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MACRO ECONOMICS EXAM 1
Terms in this set (56)
the study of economy-wide phenomena, including inflation, unemployment, and economic growth
Gross Domestic Product- measures the VALUE of all goods and services produced in a nation over a period of time
the pattern in which goods and services and resources flow in the marketplace
The Great Recession
severe economic downturn that lasted from late 2007 through mid-2009
Inverted Yield Curve
GDP per capita PPP
employed vs. unemployed vs. not in labor force
natural rate of unemployment
Labor Force Participation Rate
In a circular-flow diagram
income payments flow from firms to households, and sales revenue flows from households to firms
Refer to the figure above. Which two veins in the circular flow diagram above capture the following transaction: You write a check for 120$ to the campus bookstore for the purchase of textbooks.
a/b and c/d
In a circular-flow diagram
both A and B
The field of economics is traditionally divided into two broad sub fields
microeconomics and macroeconomics
Real GDP per capita is defined as
real GDP divided by total population
The consumer price index (CPI)
compares the cost in the current period to the cost in a base period of a basket of goods typically bought by consumers in the base period
which of the following are equal to one another?
I equals II equals III
To examine how the total domestic production of an economy has changed over time, it would be better to examine
Let C represent consumption expenditure, S saving, I gross private domestic investment, G government expenditure on goods and services, and X - M net exports of goods and services. Then GDP equals
C + I +G + NX
Net exports of goods and services
The value of exports of goods and services minus the value of imports of goods and services.
When the automobile replaces horse drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing
In the calculation of GDP by the expenditure approach, exports from the U.S. must be
If you are have $1,000 of money in the bank and the price level rises 5 percent, your
money is worth less in terms of what it can purchase
In years with inflation, nominal GDP increase ___ real GDP
If in a given year an economy has consumption of $3000, investment of $2000, government
purchases of $1500, exports of $500, imports of $600, taxes of $1200, transfer payments of $400, and
depreciation of $300, then GDP will equal
The producer price index measures the cost of a basket of goods and services
bought by firms
Which of the following is NOT a widely acknowledged problem with the CPI as a measure of the cost of living?
Unmeasured price change bias
Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as
not in the labor force
the labor force is defined as the number of people who
are employed plus the number of people who are unemployed
by rule of thumb, a recession is defined as
a period during which real GDP decreases for at least two consecutive quarters
Suppose the population of Tiny Town is 100 people and the civilian non-institutional population is
70. If 10 of these people are unemployed, the unemployment rate in Tiny Town is
There is not enough information provided to calculate the unemployment rate
who of the following is unemployed?
Glenn, a student who just graduated from college and is currently looking for a job.
Economists consider the natural rate of unemployment to occur when
cyclical unemployment equals zero
The encouragement that "it is not your fault, the economy is weak" would be most appropriate for
which of the following types of unemployment?
The civilian non-institutional population is defined as the number of
people over the age of 16 who are not in a jail, hospital, or other institution
Frictional unemployment is the result of
the search process of matching workers with jobs
Suppose the civilian non-institutional population in Tiny Town is 100 people. If 25 of these people
are NOT in the labor force, the ____ equals ____.
labor force; 75
if the economy enters a recession
cyclical unemployment increases
Suppose the country of Tiny Town decided to open its borders to free trade. As a result, a number of
its workers lost their jobs to international competition and can't find new jobs because their skills
don't match what is required for job openings. The workers who lost their jobs would best be
considered part of
over the last 30 years the labor force participation rates of men
decreased and the labor force participation rates of women increased
when a worker quits a job to look for a better job
frictional unemployment increases
the natural rate of unemployment is made up of
frictional and structural unemployment
what problem in the measurement of GDP does PPP attempt to correct?
currency being able to buy different quantities of the same good or service in different countries
What is the most recent estimate of inflation rate?
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