labor productivity equals to

answer

160

question

If a firm can produce total output valued at $50,000 by employing 20 people, labor productivity equals to

answer

2500

question

If a firm has a production valued at $40,000, it employs ________ workers since their labor productivity equals to 500.

answer

question

If a firm has a production valued at $20,000, it employs ________ workers since their labor productivity equals to 400.

answer

question

If a firm has labor productivity equals to 100 and it employs 500 people, its production would equal to

answer

$50,000

question

If a firm has labor productivity equals to 600 and it employs 30 people, its production would equal to _______.

answer

$18,000

question

According to Unit 16, People who fear that increased technology will destroy jobs and lead to higher long-run unemployment rates are often called __________ after ________________.

answer

Luddites; Ned Ludd

question

The process by which some jobs are created and some are destroyed as the economy adopts new technology is known as:

answer

creative destruction

question

Regarding labor productivity, it should _________ if automation has a huge impact on employment in the past few years.

answer

significantly increase

question

If labor productivity is _________, it should imply that automation does not have any significant effect on the labor market.

answer

constant

question

According to the Fisher equation, inflation equals to

answer

nominal interest rate minus real interest rate

question

According to the Fisher equation, if the nominal interest rate is 5% and inflation is 2%, then the real interest rate is _________.

answer

question

According to the Fisher equation, if the nominal interest rate is 1% and inflation is 3%, then the real interest rate is:

answer

-2%

question

According to the Fisher equation, when the nominal interest rate equals to 8% and inflation is 4%, the real interest rate equals to ____________.

answer

question

According to the Fisher equation, when the nominal interest rate equals to 10% and deflation is 5%, the real interest rate equals to ____________.

answer

15%

question

According to the Fisher equation, when the nominal interest rate and the real interest rate both equal to 7%, we know that ________.

answer

there is neither inflation or deflation

question

According to the Fisher equation, if you were a lender, you would prefer the period of __________, since you will receive the real interest rate higher than the nominal interest rate.

answer

deflation

question

According to the Fisher equation, if you were a borrower, you would prefer the period of __________, since you pay interest less than its real value.

answer

inflation

question

Which of the following statements is correct regarding inflation and deflation?
A. Borrowers benefit from deflation as the value of their debt decreases in real terms.
B. Inflation transfers wealth from lenders to borrowers.
C. Falling prices benefit consumers and are therefore always good for the economy.
D. Inflation makes it difficult for consumers and firms to attain the message about scarcity of resources (sent by relative prices) and is therefore always bad for the economy.

answer

B. Inflation transfers wealth from lenders to borrowers.

question

According to the two models we learned, the Keynesian Cross model represents the ________ while the labor market (WS-PS) shows what happens in the ___________.

answer

short-run, medium-run

question

When the economy enters an overheating period, the goal of monetary policy is to ___________ investment spending by _________ the real interest rate.

answer

decrease; increase

question

The fraction of a change in income that is consumed or spent is called the marginal propensity of consume (MPC). Suppose you either choose to consume or save your total income (or income equals to the sum of consumption and saving), if you experience a $400 rise in your income and you consume $320, your MPC equals to

answer

0.8

question

The fraction of a change in income that is consumed or spent is called the marginal propensity of consume (MPC). Suppose you either choose to consume or save your total income. This makes the sum of MPC and the marginal propensity to save (MPS) equals to 1. if you experience a $400 rise in your income and you consume $320, your MPS equals to

answer

0.2

question

If consumption is $30,000 when income is $35,000, and consumption increases to $36,000 when income increases to $43,000, the MPC is

answer

0.75

question

If consumption is $30,000 when income is $35,000, and consumption increases to $36,000 when income increases to $43,000, the MPS is

answer

0.25

question

f the consumption function is of the form C = 80 + 0.4Y, the MPS equals

answer

0.6

question

If the consumption function is of the form C = 80 + 0.4Y, consumption at an income level of 200 is

answer

160

question

If the consumption function is of the form C = 80 + 0.4Y, saving at an income level of 200 is

answer

question

Suppose that out of the original 100 increase in government spending, 80 will be recycled back into purchases of domestically produced goods and services. Following this multiplier effect, what value will be recycled in the next round in the cycle?

