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43 Cards in this Set
- Front
- Back
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which of the following would be counted as a final good for inclusion in GDP?
a) a piece of glass bought this year by consumer to fix a broken window b)a sheet of glass produced this year by Ford for windows in a new car produced this year. c) a tire produced this year & sold to a car maker for a new car sold this year d) all of the above |
a) the piece of glass bought this year by a consumer to fix a broken window.
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gross domestic product includes:
a)intermediate as well as final goods b)foreign produced goods as well as domestically produced goods c)used goods sold in the current time period d)only final goods & services produced within the U.S. |
d) only final goods & services produced within the U.S.
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according to national income accounting rules, which sector of he economy can purchase both final and intermediate goods?
a) households only b) business only c) governments only d)the rest-of-the-world sector e) all sectors |
b. business only
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Suppose nominal GDP in 2002 is &8 trillion and the price index value is 200. what is the value of real GDP?
a. 8 trillion b. 4 trillion c. 16 trillion d. none of these are correct |
b. 4 trillion
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GDP includes:
a. the negative attributes in our quest for more goods&services such as soil erosion & deforested landscape b. all quality improvements resulting from higher quality goods replacing inferior goods. c. the cleaning-up expenses associated with pollution d. the value of leisure time e. the illegal activities related to the underground economy. |
c. the cleaning-up expenses associated with pollution.
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when net experts are negative:
a. exports are greater than investments b. depreciation is greater than net investment c. imports are greater than investments d. exports are greater than imports e. imports are greater than exports. |
e. imports are greater than exports
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the sum of the saving & dissaving in the economy must always be:
a. positive b. negative c. zero d. none of the above |
c. zero
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depreciation measures:
a. net investment less gross investment b. the loss of productive ability due to capital intensive production c. capital that is wasted in the production process d. the value of existing capital stock used up in the production process e. the decline in the value of inventories caused by inflation |
d. the value of existing capital stock used up in the production process.
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the largest component of GDP is:
a. personal consumption expenditures b. government spending c. durable goods d. net exports e. gross profit domestic investment |
a. personal consumption expenditures
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the circular flow model assumes:
a. businesses & households own the factors of production b. businesses own the factors of production c. government owns the factors of production d. households own the factors of production e. firms, households, & the government own the factors of production |
d. households own the factors of production
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all final goods & services that make up GDP can be expressed in the form:
a. GDP=C+I-G+(x+m) b. GDP=C+I+G+(X+M) c. GDP=C+I+G+(x-m) d. GDP+=C+I+(x-m) e. GDP=C+I+G |
c. GDP=C+I+G+(x-m)
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which of the following would not be included in the government expenditures category of GDP?
a. a bakery's purchase of a new over b. a retailer's addition to it inverntories c. newly built residential construction d. a bank's purchase of a U.S. treasure bond |
d. a bank's purchase of a U.S. treasury bond.
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which of the following would not be included in the government expenditures category of GDP?
a. the payments made to Social Security recipients b. the expenditures made to repair a highway c. the spending for professors at state university d. the purchase for new china for White House functions |
a. the payments made to Social Security recipients
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More than 70 percent of national income can be attributed to:
a. compensation of employees b. rental income c. corporate profit d. net interest e. proprietors' income |
a. compensation of employees
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real GDP means GDP:
a. valued at prices in a base year b. that does not change from year to year c. corrected for changes in quality d. valued at prices at which goods are actually sold |
a. valued at prices in a base year
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a phase in the business cycle in which the decline in the economy's real GDP persists for at least 1/2 year is known as:
a. depression b. recession c. downtick d. disequilibrium e. limited demad |
b. recession
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economic indicators, like unemployement claims and the average workweek, which change before real GDP changes, are called:
a. leading indicators b. the employee plus the unemployed who are not in the military c. only individuals who are actually at work during a given week. d. civilians who are not in prisons or mental hospitals |
b. the employed plus the unemployed who are not in the military.
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the civilian unemployment rate measures the percentage of:
a. people in the current [ or actual] civilian labor force who are without jobs and actively seeking jobs, b. the U.S. population that is out of work and actively seeking a job c. the civilian non-institutionlized population aged 16yrs or more that are working part time but searching for full time work d. the U.S. population over age 21 who are without jobs and actively seeking jobs |
a. people in the current [or actual] civilian labor force who are without jobs and actively seeking jobs
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if a sizeable number of workers were switched from full time to half time [paid] employment then the official unemployment rate would be:
a. rise b. fall c. remain unchanged d. react unpredictably |
c. remain unchanged
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unemployment that is caused by the fact that the skills required for available jobs are not the skills that currently unemployed workers possess is classified as:
a. frictional unemployment b. structural unemployment c. cyclical unemployment d. mismatch unemloyment |
b. structural unemployment
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eric lost his job cause of a recession caused his employer's sales to fall. this is an example of:
a. involuntary unemployment b. frictional unemployment c. structural unemployment d. cyclical unemployment |
d. cyclical unemployment
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"full employment" is the situation in which the economy operates at the level of production at which all unemployment is due:
a. structural & frictional unemployment b. cyclica & frictional unemployment c. structural & cyclical unemployment d. structural, frictional, & cyclical unemployment |
a. structural & frictional unemployment
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which of the following does not occur when the unemployment rate rises?
