Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

econ > test2 > Flashcards

test2 Flashcards

1
Q

Suppose the total market value of all final goods and services produced in aparticular country in 2006 is $500 billion and the total market value of final goodsand services sold is $450 billion. We can conclude that:A) GDP in 2006 is $450 billion.B) NDP in 2006 is $950 billion. C) GDP in 2006 is $500 billion.D) Inventories in 2006 fell by $50billion.E) None of the above

A

C) GDP in 2006 is $500 billion.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The economic role of government can be considered to:a. Promotion and regulation of the private sectorb. Provision of social goods and servicesc. Accumulating debtsd. none of the abovee. “a” and “b” above only

A

e. “a” and “b” above only

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

GDP measures only the value of FINAL goods and services to:a. avoid double countingb. avoid measuring value addedc. include nonproductive transactionsd. exclude productive transactionse. include the value of all intermediate transaction

A

a. avoid double counting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Value added is equal to the sum of all:a. wages paid to laborb. income generated from productionc. intermediate transactions involved in the production of a goodd. intermediate transactions involved in the production of a good, less profit

A

b. income generated from production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

In general terms, the economic role of the governmentincludes the broad functions of the:a. Provision of private goods and the regulation of social goodsb. Promotion and regulation of the private sector and theprovision of private goodsc. Promotion and regulation of the private sector and theprovision of social goodsd. Promotion and regulation of the public sector and theprovision of quasi-public goodse. Reduction of economic efficiency and the maintenanceof economic growth

A

c. Promotion and regulation of the private sector and theprovision of social goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Aggregate output is the:a. money value of a nation’s total productionb. sum of money income earned by the suppliers of labor, land, capital, and entrepreneurshipc. income earned by owners of foreign factors of production less income earned by domesticfactors of productiond. total value of goods and services purchased by the business sector.e. total value of income households have available for discretionary expenditures

A

a. money value of a nation’s total production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

A “social good” is best described as:a. A good or service not adequately provided by a free market usually provided by the governmentb. A good or service not adequately provided by the government and usually provided by a free marketc. A good or service that is subject to the exclusion principled. A good or service that is subject to the investment principlee. A private good or service

A

c. A good or service that is subject to the exclusion principle

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

A measure of the economy’s output in constant dollars is:a. intermediate GDPb. current GDPc. nominal GDPd. real GDPe. inflation

A

d. real GDP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Which of the following states that a 3% increase in real GNP will yield a 1% point decrease in the unemployment rate?a. Phillips Curveb. GDP Gapc. Okun’s lawd. Keynesian Rulee. Stephen’s Law

A

c. Okun’s law

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Economist use the term “aggregate expenditure” to mean:a. spending for all final goods and servicesb. the sum of planned spending for all products and factor servicesc. household spending for all consumption goodsd. business spending for all investment goodse. spending for all products except exports

A

a. spending for all final goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

In order to know if differences in GDP is a result of changes in prices or output GDP is expressed in the way of:a. dollars and centsb. nominalc. reald. only b and c abovee. only a and c above

A

d. only b and c above

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

In the expenditure approach to measuring the GDP the following are categories of spending:a. gross private domestic investmentb. personal consumption expenditurec. government expenditured. all of the abovee. none of the above

A

d. all of the above

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

A recessionary gap exists if:a. actual real GDP is less than potential real GDPb. actual real GDP exceeds potential real GDPc. actual real GDP equals potential real GDPd. the actual equilibrium price level is greater than zeroe. the actual equilibrium price level is zero

A

a. actual real GDP is less than potential real GDP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Gross national product is income earned from:a. foreign productionb. domestic productionc. foreign production less net domestic factor incomed. domestic production plus net foreign factor incomee. domestic production less net foreign factor income

A

d. domestic production plus net foreign factor income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

In term of the “bathtub theorem,” an injection is:a. a leakage from the economy’s circular flow of incomeb. an expenditure that raises the economy’s incomec. a form savingd. any variable that reduces the economy’s incomee. any variable that has a neutral effect on theeconomy’s income

A

b. an expenditure that raises the economy’s income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

A measure of the economy’s output in current dollars is:a. deflationb. real GDPc. nominal GDPd. constant GDPe. intermediate GDP

A

b. real GDP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Which of the following is not necessarily true?a. C/DI + S/DI = 1b. APC + APS = 1c. APC = MPCd. APC + APS = MPC + MPSe. MPC + MPS = 1

A

c. APC = MPC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Which of the following is not a type of unemployment?a. seasonalb. structuralc. cost-pushd. cyclicale. none of the above

