ECON211 UNIT 2

Which of the following best defines disposable income? the before-tax income received by households the market value of the annual output net of consumption of fixed capital all income earned by resource suppliers for their current contributions to production income received by households less personal taxes

Which of the following is included in GDP? fees received by stockbrokers payments received from selling stocks in one's portfolio welfare payments received by some households cash gifts from relatives during the holidays

If depreciation exceeds gross investment, net investment is zero. the economy's stock of capital is shrinking. the economy's stock of capital may be either growing or shrinking. the economy's stock of capital is growing.

In 1933, net private domestic investment was a minus $6.0 billion. This means that the economy produced no capital goods at all in 1933. gross private domestic investment exceeded depreciation by $6.0 billion. the economy was expanding in that year. the production of 1933's GDP used up more capital goods than were produced in that yea

GDP can be calculated by summing consumption, investment, government purchases, exports, and imports. consumption, investment, government purchases, and net exports. consumption, investment, wages, and rents. consumption, investment, government purchases, and imports.

Real GDP refers to GDP data that have been adjusted for changes in the price level. the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. GDP data that embody changes in the price level but not changes in physical output. GDP data that do not reflect changes in both physical output and the price level.

Gross domestic product (GDP) measures and reports output in percentage terms. in quantities of physical units (for example, pounds, gallons, and bushels). as an index number. in dollar amounts and percentage growth.

Which of the following is a final good or service? Chevrolet windows purchased by a General Motors assembly plant diesel fuel bought for a delivery truck a haircut purchased by a father for his 12-year-old son fertilizer purchased by a farm supplier

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is 240. 300. 100. 200

In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are counted as government spending. not counted. counted as consumption spending. counted as investment spending.

The largest component of national income is rents. corporate profits. interest. compensation of employees.

Suppose the total monetary value of all final goods and services produced in a particular country in 2015 is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that NDP in 2015 is $450 billion. inventories in 2015 fell by $50 billion. GDP in 2015 is $450 billion. GDP in 2015 is $500 billion

Tom Atoe grows fruits and vegetables for home consumption. This activity is included in GDP because it reflects production. excluded from GDP because an intermediate good is involved. excluded from GDP in order to avoid double counting. productive but is excluded from GDP because no market transaction occurs.

Government purchases include government spending on government consumption goods and public capital goods. public capital goods only. government consumption goods only. government consumption goods, public capital goods, and transfer payments.

Economies of scale refers to public investments in highways, schools, utilities, and such. the reallocation of labor from less-productive to more-productive uses. the fact that large producers may be able to use more efficient technologies than smaller producers. the idea that proprietorships are less bureaucratic and therefore more efficient than corporations.

One major aspect of the socio-cultural-political environment of the United States which has generally been conducive to economic growth is the enforcement of contracts by the market. denial of the rights of property ownership. favorable attitude toward work and risk-taking. strict social regulation of production and progress

For comparing changes in potential military strength and political preeminence, the most meaningful measure of economic growth would be changes in per family output. total nominal output. per capita output. total real output.

Real per capita GDP has been about 20 times higher in the richer nations than the poorer nations for about 2,000 years. grows at approximately the same rate for all countries. was much more equal across nations in 1820 than it is today. grows much faster in "leader countries" than in "follower countries."

Trends in educational attainment in the U.S. since 1960 indicate that the percentage of adults completing college has been constant, but the percentage completing high school has been rising. completing college has been rising, and so has the percentage completing high school. who do not go to high school has been falling, but the percentage who do not complete elementary school has been rising. completing high school has been rising, and so has the percentage who do not go to high school nor complete elementary school.

Rising real wages for women in the U.S. workforce since the 1960s have led to a rise in the number of lifetime births per woman. increased the opportunity cost of staying at home. reduced access to job opportunities for women. reallocated labor resources from urban to rural areas of the nation.

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. Use the accompanying list to answer the following question. As distinct from the supply factors and demand factor of economic growth, the efficiency factor(s) of economic growth is (are)

Under what circumstances do rates of economic growth understate the growth of economic well-being? Population has grown faster than real output. Air quality has declined as real GDP has increased. Product quality has improved. Economic growth has occurred because of the increased length of the workweek.