a. reduced total output produced in the economy b. deterioration of skills as the unemployed remain idle c. loss of incomes to families d. loss of self-esteem on the part of unemployed workers e. improvements in the health & productivity of the unemployed. |
e. improvements in the health & productivity of the unemployed
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a long & deep recession in the business cycle lasting several years is classified as:
a. peak b. trough c. recession d. depression e. recovery |
d. depression
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if the owners of some economic resources suddenly decide that they do not wish to commit their resources to the production process in a given year, the result is that:
a. the production possibilities schedule shifts inward. b. the production possibilities schedule shifts outward c. the civilian unemployment will rise d. opportunity costs of production will necessarily rise. |
a. the production possibilities schedule shifts inward.
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if currently unemployed workers have the skills & abilities to meet the skil requirements of available jobs, but are unaware of these openings, this type of unemployment is classified as:
a. season unemployment b. cyclical unemployment c. structural unemployment d. frictional unemployment e. none of the above |
d. frictional unemployment
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the government's chief forecasting guage for business cycles is the:
a. unemployment rate b. real GDP c. personal income index d. index of leading indicators |
d. index of leading indicators
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economic indicators, like unemployment claims & average workweek which change before real GDP changes are called:
a. leading b. lagging c. coincident d. structural |
c. coincident
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people who are not currently employed, but say they want a job, are counted as unemployed only if they:
a. have previously held a job b. are actively seeking for employment c. are willing to accept reasonable offer d. are between 16 and 65 yrs old e. are willing to accept any offer of employment |
b. are actively seeking employment.
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which one of the following persons is not a member of the actual [or current] labor force?
a. a full time student who devotes all her time to her classes & neither works nor is looking for a job b. a person who works 30 hrs a week at burger king and goes to school at night. c. the man who was fired last week adn is searching for a new job, d. the president of the US e. a professional athlete currently under contract to a professional team |
a. a full time student who devotes all her time to her classes & neither works nor is looking for a job
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in period of high inflation:
a. people want to hold more of their wealth in the form of money b. the purchasing power of money is decreasing c. nobody wants to work & earn income d. low nominal interest rates are likely to result e. nobody wants to buy goods & services |
b. the purchasing power of money is decreasing
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price indexes like the CPI are calculated using a base year. the term base year refers to:
a. the first year that price date are available b. any year in which inflation was higher than 5% c. the most recent year in which the business cycle hit the trough d. an arbitrarily chosen reference year. |
d. an arbitrarily chosen reference year.
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the consumer price index [CPI]:
a. adjusts each year for changes in product quality b. includes seperate market baskets of goods and services for both base and current years c. includes only goods & services bought by typical urban consumer. d. includes goods & services purchased by households, business, government, and the rest-of-the-world sectors |
c. includes only goods and services bought by typical urban consumer.
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suppose the price of gasoline rises and consumers cut back on their use of gasoline relative to other consumer goods. This situation would contribute to which bias in the consumer price index?
a. substitution bias b. transportation bias c. quality bias d. indexing bias |
a. substitution
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the real interest rate is defined as the:
a. actual interest rate b. fixed-rate on consumer loans c. nominal interest rate minus the inflation rate d. nominal interest rate plus the inflation rate |
c. nominal interest rate minus the inflation rate.
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the substitution bias believed to cause the consumer price index to:
a. overstate the true rate of inflation b. understate the true rate of inflation c. understate the true GDP deflator d. none of the above |
a. overstate the true rate of inflation
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the base year in the consumer price index is;
a. given a value of zero b. a year chosen as a reference for prices in all other years. c. always the first year int he current decade d. established by law |
b. a year chosen as a reference for prices in all other years.
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which of the following would cause the consumer price index to understate changes in the cost of living?
a. substitution bias b. deteriorating quality of products whose prices did not change c. improving quality of products whose prices did not change d. law of demand bias |
b. deteriorating quality of products who prices did not change
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when inflation rate rises, the purchasing power of nominal income:
a. remains unchanged b. decreases c. increases d. changes by the inflation rate minus one |
b. decreases
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if the rate of inflation in a given time period turns out to be higher than lenders and borrowers anticipated, & if interest rates on loans are fixed then the effect will be:
a. redistribution of wealth from borrowers to lenders b. a redistribution of wealth from lenders to borrowers c. no change in the ditribution of wealth between lenders and borrowers a redistribution that causes bother lenders and borrowers to be better off |
b. a redistribution of wealth from lenders to borrowers
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if the inflation rate exceeds the nominal rate of interest on loans that lenders have extended to borrowers:
a. the real interest rate on the loans is a negative value b. lenders lose c. borrowers gain d. none of the above |
a. the real interest rate on the loans is a negative value.
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the classical economists argued that the production of goods & services [supply] generates an equal amount of total income and in turn, total spending. the theory is called:
a. keynes' general theory b. say's law c. the animal spirits theory d. the lay of autonomous consumption |
b. say's law
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according to the classical theory the most apporopriate policy for government to follow in times of high unemployment is to:
a. increase the minimum wage b. impose wage and price control c. stimulate aggregate demand d. cut taxes e. do nothing |
e. do nothing
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