A

c. cost-push

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

The aggregate supply curve is:a. downward-slopingb. upward-slopingc. verticald. horizontale. none of the above

A

b. upward-sloping

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Tom Atoe grows tomatoes for home consumption. Thisactivity is:a) excluded from GDP in order to avoid double counting.b) excluded from GDP because an intermediate good is involved.c) productive but is excluded from GDP because no market transaction occurs.d) included in GDP because it reflects productione) all of the above

A

c) productive but is excluded from GDP because no market transaction occurs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Government expenditure depends to a large extent on:a. the stock of capitalb. public needsc. credit conditionsd. the structure of taxese. disposable income

A

b. public needs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

GDP measures all goods in units of:a. poundsb. feetc. tonsd. acrese. dollars

A

e. dollars

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

During a period of high inflation:a. borrowers are better off because they can pay off their loans with currency that is worth lessb. borrowers are worse off because thy have to pay off their loans with currency that is worth morec. lenders are worse off because they cannot find anyone who wants a loand. lenders are worse off because they are repaid with currency that is worth moree. none of the above

A

a. borrowers are better off because they can pay off their loans with currency that is worth less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Disposable income includes:a. corporate taxesb. undistributed corporate profitsc. depreciationd. allowance given to children by parentse. none of the above

A

e. none of the above

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

The GDP for one year differs from the GDP of anotherbecause:a. price changesb. physical output changesc. people are not patrioticd. only “a” and “b” abovee. all of the above

A

d. only “a” and “b” above

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

The lower the market rate of interest, other things being equal:a. the higher the MEIb. the lower the rate of investmentc. the lower the MEId. the higher the rate of investmente. the steeper the MEI

A

a. the higher the MEI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

The MEI expresses a relationship between:a. consumption and investmentb. interest rates and consumptionc. interest rates and savingsd. investment and savingse. interest rates and investment

A

e. interest rates and investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Spending by business firms on physical capital is:a. taxesb. savingc. exportsd. investmente. consumption

A

d. investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

The expected annual rate of return on an additional unit of a capital good is the:a. APSb. APCc. MPSd. MPCe. MEI

A

e. MEI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

The notion that equilibrium occurs when “injections” are equal to “leakage” is termed the:a. “water paradox”b. paradox of thriftc. saving theoremd. “bathtub theorem”e. multiplier effect

A

d. “bathtub theorem”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

In the bathtub theorem, “injections” are:a. leakages from total incomeb. withdrawals that are dependent on incomec. withdrawals that are not dependent on incomed. expenditures that are dependent on incomee. expenditures that are not dependent on income

A

e. expenditures that are not dependent on income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

In terms of the “bathtub theorem,” a withdrawal of leakage:a. expands the economy’s incomeb. has a neutral effect on the economy’s incomec. reduces the economy’s incomed. is a form of investmente. is any variable that stimulates production and employment

A

c. reduces the economy’s income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

An example of an “injection” in the bathtub theorem is:a. taxesb. savingc. importsd. investmente. employment

A

d. investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

A recessionary gap occurs if:a. actual real output is greater than potential real outputb. actual real output is equal to potential real outputc. unemployment is less than the natural rated. unemployment is greater than the natural ratee. unemployment is equal to the natural rate

A

d. unemployment is greater than the natural rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

The relationship between income and consumption is expected to be:a. directb. inversec. independentd. static over timee. none of the above

A

a. direct

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Aggregate supply is:a. the amount of real aggregate output that will be made available at various national income amountsb. the amount of real aggregate output that will be purchased at various average price levelsc. the amount of real aggregate output that will be purchased at various national income levelsd. the amount of real aggregate output that will be made available at various average price levelse. the amount of real aggregate output that will be made available at various interest rates.

A

d. the amount of real aggregate output that will be made available at various average price levels

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

The best reason economists take only final goods and services into account when calculating GDP is:a. this is the way things have always been doneb. they want to avoid the problem of final countingc. this is the only way things can be doned. they want to avoid the problem of double countinge. none of the above

A

d. they want to avoid the problem of double counting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

An inflationary gap occurs if:a. actual real output is less than potential real outputb. actual real output is greater than potential real outputc. actual real output is equal to potential real outputd. unemployment is greater than the natural ratee. unemployment is equal to the natural rate

A

b. actual real output is greater than potential real output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

People who are in the process of changing jobs are accounted for by which one of the following unemployment categories?a. frictional unemploymentb. involuntary unemploymentc. structural unemploymentd. cyclical unemploymente. seasonal unemployment

