Term
If the rate of economic growth is positive, then everyone becomes better off.
a. True
b. False |
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Definition
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Term
In only one of the following situations is a nation's standard of living certain to increase. Which one?
a. Real GDP rises faster than population.
b. Real GDP rises faster than the price level.
c. Real GDP rises.
d. Real GDP rises faster than the number of people employed.
e. Real GDP rises faster than the growth rate of output. |
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Definition
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Term
Output per person rises when
a. the population increases faster than real GDP
b. the standard of living decreases
c. real GDP increases at the same rate as the population
d. real GDP rises slower than the population
e. real GDP rises faster than the population |
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Definition
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Term
The Full Employment and Balanced Growth Act of 1978 set the target unemployment rate for the United
States economy at 4 percent.
a. True
b. False |
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Definition
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Term
In the early 1980s, the United States experienced its most severe recession since the Great Depression. The
unemployment rate peaked at around
a. 7 percent
b. 50 percent
c. 11 percent
d. 15 percent
e. 25 percent |
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Definition
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Term
If the unemployment rate is 6 percent, that means that 6 percent of
a. the population is not working
b. potential workers do not have jobs
c. the workforce is not working at that time
d. the individuals who are looking for work cannot find jobs
e. people who want to work cannot find jobs |
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Definition
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Term
Recessions are identified by
a. severe and long-lasting phases of decreased output
b. high employment
c. increasing output
d. decreasing output
e. low unemployment |
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Definition
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Term
Periodic fluctuations in real GDP are called
a. business cycles
b. recessions
c. peaks
d. expansions
e. troughs |
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Definition
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Term
During the expansion phase of a business cycle
a. employment and output are both at a peak
b. employment and output are both rising
c. employment is falling and output is rising
d. unemployment and output are both rising
e. employment is rising and output is falling |
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Definition
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Term
Over the past 75 years, the inflation rate has
a. generally increased
b. been positive in most years
c. stayed low
d. been negative in most years
e. dramatically increased |
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Definition
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Term
Why is inflation considered a problem?
a. Firms gain too much economic power.
b. It is always very high when it exists.
c. People prefer falling prices.
d. It is costly for society.
e. Individuals prefer higher prices to lower prices. |
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Definition
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Term
In macroeconomics,
a. we study one market at a time
b. we try to understand how the entire economy behaves
c. we focus on large, important products and ignore the rest
d. we study one nation's economy only
e. we aggregate all national economies into a world economy |
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Definition
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Term
When we study macroeconomics,
a. we model tens of thousands of individual supply and demand curves
b. we determine thousands of prices and quantities
c. we employ aggregation to reduce the number of markets we need to understand
d. we add up all the demand and supply curves that are obtained in microeconomics
e. we add up the prices of all goods and services produced in the economy |
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Definition
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Term
Classical economists believed that
a. the government should play an active role in controlling the economy
b. the government can best help the economy by leaving it alone
c. the economy is controlled by the government
d. laissez faire will hurt the economy
e. economists should offer guidance to governmental leaders |
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Definition
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Term
The occurrence of the Great Depression offered evidence that supported
a. the classical theory of economics
b. the need for the government to practice the policy of laissez faire
c. the need for the government to control prices
d. Congress to take action to stop rising prices
e. the Keynesian idea that the government needed to guide the economy |
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Definition
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Term
A laissez faire policy is one in which
a. the government plays a major role in guiding economic activity
b. the government is lazy
c. the government leaves things alone
d. individuals rely on the government for guidance but not for active intervention in the
economy
e. businesses rely on the government for guidance but not for active intervention in the
economy |
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Definition
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Term
Used car dealerships add nothing to GDP because the cars they sell were already recorded in GDP when they
were new.
a. True
b. False |
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Definition
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Term
GDP measures the output produced within a nation's borders.
