Term
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Definition
| Gross Investment minus Net Investment |
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Term
| Intermediate goods and services.... |
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Definition
| are used to produce final goods and services |
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Term
The calculation of the final goods and services sold in an economy would NOT include:
A) the purchase of a lawnmower by a household.
B) General Motors’ purchases of tires for new automobiles.
C) Ford Motor Company’s purchase of a new industrial robot to be used to produce cars.
D) the purchase of a service by a household.
E) both B and C are correct.
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Definition
B) General Motors’ purchases of tires for new automobiles.
Can't count the the purchase of tires twice (once for the tires, once for the assembly of the car) |
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Term
In 2004 the CPI was 105; in 2005 it was 112. The inflation rate between 2004 and
2005 was
A) 6.7 percent.
B) 6.25 percent.
C) 105 percent.
D) 112 percent.
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Definition
A) 6.7 percent.
(112-105)/105 |
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Term
Cyclical unemployment...
A) is the major part of the natural rate of unemployment.
B) decreases during economic expansions.
C) rises as a result of structural change in the economy.
D) falls when unemployment compensation payments are increased.
E) None of the above answers are correct.
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Definition
| B) decreases during economic expansions |
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Term
An increase in unemployment benefits:
A) will cause frictional unemployment to increase.
B) will cause frictional unemployment to decrease.
C) will have no effect on frictional unemployment.
D) might affect frictional unemployment but only if the economy is in a recession.
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Definition
| A) will cause frictional unemployment to increase. |
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Term
When economists speak of full employment, they refer to the case in which the sum of frictional and structural unemployment is
A) falling over time.
B) equal to zero.
C) equal to the actual amount of unemployment.
D) greater than the level of deficient demand unemployment.
E) None of the above answers are correct.
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Definition
C) equal to the actual amount of unemployment.
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Term
The slope of the consumption function is
A)equal to the slope of the 45-degree line.
B)greater than the slope of the 45-degree line.
C)less than the slope of the 45-degree line but not equal to zero.
D)equal to zero.
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Definition
| C)less than the slope of the 45-degree line but not equal to zero. |
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Term
The marginal propensity to import is the ________ that is spent on imports.
A) total amount of potential GDP
B) fraction of an increase in real GDP
C) fraction of an increase in potential GDP
D) total amount of real GDP
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Definition
B) fraction of an increase in real GDP
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Term
Read the two statements below and indicate if they are true or false.
I. Autonomous expenditures change when GDP changes.
II. Aggregate planned expenditure is the sum of planned consumption expenditure, planned investment, planned government expenditure, and planned net exports.
A)I is false and II is true.
B) I and II are both true.
C)I is true and II is false
D) I and II are both false.
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Definition
A)I is false and II is true.
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Term
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Definition
-The amount of AE that occurs when aggregate planned expenditure is equal to Real GDP
-When this occurs, there are NO unplanned changes in inventories |
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Term
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Definition
| The amount by which a change in autonomous expenditure is multiplied to determine the change in equilibrium expenditure and real GDP. |
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Term
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Definition
| Change in Equilibrium Expenditure divided by the Change in Autonomous Expenditure |
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Term
If aggregate planned expenditures are less than real GDP then
A) firms must increase their planned expenditures until aggregate planned expenditures increase to the level of real GDP.
B) firms' inventories will increase and real GDP will decrease as production falls.
C) firms' inventories will decrease and real GDP will decrease as production falls.
D) the economy remains in disequilibrium until aggregate planned expenditures increase to the level of real GDP.
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Definition
| B) firms' inventories will increase and real GDP will decrease as production falls. |
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