Economics exam 2

Question 1

what are the 3 objectives of macroeconomics

Answer 1

output
inflation
unemployment

Question 2

what signals a recessions

Answer 2

2 periods of decreased output

Question 3

what is the natrual rate of unemployment

Answer 3

5%

Question 4

match each yr with a status
1920
1930
1950
1970
1980
1990
2007

Answer 4

1920-good economy
1930-great depression
1940-economic reset
1950-fine turning
1970- stagflation
1980-reganomics
1990-growth
2007- financial crisis

Question 5

fiscal policy

Answer 5

government spending increasing growth and making jobs

Question 6

monetary policy

Answer 6

corrects aggregate demand

Question 7

supply side policy

Answer 7

effects aggregate supply

Question 8

relationship betwen GDP and unemployment

Answer 8

they move together

Question 9

What does GDP measure

Answer 9

production
income
expenditure

Question 10

what is GDP

Answer 10

market value of all final goods and services produced by all factors of production in current yr

Question 11

identify whether these are intermediate or final goods

1- Tires you buy and use to replace flat tires

2-materials used for construction

3- Tires mounted on the wheels of a new car

Answer 11

1-final
2- intermediate
3- final

Question 12

what does GDP ignore

Answer 12

buying and selling of used goods, transactions where no goods and services are exchanged

Question 13

GDP vs GNP

Answer 13

GDP- The output within the domestic economy of a country regardless of what country is responsible for manufacturing it
GNP-measures the output of all U.S owned factories no matter what country they are produced in

Question 14

income method of computing GDP

Answer 14

looks at all: wages, rent, interest, income earned domestically

Question 15

Expenditure approach of finding GDP

Answer 15

measures the total amount spent on domestically produced goods

Question 16

what type of expenditure durable vs nondurable goods

Answer 16

long term goods vs short term goods clothes
consumption

Question 17

percents of aggregate demand
households
firms
government
world economy

Answer 17

70%
17%
20%
-5%

Question 18

If in a year there is a positive inventory investment, then sales
A) equal GDP. B) are less than GDP.
C) exceed GDP. D) are zero

Answer 18

exceed GDP

Question 19

what does CPI measure

Answer 19

the amount purchased monthly by consumer