a. True
b. False |
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Definition
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Term
Gross domestic product (GDP) is
a. the total value of all goods and services produced for the marketplace during a given
period, within a nation's borders
b. the total value of all final goods and services produced for the marketplace during a given
period, by a nation's citizens and businesses
c. the total value of all final goods and services produced for the marketplace during a given
period, within a nation's borders
d. the total value of all goods and services produced for the marketplace during a given
period, by a nation's citizens and businesses
e. the total value of all goods, services and inputs produced for the marketplace during a
given period, within a nation's borders |
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Definition
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Term
A Texas oil company extracts petroleum and sells it to a refinery for $1,000. After processing, the refinery
sells the gasoline to a wholesaler for $1,500, who then sells it to a gas station for $1,700. The gas station sells
it to customers for $2,500. In these transactions, how much has been added to GDP?
a. $1,000
b. $1,500
c. $1,700
d. $2,500
e. $6,700 |
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Definition
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Term
An example of a good whose production is counted in this year's GDP is
a. a share of corporate stock
b. a used book
c. an acre of farm land
d. a used car
e. a new shirt |
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Definition
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Term
Which of the following would be counted in U.S. GDP?
a. a new U.S.-produced radio bought by a Japanese citizen living in Kyoto
b. a used U.S.-produced computer bought by a French citizen living in Kansas
c. a new Japanese radio bought by a U.S. citizen in Rhode Island
d. a U.S. pianist's concert sales in Britain
e. stock in Microsoft Corporation bought by a Russian citizen |
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Definition
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Term
In the expenditure approach to measuring GDP, we add the values of all
a. intermediate goods in addition to all final goods purchased
b. goods and services purchased by each type of final user
c. goods and services purchased in the United States
d. goods and services purchased by intermediate and final users
e. output produced by U.S. firms |
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Definition
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Term
Susie grows corn in her backyard garden to feed her family. The corn she grows is not counted in GDP
because
a. it was not produced for the marketplace
b. it is an intermediate good that Susie will process further before feeding her family
c. goods produced using land are not included in GDP
d. the corn has no value
e. it reduces the amount of corn she will buy at the store |
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Definition
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Term
If private investment increased by $50 billion while GDP remained the same, which of the following could
have occurred, all else being the same?
a. consumption spending decreased by $50 billion
b. exports increased by $50 billion
c. imports decreased by $50 billion
d. net exports increased by $50 billion
e. government spending increased by $50 billion |
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Definition
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Term
In 2003, Computers, Inc. produced personal computers worth $20 million. If $16 million worth were sold and
$4 million worth remained unsold at year end and were added to inventories, how much did Computers, Inc.
contribute to GDP in 2003?
a. $0
b. $4 million
c. $12 million
d. $16 million
e. $20 million |
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Definition
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Term
Inventories — goods produced but not sold — are included in GDP because
a. we want to measure total production, not just what is purchased
b. they are an important component of consumption in later periods
c. stores count their inventories as part of their profits
d. they are needed for planning for next year's production levels
e. firms need to know when to lower prices |
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Definition
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Term
The largest component of GDP is
a. tax revenue
b. government purchases of goods and services
c. the nation's capital stock
d. private investment spending
e. private consumption expenditures |
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Definition
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Term
Even though households do not actually purchase certain items, the government estimates and adds to the
consumption component what the household would pay for these items in the marketplace. An example of
this type of item is
a. a car that an individual builds from parts of old cars
b. food that a farm family grows for themselves
c. a pond that a household member digs by hand
d. police and fire protection
e. a barn that a household builds on their own property |
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Definition
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Term
Which of the following would be classified as a consumer durable?
a. new clothing
b. a new central heating system
c. a new home
d. a tube of toothpaste
e. new toys |
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Definition
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Term
Which of the following would be considered a component of government purchases?
a. both d and e
b. all of the following
c. welfare payments
d. police salaries
e. social security payments |
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Definition
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Term
Which of the following is a definition of value added? Revenue received by a firm for its output
a. minus the cost of all the final goods bought
b. plus the cost of all the intermediate goods bought
c. minus the cost of all the intermediate goods bought
d. minus the cost of all interest payments
e. plus the cost of all the final goods bought |
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Definition
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