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Macro test
| Question | Answer |
|---|---|
| The consumption of fixed capital in each year's production is called | depreciation |
| "Net foreign factor income" in the national income accounts refers to the difference between | the income Americans gain from supplying resources abroad and the income that foreigners earn by supplying resources in the U.S. |
| Which of the following is not economic investment? | the purchase of 100 shares of AT&T by a retired business executive |
| Which of the following is a private transfer payment? | a check for $250 sent by a parent to a daughter at college |
| Net exports are negative when | a nation's imports exceed its exports. |
| Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Donita sells the dresses for $1,200 to kids attending the prom. The total contribution to GDP of this series of transactions is | $1,2000 |
| Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being? | the child-care services provided by stay-at-home parents |
| If real GDP in a year was $3,668 billion and the price index was 112, then nominal GDP in that year was approximately | $4,108 billion |
| GDP is the | monetary value of all final goods and services produced within the borders of a nation in a particular year. |
| When local police and fire departments buy new cars for their operations, these are counted as part of | G |
| Environmental pollution is accounted for in | none of these |
| Which of the following is not seen by economists as an underlying cause of business cycle fluctuations? | All of these are identified as causes of business cycle changes. |
| Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percentage of potential GDP is | 8 percent |
| What are the primary effects of cost-push inflation? | It reduces real output and redistributes a decreased level of real income. |
| Alex works in his own home as a homemaker and full-time caretaker of his children. Officially, he is | not in the labor force |
| Kara voluntarily quit her job as an insurance agent to return to school full time to earn an MBA degree. With degree in hand, she is now searching for a position in management. Kara presently is | frictionally unemployed |
| The presence of discouraged workers | may cause the official unemployment rate to understate the true amount of unemployment. |
| The consumer price index was 177.1 last year and 179.9 this year. Therefore, the current rate of inflation is about | 1.6 percent |
| Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers. The type of unemployment Kevin is faced with is | strucutural |
| In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates? | expansion |
| If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation premium is | 3 percent |
| The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are | capital goods and durable consumer goods |
| Rising per-unit production costs are most directly associated with | cost-push inflation |
| Recurring upswings and downswings in an economy's real GDP over time are called | business cycles |
| If actual GDP is $500 billion and there is a negative GDP gap of $10 billion, potential GDP is | $510 billionThe natural rate of unemployment is |
| The natural rate of unemployment is | that rate of unemployment occurring when the economy is at its potential output. |
| A headline states, "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment? | cyclical |
| Cost-of-living adjustment clauses (COLAs) | tie wage increases to changes in the price level. |
| In the expansion phase of a business cycle, | employment and output increase |
| The phrase "too much money chasing too few goods" best describes | demand-pull inflation |
| Which of the following constitute the types of unemployment occurring at the natural rate of unemployment? | structural and frictional unemployment |
| Personal saving is equal to | disposable income minus consumption. |
| The 45-degree line on a graph relating consumption and income shows | all the points at which consumption and income are equal. |
| Which of the following factors would decrease investment demand? | an increase in the cost of acquriing capital goods |
| The purchase of capital goods, like ____ consumer goods, can be postponed; it tends to contribute to _____ in investment spending. | durable; instability |
| As disposable income increases, consumption | and saving both increase |
| Disposable Income Consumption $ 200 $ 205 225 225 250 245 275 265 300 285 Refer to the given data. The marginal propensity to consume is | 0.80 |
| Disposable Income Consumption $ 0 $ 8 80 80 160 152 240 224 320 296 400 368 All figures are in billions of dollars. The marginal propensity to save in this economy is | 0.1 |
| Disposable Income Consumption $ 10,000 $ 12,000 18,000 18,000 26,000 24,000 34,000 30,000 42,000 36,000 50,000 42,000 Refer to the accompanying consumption schedule. If disposable income is $42,000, then saving is | $6,000 |
| The relationship between the MPS and the MPC is such that | 1- MPC = MPS |
| Which one of the following will cause a movement down along an economy's consumption schedule? | a decrease in disposable income |
| If households in the economy save more of any extra income that they earn, then the multiplier effect will | decrease |
| If Matt's disposable income increases from $4,000 to $4,500 and his level of saving increases from $200 to $325, it may be concluded that his marginal propensity to | consume is 0.75 |
| Disposable Income Consumption $ 10,000 $ 12,000 18,000 18,000 26,000 24,000 34,000 30,000 42,000 36,000 50,000 42,000 If disposable income were $34,000, then the average propensity to save would be about | 0.12 |
| Investment spending in the United States tends to be unstable because | all of the factors mentioned in other answers contribute to the instability. |
| Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by | $20 billion |
| If the MPC is 0.8, what change in investment spending is required to effect a total change in income by $60 billion? | 12 billion |
| The MPC for an economy is | the slope of the consumption schedule or line. |
| If disposable income is $900 billion when the average propensity to consume is 0.9, it can be concluded that | saving is $90 billion |
| Given the expected rate of return on all possible investment opportunities in the economy, | an increase in the real rate of interest will reduce the level of investment. |
| If disposable income increases from $912 to $927 billion and MPC = 0.6, then consumption will increase by | $9 billion |
| With a marginal propensity to save of 0.4, the marginal propensity to consume will be | 1.0 minus 0.4 |
| An increase in spending of $25 billion increases real GDP from $600 billion to $700 billion. The marginal propensity to consume must be | 0.75, and the multiplier is 4. |
| A firm invests in a new machine that costs $2,000 a year but which is expected to produce an increase in total revenue of $2,200 a year. The current real rate of interest is 8 percent. The firm should | undertake the investment because the expected rate of return of 10 percent is greater than the real rate of interest. |
| If the real interest rate in the economy is i and the expected rate of return from additional investment is r, then more investment will be forthcoming when | r is greater than i |
| Dissaving means | that households are spending more than their current incomes. |
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briannasutton_17
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