answer

question

Suppose that out of the original 100 increase in government spending, 70 will be recycled back into purchases of domestically produced goods and services. Following this multiplier effect, what value will be recycled in the next round in the cycle?

answer

question

When the economy is in a recession, the government will want to increase output. If the multiplier equals 2.5 and the government increases spending by 200, how much will output increase by?

answer

500

question

The economy is in a recession and the government wants to increase output. If the multiplier equals 3 and the government increases spending by 250, how much will output increase by?

answer

750

question

Assuming there is no government or foreign sector, the formula for the multiplier is

answer

1/(1-MPC)

question

Assume there is no government or foreign sector. If the MPS is 0.05, the multiplier is

answer

question

According to the "paradox of thrift," as individuals increase their saving,

answer

income in the economy will fall because the decreased consumption that results from increased saving causes the economy to contract.

question

According to the "paradox of thrift," increased efforts to save will cause a(n)

answer

decrease in income and an overall decrease in saving.

1 of 113

question

Investment (I) includes:

answer

the amount spent on new factories and machinery.

question

Consumption is the purchase of goods and services by:

answer

households

question

Income Mexican citizens earn in the U.S. counts in

answer

US GDP

question

The largest component of the expenditure side of GDP in the United States is:

answer

Consumption

question

The most volatile component of GDP in the United States and Europe is:

answer

Investment

question

The correct formula to calculate GDP based on its spending components is:

answer

Consumption + Investment + Government Spending + Exports - Imports

question

answer

$1600

question

answer

$500

question

Consumption in the United States is about ____________ of GDP.

answer

68%

question

Shares of personal consumption in GDP has been ________ since 1980s in the US.

answer

increasing

question

Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then:

answer

imports exceed exports by $50 billion.

question

Trade deficit means

answer

imports higher than exports

question

In the US, shares of investment in GDP have been _________ .

answer

fluctuating

question

In the US, shares of investment in GDP have always _________ before economic recessions.

answer

declined

question

From the US GDP, shares of government spending have always ___________ during economic recessions.

answer

increased

question

In a closed economy with no government, aggregate expenditure is

answer

consumption plus investment.

question

answer

10 and .8

question

answer

$10 million and $18 million

question

The Tiny Tots Toy Company manufactures only sleds. In 2010 Tiny Tots manufactured 10,000 sleds, but sold only 8,000 sleds. In 2010 Tiny Tots' change in inventory was

answer

2,000 sleds

question

The Jackson Tool Company manufactures only tools. In 2010 Jackson Tools manufactured 20,000 tools, but sold 21,000 tools. In 2010 Jackson Tools' change in inventory was

answer

-1,000 tools

question

answer

-$20 billion

question

answer

$50 billion

question

Actual investment equals to the sum of planned investment and a change in inventory investment. If planned investment exceeds actual investment,

answer

there will be a decline in inventories.

question

Actual investment equals to the sum of planned investment and a change in inventory investment. If Inventory investment is higher than firms planned,

answer

actual investment is greater than planned investment.

question

In Keynesian macroeconomic model, equilibrium is defined as that point at which

answer

aggregate expenditure equals aggregate output.

question

Based on the table of Aggregate expenditure-output we practiced in class, if aggregate output is greater than planned spending, then

answer

unplanned inventory investment is positive.

question

national accounts

answer

keep track of the flows of money between different sectors of the economy

question

The multiplier represents the

answer

total amount of additional increases in consumption spending induced by an initial change in aggregate expenditure.

question

AD for Full economy

answer

AD = C + I + G + X -M

question

AD for closed economy with government

answer

AD = C + I + G

question

AD for Closed economy without government

answer

AD = C + I

question

Total income

answer

(Y) = C + S + T

question

Disposable income

answer

(Yd) = C + S

question

the economy's total production of goods and services for a given time period

answer

aggregate output

question

the amount of goods and services in the economy that will be purchased at all possible price levels

answer

aggregate demand

question

The total income received
by all factors of production in a given period.