Which of the following economic regions has experienced the most growth in real GDP per capita since 1820? Japan United States Latin America Western Europe

conomic historians identify which invention as a major factor that started the Industrial Revolution in Britain? steam engine automobile telephone electric motor

An antigrowth view would be that there may be a significant trade-off between productivity and education. the quality of life . employment. economies of scale.

A competitive market system encourages growth by allowing producers to make profitable investment decisions based on market signals. encourages growth by ensuring that everyone in society will receive a decent standard of living. discourages growth unless government protects domestic firms from foreign competition. discourages growth because firms busy competing have no time to innovate or invest.

The entry of women into the workforce since the 1960s resulted in a shift inward in the production possibilities curve of the United States. a shift outward in the production possibilities curve of the United States. a movement along the existing production possibilities curve of the United States. a falling real wage for female workers in the United States.

f the Consumer Price Index was 170 in one year and 180 in the next year, then the rate of inflation was approximately 6.3 percent. 5.5 percent. 5.9 percent. 7.2 percent.

The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in this economy is 12 million. 24 million. 6 million. 9 million

A trough in the business cycle occurs when employment and output reach their lowest levels. cyclical unemployment is at a minimum point. the inflation rate is at its lowest level. the natural rate of unemployment is at a minimum point.

If the total population is 200 million, the labor force is 100 million, and 92 million workers are employed, then the unemployment rate would be 6 percent. 4 percent. 10 percent. 8 percent

Which of the following would most likely occur during the expansionary phase of the business cycle? structural inflation frictional inflation demand-pull inflation cost-push inflation

The best example of a "frictionally unemployed" worker is one who reduces productivity by causing friction in a business. is discouraged and not actively seeking work. is in the process of voluntarily switching jobs. is laid off during a recessionary period in the economy.

Inflation caused by an increase in aggregate spending is referred to as demand-pull inflation. cost-push inflation. hyperinflation. anticipated inflation.

The natural rate of unemployment is a fixed unemployment rate that does not change over time. means that the economy will always operate at that rate. is equal to the total of frictional and structural unemployment. means that the economy will always realize its potential output.

Unanticipated inflation tends to penalize governments that have a progressive personal income tax. businesses which borrow money from financial institutions. people who save money in financial institutions. individuals who borrow money from financial institutions.

The accompanying list describes the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment. 1. Mollie just graduated from college and is now looking for work. She has had three job interviews in the past month but still has not gotten a job offer. 2. George used to work in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in a few months when national economic conditions improve. 3. Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the Federal government cut defense spending. She has been looking for similar work for a year, but no company seems interested in her aircraft design skills. 4. Ricardo lost his job last year when his company downsized and laid off middle-level managers. He tried to find another job for a year but was unsuccessful and quit looking for work. Which individual is frictionally unemployed?

A headline states, "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment? natural structural frictional cyclical

The GDP gap measures the difference between NDP and GDP. nominal GDP and real GDP. NI and PI. actual GDP and potential GDP.

As applied to the price level, the "rule of 70" indicates that the number of years required for the price level to double can be found by subtracting the annual change in nominal incomes from 70. multiplying the annual rate of inflation by 70. dividing the annual rate of inflation into 70. dividing 70 into the annual rate of inflation.

A recession is a decline in the unemployment rate that lasts six months or longer. the inflation rate that lasts six months or longer. potential GDP that lasts six months or longer. real GDP that lasts six months or longer.

Did economic output start growing faster than population from the beginning of the human inhabitation of the earth? No, rapid and sustained economic growth is a modern phenomenon. Yes, rapid and sustained economic growth has been occurring since the beginning of the human inhabitation of the earth. No, population has always grown faster than output. This is impossible to know.

Modern economic growth began in the year 1000. when the railroads were built. with the Industrial Revolution. after the death of Christ.