A

a. frictional unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

“Double counting” would occur in GNP statisticians:a. used market prices without a correction for inflationb. included sales taxes in the market prices of goods and servicesc. added the costs of wood to the furniture maker along with the final price of the chairsd. added government expenditures on roads, and consumer expenditures on gasolinee. did all of the above

A

c. added the costs of wood to the furniture maker along with the final price of the chairs

41
Q

Aggregate expenditure is the sum of desire or planned spending that:a. occurs only when the economy is in equilibriumb. occurs only when the economy is at full employmentc. occurs only when the economy is in equilibrium at full employmentd. will be undertaken by the household sector after taxese. will be undertaken at each aggregate-income level by all sectors of the economy

A

e. will be undertaken at each aggregate-income level by all sectors of the economy

42
Q

Household spending on goods and services is:a. taxesb. savingc. exportsd. investmente. consumption

A

e. consumption

43
Q

The most important factor determining a family’s consumption expenditures is likely to be the:a. neighborhood in which it livesb. level of its disposable incomec. average age of its membersd. size of the familye. general price level

A

b. level of its disposable income

44
Q

The consumption function expresses the:a. purposes of consumptionb. relation between consumption and pricesc. relation between consumption and savingd. difference between consumption and taxese. relation between consumption and income

A

e. relation between consumption and income

45
Q

Dissaving occurs if:a. consumption is greater than disposable incomeb. the APC is negativec. the APS is positived. the MPC is negativee. the MPS is negative

A

a. consumption is greater than disposable income

46
Q

The APC is:a. 1 - MPSb. consumption divided by disposable incomec. the slope of the propensity-to-consume lined. the proportion of additional disposable income used for consumptione. the change in consumption divided by the change in disposable income

A

b. consumption divided by disposable income

47
Q

As price level rises:a. the purchasing power of cash holdings risesb. the purchasing power of cash holdings fallsc. the purchasing power of cash holdings remain constantd. all of the abovee. none of the above

A

b. the purchasing power of cash holdings falls

48
Q

An increase in consumption means that, at each level of the economy’s income:a. APC has decreased, and APS has increasedb. APC has increases, and APS has decreasedc. APC and APS have increasedd. APC and APS have decreasede. APC and APS have remained the same

A

b. APC has increases, and APS has decreased

49
Q

Suppose that your income increases form $10,000 to $15,000 and your consumption increase from $9,000 to $12,000. Your APC at $15,000 is:a. 0.4b. 0.6c. 0.8d. 0.9e. 1.0

A

c. 0.8

50
Q

Frictional unemployment consists of people who are unemployed due to:a. discriminationb. business recessionsc. business depressionsd. temporary changes in jobse. a mismatch between the skills of workers and the skills required by the job market

A

d. temporary changes in jobs

51
Q

Cyclical unemployment consists of people who are unemployed due to:a. discriminationb. business recessionsc. temporary changes in jobsd. a mismatch between the location of workers and the location of jobse. a mismatch between the skills of workers and the skills required by the job market

A

b. business recessions

52
Q

Structural unemployment consists of people who are unemployed due to:a. business recessionsb. business depressionsc. temporary changes in jobsd. imperfect knowledge of job opportunitiese. a mismatch between the skills of workers and the skills required by the job market

A

e. a mismatch between the skills of workers and the skills required by the job market

53
Q

The MPS is:a. 1 - MPSb. saving divided by consumptionc. saving divided by disposable incomed. the slope of the propensity-to-consume linee. the proportion of additional disposable income used for saving

A

e. the proportion of additional disposable income used for saving

54
Q

The GDP gap is the:a. difference between nominal GDP and real GDPb. difference between potential GDP and actual GDPc. ration of nominal GDP to real GDPd. ratio of potential GDP to actual GDPe. ratio of potential GDP to real GDP

A

b. difference between potential GDP and actual GDP

55
Q

During recession, government tax receipts (revenue):a. is unaffectedb. overflowc. underestimatedd. decreasee. increase

A

d. decrease

56
Q

A rise in the general price level of goods and services is:a. depreciationb. deflationc. inflationd. expectationse. fluctuations

A

c. inflation

57
Q

The expression “too much money chasing too few good” best describes the condition called:a. cost-push inflationb. wage-push inflationc. demand-pull inflationd. market-power inflatione. commodity inflation

A

c. demand-pull inflation

58
Q

Macroeconomics deals with the action of:a. individuals onlyb. societies onlyc. atmosphere onlyd. both individuals and societiese. neither individuals nor societies

