Upgrade to remove ads
Macro Final Study Guide
Terms in this set (77)
All Expenditures on new construction are included as investment in calculating GDP
The simplest way to calculate GDP is to sum the total sales of all business firms
Personal income usually exceeds disposable income.
Welfare payments to low-income families are included in national income
Disposable income measures the before-tax income received by resource suppliers
If nominal GDP is 150 and the GDP price index is 200, real GDP is 75
If real GDP is 50 and nominal GDP is 100, the GDP price index is 200
U.S. gross domestic product (GDP) measures the market value of all good and services produced by Americans in one year
Government purchases are the largest component of aggregate expenditures in the United States
Net exports are positive when exports are greater than imports
In 2017, China's GDP was bigger than that of the United States
In an economy that is experiencing inflation and output growth, nominal GDP will rise faster than real GDP
If nominal GDP in one year is $5,000 billion and the price index is 135, then the real GDP that year would be $3,704 billion.
To adjust nominal GDP for a given year in order to obtain real GDP, we multiply the nominal GDP by the price index
A nation's gross domestic product (GDP)
is the dollar value of all final output produced within the borders of the nation during a specific period of time
A nation's gross domestic product equation :
C + Iq + G + Xn
monetary value of all final goods and services produced within the borders of a nation in a particular year
National income accountants can avoid multiple counting by
only counting final goods
Gross Domestic Product (GDP) measures and reports output
in dollar amounts
Final goods and services refers to
goods and services purchased by ultimate users, rather than for resale or further processing .
Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is:
An economy is enlarging its stock of capital goods:
when gross investment exceeds depreciation
GDP can be calculated by summing:
personal consumption, investment, government purchases, and net exports
In national income accounting, the personal consumption expenditures category includes purchases of
consumer durable goods, consumer non durable goods, and services
Net exports are:
exports less imports
Net exports are negative when:
a nation's imports exceed its exports.
The largest component of total expenditures in the US is
In the US, real GDP per capita has increased more rapidly than real GDP
An economy with an average growth rate of 10 percent can expect to see its real GDP double in approximately 7 years
Growth is a widely held economic goal primarily because it creates a more equal distribution of wealth and income
Real GDP per capita is found by dividing real GDP by the size of the labor force.
The rule of 70 is used to find how long it will take an economy to grow by 70 percent
Modern economic growth since the 1820's has widened wealth and income disparities between richer and poorer nations
Strong patent laws encourage innovation and promote economic growth
A competitive market system promotes growth by providing producers with market signals on which to base investment and production decisions .
Critics of economic growth say studies show that people are not interested in achieving higher standards of living
There are two common measures of economic growth : (1) increases in real GDP over some period of time and (2) increases in real GDP per capita over sone time period
If a country has a larger real GDP than another country, then it should also have a higher real GDP per capita than the other country
The real GDP of the US has grown since the 1950s largely because of increases in labor productivity.
In the growth debate, defenders of economic growth believe that it is the primary path to raising living standards
Economic growth is best defined as an increase in
either real GDP or real GDP per capita.
Real GDP per capita is found by
dividing real GDP by population
Which of the following best measures improvements in the standard of living of a nation?
growth of real GDP per capita
For a nation's real GDP per capita to rise during a year:
real GDP must increase more rapidly than population.
Given the annual rate of economic growth, the "rule of 70" allows one to:
calculate the number of years required for real GDP to double.
The number of years required for real GDP to double can be found by
dividing 70 by the annual growth rate.
At an annual growth rate of 7 percent, real GDP will double in about:
If a nation's real GDP is growing by 5 percent per year, its real GDP will double in approximately
Real per capita GDP in the United States in 2018 was approximately
Which of the following statements is most accurate about modern economic growth ?
Modern economic growth is characterized by sustained and ongoing increases in living standards.
Countries that have experienced modern economic growth have also tended to
move toward more democratic forms of government.
Real per capita GDP
was much more equal across nations in 1820 than it is today.
Which of the following economic regions has experienced the most growth in real GDP per capita since 1820 ?
Strong property rights are important for modern economic growth because:
people are more likely to invest if they don't fear that others can take their returns on investment without compensation.
Use the accompanying list to answer the following question. As distinct from the demand and efficiency factors of economic growth, the supply factors of economic growth are
1. Improvements in technology
2. Increase in the supply stock of capital goods
3. Purchases of expanding output
4. Obtaining the optimal combination of goods, each at least - cost production.
5. Increases in the quantity and quality of natural resources.
6. Increases in the quantity and quality of human resources .
1,2,5, and 6 only
As distinct from the supply factors and efficiency factor of economic growth, the demand factors of economic growth are
1. Improvements in technology
2. Increases in the supply stock of capital goods
3. Purchases of expanding output
4. Obtaining the optimal combination of goods, each at least-cost production.
5. Increases in the quantity and quality of natural resources .
6. Increases in the quantity and quality of human resources
If the growth trend of labor productivity is 3 percent per year, the number of years that it will take for the standard of living to double will be about:
The business cycle is so named because upswings and downswings in business activity are predictably equal in terms of duration and intensity
People who work part time, but desire to work full time, are considered to be officially unemployed
If the nominal interest rate is 8 percent and the real interest rate is 5 percent, the inflation rate is 13 percent
Anyone who is not employed if classified as unemployment in the Bureau of Labor Statistics data on the labor force
Recurring upswings and downswings in an economy's real GDP over time are called:
In the United States, business cycles have occurred against a backdrop of a long- run trend of
rising real GDP
The phase of the business cycle in which real GDP declines
The production of durable goods varies more than the production of non durable goods because
purchase of durable goods are postponable
A recession is defined as a period in which:
real domestic output falls
In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates
To find the Real GDP...
Sum all of the final goods AND services (produced in a country's boarders)
To find GDP per capita
Real GDP/ population
Find Real GDP with price index
Real GDP = nominal GDP/price index (in 100s)
Divide Price Index by 100
Find Net Exports
Net Exports = exports - imports
Find the Rule of 70
70/annual growth rate
Find percent change
V1-V0/ V0 x100
V1 = 2nd change in GDP
V0 = Initial/ Start GDP
The ———- helps determine how long it'll take for the real GDP to double
Rule of 70
Components of aggregate spending in US
1. Personal consumption
2. Private Investments
3. Govt. Purchases
4. Net Exports
What you make BEFORE taxes
What you have left AFTER taxes
Recommended textbook explanations
Krugman's Economics for AP*
David Anderson, Margaret Ray
Principles of Microeconomics
N. Gregory Mankiw
William A. McEachern
Online Learning Center to accompany Essentials of Investments
Alan J. Marcus, Alex Kane, Zvi Bodie
Other sets by this creator
Chapters 3 and 6
Quiz Chapter One and Two
MacroEconomics Chapters 1 and 2
Map Test Quizlet
Other Quizlet sets
Final Exam Study Part 3
Pharm III - Quiz Collection
Radiology final 1
PSYC 236 Memory Disorders Section