answer

aggregate income

question

the fixed amount one will spend, independent of income

answer

Autonomous consumption

question

Those additions to capital stock and
inventory that are planned by firms.

answer

planned investment

question

The actual amount of investment that takes
place; it includes items such as unplanned changes in inventories.

answer

actual investment

question

A variable that is assumed not to depend on the state of the economy—that is, it does not change when the economy changes.

answer

exogenous variable

question

an increase in general price level

answer

inflation

question

a constant price level from year to year

answer

zero inflation

question

a decrease in the general price level

answer

deflation

question

a decrease in the rate of inflation

answer

disinflation

question

real interest rate = nominal interest rate - inflation rate

answer

fischer equation

question

Higher employment may result in inflation

answer

phillips curve

question

The difference between the real wage required to incentivize effort, and the real wage that gives firms enough profits to stay in business.

answer

bargaining gap

question

the unemployment rate which
keeps inflation constant.

answer

inflation stabilizing rate

question

unexpected change on the supply side of the economy

answer

supply shock

question

In the short run, what is one of the most important issues for macroeconomics?

answer

relationship between fluctuations in demand and output

question

In the medium run, what is one of the most important issues for macroeconomics?

answer

inflation/deflation

question

In the long run, what is one of the most important issues for macroeconomics?

answer

labor productivity, institutions, technological progress

question

According to Financial Time's article written by Larry Summers, why he claimed the Phillips curve is already broken down?

answer

lower unemployment has not resulted in higher inflation in the past few years.

question

According to Financial Time's article written by Larry Summers, gig economy and automation cause a _________ in labor's bargaining power.

answer

decrease

question

According to Financial Time's article written by Larry Summers, another reason that has decreased the bargaining power of labor in the U.S. is that _______.

answer

labor unions shrink down.

question

While _____ is considered as a flow variable, ____ is considered as a stock variable.

answer

investment; capital

question

flow variables

answer

measured per period of time (GDP, income, saving, investment)

question

stock variables

answer

measured at a point in time (quantity of money, value of houses, capital stock)

question

When you try to measure ______, it must be at a specific date such as the 1st January of 1999. But when you measure _______, it must be just a certain period of time such as during 1999.

answer

wealth; income

question

Inequality can be good for the society because _______.

answer

inequality incentivizes people to work harder.

question

Inequality can be bad for the society because _______.

answer

huge inequality may disincentivize people to work harder since they realize it became harder to have upward social mobility.

question

What is the measurement that economists use to measure income/wealth inequality?

answer

Gini coefficient

question

To draw a Lorenz curve, we must put the _____ of the society to the left of the horizontal line.

answer

poorest

question

On the Lorenz curve diagram, the 45 degree line represents a _________.

answer

perfect equality

question

If only one person in the society owns all income, the Gini coefficient will equal to _______. That represents a maximum inequality.

answer

question

If everyone in the society receives the same amount of income, the Gini coefficient will equal to _______. The reflects a perfect equality.

answer

question

In macroeconomics, the ________ is used to analyze fluctuations of demand in the short-run.

answer

Keynesian-cross model

question

In macroeconomics, the _________ is (are) used to construct the Phillips Curve (the relation ship between inflation and unemployment) in the medium run.

answer

Keynesian-cross model and WS-PS model

question

In the Keynesian-cross model, __________ are assumed to be constant as to show the short-run case.

answer

wage & price

question

In the long run, the main factor that can increase labor productivity is ___________.

answer

technological progress

question

According to the original Phillips curve, if the bargaining gap equals to 3% in the first year and so on, inflation would equal to _______ in the third year.

answer

question

According to the original Phillips curve, if the bargaining gap equals to 2% in the first year and so on, inflation would equal to _______ in the fourth year.

answer

question

According to the original Phillips curve, if the bargaining gap equals to 2% in the first year and so on, inflation would equal to _______ in the third year.