A

b. societies only

59
Q

As aggregate income increases, consumption:a. and saving both increaseb. and saving both decreasec. decrease and saving increased. increase and saving decreasee. none of the above

A

a. and saving both increase

60
Q

That part of a person’s income which is not consumed is his or her:a. saving b. profit c. surplusd. excesse. problem

A

a. saving

61
Q

Real GDP measures:a. current output at current pricesb. current output at base year pricesc. base year output at current pricesd. none of the abovee. all of the above

A

b. current output at base year prices

62
Q

Suppose during the course of a year an economy produces $11 trillion of consumer goods, $3 trillion of investment goods, $6 trillion in government services, and has $3 trillion of exports and $1 trillion of imports. For this economy, GDP would be:a) $18 trillion.b) $22 trillion.c) $23 trillion.d) $24 trillion

A

b) $22 trillion.

63
Q

The value of production being measured in the economy should be different when the expenditure and income approaches are used.

A

FALSE

64
Q

Government expenditures and net foreign expenditures are part of aggregate expenditure.

A

TRUE

65
Q

Inflationary and recessionary gaps are always eliminated automatically through changes in aggregate demand

A

FALSE

66
Q

A firm’s MEI curve is its demand curve for investment

A

TRUE

67
Q

A business will invest in a project if the MEI is less than the market interest rate.

A

FALSE

68
Q

A decrease in the interest rate will decrease the amount of business investment.

A

FALSE

69
Q

GDP for all nations does grow at the same rate.

A

FALSE

70
Q

The expected rate of return on a firm’s addition to investment is measured by its MEI.

A

TRUE

71
Q

The expression, “too much money chasing too few goods” best describes the phenomenon of demand-pull inflation rather than cost-push inflation.

A

TRUE

72
Q

The single most important determinant of consumption spending is disposable income

A

TRUE

73
Q

1 + MPS = MPC

A

FALSE

74
Q

The APS is defined as saving divided by disposable income

A

TRUE

75
Q

There is no difference between aggregate quantity demanded and aggregate demand.

A

FALSE

76
Q

Suppose you have a contract with your employer that provides you a certain fixed annual income. If the general price level rises, it is likely that your real income will decline.

A

TRUE

77
Q

The ratio of consumption to income is called the MPC

A

TRUE

78
Q

Inflation means that prices in the aggregate are rising, as a result no particular price may be falling.

A

FALSE

79
Q

Aggregate output and aggregate employment tend to be directly related.

A

TRUE

80
Q

MPC + MEI = 1

A

FALSE

81
Q

If DI is $275 billion and APC is 0.8, it can be concluded that saving is $55 billion.

A

TRUE

82
Q

The slope of the saving schedule measures the size of the multiplier

A

FALSE

83
Q

GDP is the sum of the total market value of all goods and services produced in a nation during a given time period.

A

FALSE

84
Q

The Consumer Price Index is not the best known measure of price changes.

A

FALSE

85
Q

People who work part time, but desire to work full time, are considered to be officially unemployed.

A

FALSE

86
Q

A college graduate using the summer following graduation to search for a job would best be classified as a part of frictional unemployment

A

TRUE

87
Q

Real GDP is calculated to observe changes in real output that is unaffected by price changes.

A

TRUE

88
Q

Value added can be determined subtracting the purchase price of intermediate products from the value of the sales of final products

A

TRUE

89
Q

A dissatisfied worker is considered unemployed

A

FALSE

90
Q

Consumption is the largest component of aggregate expenditure.

A

TRUE

91
Q

Disposable income is the single most important factor affecting a family’s consumption expenditures.

A

TRUE

92
Q

1 - MPC = MPS

A

TRUE

93
Q

If personal taxes are added to disposal income, the result obtained is personal income.

A

TRUE

94
Q

A decrease in the prices of the things you buy will always have an immediate effect on your nominal income

A

FALSE

95
Q

If profit and wages are both rising during inflation, the inflation must be a cost-pushed inflation.

A

TRUE

96
Q

Any good whose production or consumption results in spillover is a public good.

A

FALSE

97
Q

Some frictional unemployment is inevitable in an economy like ours, in which people are free to seek the type of employment they wish.

A

TRUE

98
Q

The difference between potential and actual GDP is the GDP gap.

A

TRUE

99
Q

Since MPC + MPS = 1 and APC + APS = 1, it follows that MPC = APC and MPS = APS.

A

FALSE

econ (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions