Macroeconomics Chapter 3-6 (PART 1)

Term
1 / 40
According to economists, presently, what is the natural rate of unemployment in Canada?
Click the card to flip 👆
Terms in this set (40)
According to economists, presently, what is the natural rate of unemployment in Canada?
5%-7%
What is the real rate of interest if the nominal rate of interest is 10% and the rate of inflation is 4%
6%
Assume Brown is temporarily unemployed because she has voluntarily quit her job and will begin a better job with a new company next week. What is Brown considered?
Frictionally unemployed
In 2021 Robinson's nominal income rose by 4% and the price level rose by 6%. What can be concluded about Robinson's real income?
It fell by 2%
Assume an economy is producing only one product and the year 1 is the base year. Output and price data for 5 years are as follows... What is the nominal GDP?

Year Output Price
1 16 $8
2 20 9
3 25 10
4 30 15
5 33 12
$180
What is the GDP Deflator?
A measure of the price level of goods included in the GDP
What is real income?
The nominal income divided by the price level
What is a variation of cost-push inflation?
profit-push inflation
Which of the following does inflation effect?

a) both the level and distribution of income
b) the distribution but not the level of income
c) the level but not the distribution of income
d) neither level or distribution of income
a) both the level and distribution of income
Below is info from a hypothetical economy. What is the participation of this economy?
Total Population- 40
Working age Population- 32
Discouraged workers- 4
Full-time employed- 15
Part-time employed- 3
Unemployed- 2
62.5%
What is the definition of unemployment rate?The percentage of the labour force which is unemployedWhat type of unemployment is associated with recessions?CyclicalWhich two pieces of information would allow us to calculate a GDP deflator?Nominal GDP and real GDP figuresWhat percentage of Canada's labour force was unemployed in 2018?5.9%What is demand-pull inflation caused by?Aggregate expenditures exceeding the economy's capacity to produceWhy are economists concerned about deflation?Because it could cause credit markets to freeze up and in turn cause economic growth to stopWhich of the following best describes the relationship between deflation and consumption?Deflation is a decrease in the price level that causes people to postpone their consumption because they expect lower prices for goods and services in the futureThe price of a movie ticket in 1959 was $2, while in 2017 it was $10. The price index in 1959 was 30 and in 2017 it was 116.4 (2002 = 100). What are the 1959 and 2017 ticket prices respectively measured in 2002 prices?$6.67 and $8.59How does the economy eventually adjust to a recessionary gap?The nominal wage and price level will both decreaseWhat could cause the aggregate demand curve to shift to the right?An increase in income levels abroadWhich of the following statements is true about Canada's annual rate of economic growth since 2000?It averaged 2.3 percentWhat does the interest-rate effect explain?The shape of the aggregate demand curveAn increase in exports will have what effect on aggregate demand?It will increaseWhat does the foreign-trade effect explain?The shape of the aggregate demand curveWhich of the following is true of a recessionary gap?Firms have no incentive to produce more because they can't sell additional outputWhat is true of a movement up the aggregate supply curve?The nominal wage remains constant but the real wage declinesThe aggregate demand curve is downward sloping due to all of these factors EXCEPT: a) Interest rate effect. b) Foreign trade effect. c) Factor price effect. d) Real balances effect.Factor price effectWhich of the following will lead to an increase in aggregate demand?A decrease in the price of capital goodsAccording to Keynesian economists, why are prices and wages often inflexible?Because of the existence of large corporations and unionsHow does the economy eventually adjust to an inflationary gap?The nominal wage and price levels will both increaseIf the economy is close to full employment, what will be the result of an increase in aggregate demand?The price level will increase a lot, and Real GDP will increase only a littleAll of the following, except one, is another way of thinking of full-employment GDP. Which is the exception?It is the level of GDP when frictional and structural unemployment is zero.All of the following, except one, will cause an increase in aggregate demand. Which is the exception? a) A decrease in the exchange rate b) An increase in government spending c) A decrease in the interest rates d) A decrease in the price leveld) A decrease in the price levelWhich of the following will most likely lead to long-term economic growth? a) A decrease in the interest rate b) A decrease in the price level c) An increase in consumer spending d) A decrease in the quantity of labour resources e) An increase in the quality of labour resourcesAn increase in the quality of labour resourcesAccording to neoclassical economists, what is true of the aggregate supply curve?It is vertical at the capacity level of output in the economyAll of the following, except one, will cause an increase in aggregate demand. Which is the exception? a) A decrease in stock prices b) A decrease in interest rates c) A decrease in the price of capital goods d) A decrease in the exchange ratea) A decrease in stock pricesWhat is the business cycle?The expansionary and contractionary phases in the growth rate of Real GDPAssume that the parameters of a particular economy are as follows (all figures are in $billions): C = 100 + 0.75Y I = 50 What is the value of savings at expenditure equilibrium?$50What is the most important determinant of the level of consumption?The level of incomeWhat is true regarding autonomous spending?It is the level of spending when income is 0