ECON-101 Exam 2 - Assignment Essays

question

Suppose that inventories were $40 billion in 2012 and $50 billion in 2013. In 2013, national income accountants would _____.

answer

add $10 billion to other elements of investment in calculating total investment

question

Consumption of fixed capital (depreciation) can be determined by _____.

answer

subtracting net investment from gross investmen

question

Net foreign factor income is _____.

answer

the difference between the income people in a country receive from resources owned in foreign countries and the income people in foreign countries receive from resources owned domestically

question

In the expenditures approach of national income accounting, C, I, and G include expenditures for _____.

answer

domestically-produced, as well as imported, goods and services

question

"Net foreign factor income" in the national income accounts refers to the difference between the _____.

answer

income Americans gain from supplying resources abroad and the income that foreigners earn by supplying resources in the U.S.

question

If an economy produces 100 pencils and 100 pens, and pencils sell for twice as much as pens, _____.

answer

pencils are weighted as twice as important in the economy compared to pens

question

The U.S. produces and sells millions of different products. To aggregate them together into a single measure of domestic output, the quantity of each good produced is weighted by its _____.

answer

market price

question

Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2, except that business inventories increased by $10 billion. GDP in year 2 is _____.

answer

$210 billion

question

What is an intermediate good?

answer

a product used to produce a final good or finished product

question

GDP can be calculated by summing _____.

answer

consumption, investment, government purchases, and net exports

question

How to calculate GDP Price Index

answer

Nominal GDP/Real GDP times 100

question

What do government purchases include in national income accounting?

answer

Purchases by federal, state, and local governments

question

GDP tends to overstate economic well-being because it takes into account _____.

answer

total spending to deal with the adverse health effects of some products

question

Nominal GDP is _____.

answer

the sum of all monetary transactions involving final goods and services that occur in the economy in a year

question

Nominal GDP is the market value of _____.

answer

all final goods and services produced in an economy in a given year

question

The value of corporate stocks and bonds traded in a given year is _____.

answer

excluded from the calculation of GDP because it does not represent new production

question

When gross investment is positive, net investment _____.

answer

may be either positive or negative

question

When a firm builds a new factory, this is an example of an investment in

answer

physical capital.

question

Real GDP per capita is a

answer

better measure of the physical environment than output.

question

The cost of a higher living standard in the future is giving up

answer

current consumption.

question

The principle that if the amount of labor and other inputs is held constant, then the greater the amount of capital in use, the less an additional unit of capital adds to production is called the principle of

answer

diminishing returns to capital.

question

Economic growth can best be portrayed as a(n)

answer

outward shift of the production possibilities frontier.

question

Usually an abundance of natural resources ______ labor productivity.

answer

increases

question

Suppose there are two economies, Alpha and Beta, that have the same production possibilities frontiers. If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future

answer

Beta will experience greater economic growth than Alpha.

question

Human capital is

answer

the talents, training, and education of workers.

question

To increase future living standards by pursuing higher current rates of investment spending, an economy must

answer

reduce current rates of consumption spending.

question

In the expansion phase of a business cycle

answer

employment and output increase.

question

The inflation rate measures the percentage growth rate of

answer

the CPI from one year to the next

question

For a given real interest rate, the nominal interest must ____________ if expected inflation ______________.

answer

increase; increases

question

If labor market institutions change so that it becomes easier to find a job, and unemployed people are unemployed for smaller durations of time, what would happen to the natural rate of unemployment?

answer

It would decrease.

question

Which measure of inflation would include consumer goods and capital goods?

answer

the GDP Price Index

question

The presence of discouraged workers

answer

may cause the official unemployment rate to understate the true amount of unemployment.

question

Which of the following is the correct way to calculate the unemployment rate?

answer

(unemployed/labor force) x 100

1 of 33

question

Suppose that inventories were $40 billion in 2012 and $50 billion in 2013. In 2013, national income accountants would _____.

answer

add $10 billion to other elements of investment in calculating total investment

question

Consumption of fixed capital (depreciation) can be determined by _____.

answer

subtracting net investment from gross investmen

question

Net foreign factor income is _____.

answer

the difference between the income people in a country receive from resources owned in foreign countries and the income people in foreign countries receive from resources owned domestically

question

In the expenditures approach of national income accounting, C, I, and G include expenditures for _____.

answer

domestically-produced, as well as imported, goods and services

question

"Net foreign factor income" in the national income accounts refers to the difference between the _____.

answer

income Americans gain from supplying resources abroad and the income that foreigners earn by supplying resources in the U.S.

question

If an economy produces 100 pencils and 100 pens, and pencils sell for twice as much as pens, _____.

answer

pencils are weighted as twice as important in the economy compared to pens

question

The U.S. produces and sells millions of different products. To aggregate them together into a single measure of domestic output, the quantity of each good produced is weighted by its _____.

answer

market price

question

answer

$210 billion

question

What is an intermediate good?

answer

a product used to produce a final good or finished product

question

GDP can be calculated by summing _____.

answer

consumption, investment, government purchases, and net exports

question

How to calculate GDP Price Index

answer

Nominal GDP/Real GDP times 100

question

What do government purchases include in national income accounting?

answer

Purchases by federal, state, and local governments

question

GDP tends to overstate economic well-being because it takes into account _____.

answer

total spending to deal with the adverse health effects of some products

question

Nominal GDP is _____.

answer

the sum of all monetary transactions involving final goods and services that occur in the economy in a year

question

Nominal GDP is the market value of _____.

answer

all final goods and services produced in an economy in a given year

question

The value of corporate stocks and bonds traded in a given year is _____.

answer

excluded from the calculation of GDP because it does not represent new production

question

When gross investment is positive, net investment _____.

answer

may be either positive or negative

question

When a firm builds a new factory, this is an example of an investment in

answer

physical capital.

question

Real GDP per capita is a

answer

better measure of the physical environment than output.

question

The cost of a higher living standard in the future is giving up

answer

current consumption.

question

answer

diminishing returns to capital.

question

Economic growth can best be portrayed as a(n)

answer

outward shift of the production possibilities frontier.

question

Usually an abundance of natural resources ______ labor productivity.

answer

increases

question

answer

Beta will experience greater economic growth than Alpha.

question

Human capital is

answer

the talents, training, and education of workers.

question

To increase future living standards by pursuing higher current rates of investment spending, an economy must

answer

reduce current rates of consumption spending.

question

In the expansion phase of a business cycle

answer

employment and output increase.

question

The inflation rate measures the percentage growth rate of

answer

the CPI from one year to the next

question

For a given real interest rate, the nominal interest must ____________ if expected inflation ______________.

answer

increase; increases

question

If labor market institutions change so that it becomes easier to find a job, and unemployed people are unemployed for smaller durations of time, what would happen to the natural rate of unemployment?

answer

It would decrease.

question

Which measure of inflation would include consumer goods and capital goods?

answer

the GDP Price Index

question

The presence of discouraged workers

answer

may cause the official unemployment rate to understate the true amount of unemployment.

question

Which of the following is the correct way to calculate the unemployment rate?

answer

(unemployed/labor force) x 100

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