Macroeconomic Chapter 24, 25, & 26

question

Macroeconomics is mostly focused on:

answer

the economy as a whole.

question

The term "recession" describes a situation where:

answer

output and living standards decline

question

Real GDP measures the:

answer

value of final goods and services produced within the borders of a country, corrected for price changes.

question

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

answer

Nominal GDP would rise, but real GDP would be unchanged.

question

Real GDP is preferred to nominal GDP as a measure of economic performance because:

answer

nominal GDP uses current prices and thus may over- or understate true changes in output.

question

Unemployment describes the condition where:

answer

a person cannot get a job but is willing to work and is actively seeking work.

question

Inflation is defined as:

answer

an increase in the overall level of prices

question

Why are economists concerned about inflation?

answer

Inflation lowers the standard of living for people whose income does not increase as fast as the price level.

question

The three statistics that are the main focus for those measuring macroeconomic health are:

answer

real GDP, inflation, and unemployment.

question

Demand shocks:

answer

refer to unexpected changes in the desires of households and businesses to buy goods and services.

question

Which of the following is an example of a demand shock?

answer

Consumers become worried about job loss and buy fewer goods and services than expected.

question

Supply shocks:

answer

occur when sellers face unexpected changes in the availability and/or prices of key inputs.

question

Which of the following is an example of a supply shock?

answer

A dramatic increase in energy prices increases production costs for firms in the economy.

question

The agency responsible for compiling the National Income Product Accounts for the U.S. economy is the:

answer

Bureau of Economic Analysis.

question

The system that measures the economy's overall performance is formally known as:

answer

national income accounting.

question

A nation's gross domestic product (GDP):

answer

is the dollar value of all final output produced within the borders of the nation during a specific period of time.

question

A nation's gross domestic product (GDP):

answer

can be found by summing C + Ig + G + Xn.

question

Final goods and services refer to:

answer

goods and services purchased by ultimate users, rather than for resale or further processing.

question

If intermediate goods and services were included in GDP:

answer

the GDP would be overstated.

question

Which of the following is an intermediate good?

answer

The purchase of baseball uniforms by a professional baseball team.

question

Net exports are:

answer

exports less imports

question

The largest component of total expenditures in the United States is:

answer

consumption.

question

Transfer payments are:

answer

excluded when calculating GDP because they do not reflect current production.

question

GDP is:

answer

$121

question

The total amount of income earned by U.S. resource suppliers in a year, plus taxes on production and imports, is measured by:

answer

national income

question

A price index is:

answer

a comparison of the current price of a market basket to a fixed point of reference.

question

Real GDP in year 3 is:

answer

$150

question

Real GDP is:

answer

the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.

question

Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?

answer

Goods and services produced in the underground economy.

question

Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?

answer

The child-care services provided by stay-at-home parents.

question

Growth is advantageous to a nation because it:

answer

lessens the burden of scarcity.

question

Given the annual rate of economic growth, the "rule of 70" allows one to:

answer

calculate the number of years required for real GDP to double.

question

The number of years required for real GDP to double can be found by:

answer

dividing 70 by the annual growth rate

question

At an annual growth rate of 7 percent, real GDP will double in about:

answer

10 years.

question

A competitive market system:

answer

encourages growth by allowing producers to make profitable investment decisions based on market signals.

question

Free trade:

answer

encourages growth by promoting the rapid spread of new inventions and innovations.

question

Which of the following is not a supply factor in economic growth?

answer

Aggregate expenditures of households, businesses, and government.

question

Economic growth can be portrayed as:

answer

an outward shift of the production possibilities curve.

question

Realized economic growth is best represented by a:

answer

move from X on AB to Y on CD.

question

The most likely cause of a shift from AB to CD would be a(n):

answer

increase in productivity.

1 of 40

question

Macroeconomics is mostly focused on:

answer

the economy as a whole.

question

The term "recession" describes a situation where:

answer

output and living standards decline

question

Real GDP measures the:

answer

value of final goods and services produced within the borders of a country, corrected for price changes.

question

If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP?

answer

Nominal GDP would rise, but real GDP would be unchanged.

question

Real GDP is preferred to nominal GDP as a measure of economic performance because:

answer

nominal GDP uses current prices and thus may over- or understate true changes in output.

question

Unemployment describes the condition where:

answer

a person cannot get a job but is willing to work and is actively seeking work.

question

Inflation is defined as:

answer

an increase in the overall level of prices

question

Why are economists concerned about inflation?

answer

Inflation lowers the standard of living for people whose income does not increase as fast as the price level.

question

The three statistics that are the main focus for those measuring macroeconomic health are:

answer

real GDP, inflation, and unemployment.

question

Demand shocks:

answer

refer to unexpected changes in the desires of households and businesses to buy goods and services.

question

Which of the following is an example of a demand shock?

answer

Consumers become worried about job loss and buy fewer goods and services than expected.

question

Supply shocks:

answer

occur when sellers face unexpected changes in the availability and/or prices of key inputs.

question

Which of the following is an example of a supply shock?

answer

A dramatic increase in energy prices increases production costs for firms in the economy.

question

The agency responsible for compiling the National Income Product Accounts for the U.S. economy is the:

answer

Bureau of Economic Analysis.

question

The system that measures the economy's overall performance is formally known as:

answer

national income accounting.

question

A nation's gross domestic product (GDP):

answer

is the dollar value of all final output produced within the borders of the nation during a specific period of time.

question

A nation's gross domestic product (GDP):

answer

can be found by summing C + Ig + G + Xn.

question

Final goods and services refer to:

answer

goods and services purchased by ultimate users, rather than for resale or further processing.

question

If intermediate goods and services were included in GDP:

answer

the GDP would be overstated.

question

Which of the following is an intermediate good?

answer

The purchase of baseball uniforms by a professional baseball team.

question

Net exports are:

answer

exports less imports

question

The largest component of total expenditures in the United States is:

answer

consumption.

question

Transfer payments are:

answer

excluded when calculating GDP because they do not reflect current production.

question

GDP is:

answer

$121

question

The total amount of income earned by U.S. resource suppliers in a year, plus taxes on production and imports, is measured by:

answer

national income

question

A price index is:

answer

a comparison of the current price of a market basket to a fixed point of reference.

question

Real GDP in year 3 is:

answer

$150

question

Real GDP is:

answer

the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.

question

Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?

answer

Goods and services produced in the underground economy.

question

Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?

answer

The child-care services provided by stay-at-home parents.

question

Growth is advantageous to a nation because it:

answer

lessens the burden of scarcity.

question

Given the annual rate of economic growth, the "rule of 70" allows one to:

answer

calculate the number of years required for real GDP to double.

question

The number of years required for real GDP to double can be found by:

answer

dividing 70 by the annual growth rate

question

At an annual growth rate of 7 percent, real GDP will double in about:

answer

10 years.

question

A competitive market system:

answer

encourages growth by allowing producers to make profitable investment decisions based on market signals.

question

Free trade:

answer

encourages growth by promoting the rapid spread of new inventions and innovations.

question

Which of the following is not a supply factor in economic growth?

answer

Aggregate expenditures of households, businesses, and government.

question

Economic growth can be portrayed as:

answer

an outward shift of the production possibilities curve.

question

Realized economic growth is best represented by a:

answer

move from X on AB to Y on CD.

question

The most likely cause of a shift from AB to CD would be a(n):

answer

increase in productivity.

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