There is a trade-off between the amount of consumption that people can enjoy today and the amount of consumption that they can enjoy in the future because producers always respond to what consumers want. consumers like to both save and spend. to increase consumption in the future households must save, thus providing funds for investment. consumers do not like to save.

Typically a higher saving rate is associated with higher investment rates and lower rates of growth. lower investment rates and lower rates of growth. higher investment rates and higher rates of growth. lower investment rates and higher rates of growth.

Banks and other financial institutions help allocate resources to the most productive investments. eliminate poor business decisions. reduce the risk of borrowing. focus on long-term projects.

a. Investment as defined by economists differs from investment as defined by the general public in that financial investment refers to the purchase of machinery, whereas economic investment refers to the purchase of financial assets . economic investment refers to the purchase of labor, whereas financial investment refers to the purchase of banking assets. economic investment refers to the motivation to earn a profit, whereas financial investment refers to the motivation to increase sales. economic investment refers to the purchase of machinery, whereas financial investment refers to the purchase of financial assets.

If firms expected the future returns for an investment to be very low, all else equal, they would invest less. invest more. produce more. produce less.

fluctuations in output and emplyment are known as

a ______ a period where output and input decline

what are the top 3 ways you evaluate economy?

measures the value of final goods and services produced within the borders of a country within a year

measures dollar value of goods and services at their current prices

high rates of unemployment re undesirable because it shows that a high level of the work force is not

increase in overall level of prices

the __________ created a major increase in economic growth

what do these describe? output per person rises not experienced by all countries

when current consumption is less than current output

when resources are devoted to increasing future output

while _____ are the principle source of savings, businesses are the principle economic investors

unexpected shocks in the demand for goods and services

*demand shocks

what is it called when prices charged for certain goods are reluctant to change despite changes in input cost or demand patterns

many prices are sticky in the ________

all prices are flexible in the _______

who believed that severe recessions are followed by euphoric bubbles

who believed that government action bubbles that keep interest rates too low caused the great recession

what measures economy overall performance?

what compiles national income and product accounts? --asses health of economy --tracks long-run course --formulates policy

primary measure of the output of economy as a whole is _____

GDP only includes the final value of goods and ignores intermediate goods in order to avoid

What approach of GDP looks at income derived from production such as wages, rental income, and interest income, and profit?

What approach of GDP counts money as all the money spent in buying the output?

what covers all the expenditures of households on all the goods and services for the year?

What is a good that has a life of more than 3 years?

what is a good that has a life of less than 3 years?

dollar measure of production is

what are the two types of GDP?

which GDP is based on prices that prevailed when output was prevailed?

Which GDP reflects changes in the price level -calculated when base year is selected and current year prices are divided by that (multiply by 100)

T/F GDP fails to capture the full value of improvements in product quality

T/F underground economy is not included in GDP which can hurt economy

What is the statistic that sums together the dollar value of each stage in which all economic activity can be grouped -larger than GDP

Office of Personnel Management deals with what?

What is the increase in real GDP or real GDP per capita over some time period?

what is the arithmetic of growth rule of economic growth?

where did modern economic growth start?

What are these examples of? Strong property rights Patents and Copyrights Efficient financial institutions Literacy and widespread education Free Trade Competitive market system

What are these 4 things? 1.) Increases in quantity and quality of natural resources 2.) Increases in quality and quantity of human resources 3.) Increases in the supply (or stock) of capital goods 4.) Improvements in technology

what is hours of work x labor productivity = to

what is the largest contributor to productivity growth?

which kind of goods are most affected by causation?

what is this? # of unemployed/labor force

what unemployment is known as individuals searching for a job or waiting to take jobs soon (somewhat desirable) (short term)

what unemployment occurs due to changes in the structure or demand of labor

what unemployment is caused by the recession phase of the business cycle?

what is the difference between potential and actual GDP?

actual GPD-potential GDPT

what law states that for every 1% of cyclical unemployment, there is a 2% GDP gap

what start of inflation is the result of spending increasing more than production (too much spending chasing too few goods)

what type of inflation occurs due to a ride in per-unit input costs

what type of inflation ends in recession?