answer

question

answer

question

answer

question

The productivity of workers is defined as the

answer

output produced by a worker per hour

question

Labor productivity can be decreased by

answer

decrease in output

question

If a firm can produce total output valued at $8000 by employing 50 people, labor productivity equals to

answer

160

question

If a firm can produce total output valued at $50,000 by employing 20 people, labor productivity equals to

answer

2500

question

If a firm has a production valued at $40,000, it employs ________ workers since their labor productivity equals to 500.

answer

question

If a firm has a production valued at $20,000, it employs ________ workers since their labor productivity equals to 400.

answer

question

If a firm has labor productivity equals to 100 and it employs 500 people, its production would equal to

answer

$50,000

question

If a firm has labor productivity equals to 600 and it employs 30 people, its production would equal to _______.

answer

$18,000

question

According to Unit 16, People who fear that increased technology will destroy jobs and lead to higher long-run unemployment rates are often called __________ after ________________.

answer

Luddites; Ned Ludd

question

The process by which some jobs are created and some are destroyed as the economy adopts new technology is known as:

answer

creative destruction

question

Regarding labor productivity, it should _________ if automation has a huge impact on employment in the past few years.

answer

significantly increase

question

If labor productivity is _________, it should imply that automation does not have any significant effect on the labor market.

answer

constant

question

According to the Fisher equation, inflation equals to

answer

nominal interest rate minus real interest rate

question

According to the Fisher equation, if the nominal interest rate is 5% and inflation is 2%, then the real interest rate is _________.

answer

question

According to the Fisher equation, if the nominal interest rate is 1% and inflation is 3%, then the real interest rate is:

answer

-2%

question

According to the Fisher equation, when the nominal interest rate equals to 8% and inflation is 4%, the real interest rate equals to ____________.

answer

question

According to the Fisher equation, when the nominal interest rate equals to 10% and deflation is 5%, the real interest rate equals to ____________.

answer

15%

question

According to the Fisher equation, when the nominal interest rate and the real interest rate both equal to 7%, we know that ________.

answer

there is neither inflation or deflation

question

According to the Fisher equation, if you were a lender, you would prefer the period of __________, since you will receive the real interest rate higher than the nominal interest rate.

answer

deflation

question

According to the Fisher equation, if you were a borrower, you would prefer the period of __________, since you pay interest less than its real value.

answer

inflation

question

answer

B. Inflation transfers wealth from lenders to borrowers.

question

According to the two models we learned, the Keynesian Cross model represents the ________ while the labor market (WS-PS) shows what happens in the ___________.

answer

short-run, medium-run

question

When the economy enters an overheating period, the goal of monetary policy is to ___________ investment spending by _________ the real interest rate.

answer

decrease; increase

question

answer

0.8

question

answer

0.2

question

If consumption is $30,000 when income is $35,000, and consumption increases to $36,000 when income increases to $43,000, the MPC is

answer

0.75

question

If consumption is $30,000 when income is $35,000, and consumption increases to $36,000 when income increases to $43,000, the MPS is

answer

0.25

question

f the consumption function is of the form C = 80 + 0.4Y, the MPS equals

answer

0.6

question

If the consumption function is of the form C = 80 + 0.4Y, consumption at an income level of 200 is

answer

160

question

If the consumption function is of the form C = 80 + 0.4Y, saving at an income level of 200 is

answer

question

answer

question

answer

question

When the economy is in a recession, the government will want to increase output. If the multiplier equals 2.5 and the government increases spending by 200, how much will output increase by?

answer

500

question

The economy is in a recession and the government wants to increase output. If the multiplier equals 3 and the government increases spending by 250, how much will output increase by?

answer

750

question

Assuming there is no government or foreign sector, the formula for the multiplier is

answer

1/(1-MPC)

question

Assume there is no government or foreign sector. If the MPS is 0.05, the multiplier is

answer

question

According to the "paradox of thrift," as individuals increase their saving,

answer

income in the economy will fall because the decreased consumption that results from increased saving causes the economy to contract.

question

According to the "paradox of thrift," increased efforts to save will cause a(n)

answer

decrease in income and an overall decrease in saving.

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