macro

EXAM 1

64 cards·by rburden44

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income mexican citizens earn in the US counts in:

Mexican GNP

The concept of "market clearing" is adopted and defended by:

Classical economists

T/F Stock market transactions are part of GNP?

False

An increase in the overall price level is know as:

inflation

The demanders in the goods-and-services market are:

households, government, business firms, and the rest of the world

Aggregate behavior is:

the behavior of all households and firms together

question

answer

In a business cycle, a peak represents the end of ____ and a tough represents the end of ___.

an expansion; a recession

If real GDP in 2010 using 2009 prices is lower than nominal GDP of 2010, then:

prices in 2010 are higher than prices in 2009

Which of the following is a topic studies by Macroeconomics?

gross domestic product

according to the classical model, unemployment:

could not persist because wages would fall to eliminate the excess supply of labor

in the goods-and-servives market, households:

only demand

The term business cycle refers to the:

short-term ups and downs in the level of economic activity

Which of the following would NOT be counted in 2010's GDP?

the value of a 2008 boat you purchased from a boat dealer in 2010

An increase in the value of an asset over the price initially paid for it is a:

capital gain

According to the classical economists, the economy:

is self-correcting

T/F A weakness in the concept of GDP is that it ignores income distribution.

TRUE

The largest income component of GDP is:

compensation of employees

Macro policies became more influenced by Keynes' theories starting with:

the Great Depression

The trend of the economy is:

the long-run growth path of the economy

In the circular flow diagram, the different payments made by firms to households include:

wages and profits

Gross domestic product measures:

value of all output in economy, total spending of everyone and total income of everyone in economy

Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are:

sticky prices

Profits earned in the US by foreign-owned companies are included in:

the US GDP, but not GNP

The GDP deflator is the:

ratio of nominal GDP to real GDP times 100

T/F If nominal GDP rises, then so must real GDP.

FALSE

Net interest is the interest on loans paid by:

businesses

T/F Value added is the difference between the value of goods as they leave a stage of production and cost of the goods as they entered tha

TRUE

The unemployment rate equals:

(labor force-employed)/labor force

Policies designed to affect the quantity of money are:

monetary policies

Real GDP is gross domestic product measured:

in the prices of a base year

Fixed weight indexes:

generally become less accurate the farther in time they are from the base year

in the circular flow diagram, households demand___and supply___

goods and services; labor

If receipts of factor income from the rest of the world exceed payments of factor to rest of world, then:

GNP is greater than GDP

Gross national product is the total market value of:

all final goods and services produced by resources owned by a country, no matter where production takes place

If disposable personal income is $400 billion and personal savings is $8 billion, the personal saving rate is:

2% (8/400)100=2%

Government policies regarding taxes and expenditures are called:

fiscal policies

A period of very rapid increase in the overall price level is known as:

hyperinflation

A household that spends less that it receives in income during a given period is:

saving

The single largest expenditure component of GDP is:

consumption

Depreciation is:

the amount of used up machinery in a year

The value of what KFC produces in Japan is included in the US___and in the Japanese___.

GNP; GDP

T/F Fiscal policy generally takes the form of regulations specifying the maximum amount by which the money supply can be changed.

FALSE

The demand for corn has increased in May w/out any change in supply. 8 months later there still had been no change in corn price.example of?

sticky price

If the labor force is 500 and employment is 450, unemployment rate is:

10%

Which of following is included in both the Us GDP and GNP?

the value of all cars produced by GM in the US

Dividends are:

corporate profits distributed among shareholders

The GDP deflator in yr 2 is 95 using yr 1 as base yr. This means that, on average, the price of goods and services is:

5% higher in yr 1 than in yr 2

If the change in business inventories is zero, then final sales are:

equal to zero. Final Sales=CiB inventories+GDP

The change in business inventories is measured as:

GDP minus final sales

Exports equal:

net exports+imports

If net investment is zero, then:

gross investment equals depreciation

Which of following is a good or service counted in GDP?

a new tire you buy for your personal car.

GDP is not a perfect measure of social welfare and the society's economic well-being because:

does not include all economic activity, does not say anything about distribution of income, and does not adjust for production

In which of the following markets are funds demanded and supplied?

the money market

The diagram that shows the income received and payments made by each sector of the economy is:

the circular flow diagram

The government wants to encourage consumer spending through cutting income taxes. This is an example of:

fiscal policy

If no foreign companies produce in a country, but many of the country's companies produce abroad, then:

the country's GNP will tend to exceed the GDP

If GDP is $500 billion and depreciation is $40 billion, then net national product:

cannot be determined. NNP=GNP-depreciation.

To get the economy out of a slump, Keynes believed that the government should:

decrease taxes and/or increase government spending

Personal income is national income minus:

the amount of national income not going to households

Double counting can be avoided by:

not counting the value of intermediate goods in the GDP

If the central bank decreases the money supply, it is conducting:

monetary policy

T/F the income of US citizens working abroad counts in US GDP.

FALSE