Chapter 3-6 true/false Flashcards

(40 cards)

1
Q

the goods and services flow and the factors of production flow are both money flows

A

False: they are both REAL flows

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2
Q

individuals in the household sector earn income by receiving payment for the goods and services they did

A

false: individuals earn incomes from selling their factor services

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3
Q

the amount of income in an economy is always equal to the amount of money in the economy

A

false: income and money are different concepts and are rarely equal, except by coincidence

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4
Q

savings equal consumption minus income

A

false: savings are equal to income minus consumption

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5
Q

transfer payments are a flow from the business sector to the government sector

A

false: they flow from the government to the household (and business) sector

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6
Q

at equilibrium aggregate expenditures and income are equal

A

true

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7
Q

the 2 conceptual approaches used to measure GDP are the expenditures approach and the income approach

A

true

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8
Q

one definition of equilibrium income is the income at which total injections equal total leakages

A

true

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9
Q

real GDP in the value of nominal GDP measured in base-year prices

A

true

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10
Q

GDP figures tend to be overstated because they include non-market activities

A

false: non-market activities are excluded from GDP figures

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11
Q

frictional unemployment is likely to be greatest in sunset industries

A

false: structural unemployment is likely to be largest in sunset industires

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12
Q

the natural rate of unemployment is the unemployment rate at full employment

A

true

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13
Q

if the number of job vacancies in an economy is equal to the number of people unemployed, , then cyclical unemployment is zero

A

true

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14
Q

both male and female participation rates in Canada have been steadily rising for the past 20 years

A

false: female participation rates only have been increasing

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15
Q

the higher the rate of inflation, the the lower is the redistribution

A

false: the higher the redistributive effects

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16
Q

cost-push inflation is caused by the total demand for goods and services exceeding the economys capacity to produce those goods

A

false: demand pull inflation occurs when the total demand exceeds the capacity to produce

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17
Q

the real interest rate is equal to the nominal interest rate plus the expected inflation rate

A

False: it is equal to the nominal rate less the expected inflation rate.

18
Q

real GDP is equal to nominal GDP divided by the GDP deflator times 100

19
Q

if the annual inflation rate is 7 percent, then the price level will double in 10 years

20
Q

the labour force participation rate is the percentage of the working age population that is included in the labour force

21
Q

aggregate demand is the total quantity of final goods and services that consumers, businesses, government, and those living outside the country would buy at different price levels

22
Q

the foreign-trade effect is the effect that a change in exports and imports has on the price level

A

False: it is the effect which a change in the price level has upon exports and imports

23
Q

the aggregate supply curve is upward sloping

24
Q

macro equilibrium occurs where the aggregate demand is equal to potential GDP

A

False: where aggregate demand equals the short-run aggregate supply

25
a change in resource prices will shift both the aggregate supply and the potential GDP curves
False: it will not shift the potential GDP curve
26
an increase in potential GDP has no effect on macro equilibrium
False: it will, because any change in potential GDP will also affect the aggregate supply and, therefore, equilibrium
27
an increase in aggregate demand will cause an increase in both real GDP and the price level
true
28
an increase in wage rates will cause an increase in both real GDP and price level
False: it will cause a decrease in real GDP
29
according to keynes, the aggregate supply curve is vertical
False: to Keynes, it is horizontal
30
according to neoclassicists, an increase in aggregate demand will have no effect upon real gdp but will cause the price level to increase
true
31
autonomous spending depends on the level of income, whereas induced spending does not
False: it is the other way around.
32
equilibrium income occurs where the value of production is equal to aggregate expenditures
true
33
induced taxes do not change with income, but autonomous taxes do
False: it is the other way around.
34
a change in the price level shifts the aggregate expenditures curve but does not shift the aggregate demand curve
true
35
the real balance effect refers to the effect that a change in interest rate has on the real value of wealth
False: ....change in the price level has on....
36
a decrease in the interest rate will cause an increase in the investment spending
true
37
the value of the multiplier is equal to the inverse of the marginal leakage rate
true
38
growth in an economy's gdp (if not caused by a change in exports) results in a larger trade deficit or in a reduction of a previous trade surplus
true
39
if taxes increase, disposable income will fall, but consumption will remain the same
False: consumption will fall too
40
if the marginal tax rate increase, then the marginal propensity to expend will be smaller, and the marginal leakage rate will be larger
true