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Macro Section 6-10
| Question | Answer |
|---|---|
| Many goods and services are illegally sold or legally sold but not reported to the government. If we increased efforts to count those goods and services, GDP would ...? | increase GDP |
| Since 1965, the citizens of the United States have had what in their standard of living? | increased standard |
| Since 1965, the U.S. economy has experienced how many economic contractions? | seven |
| Microsoft buying another firm to expand social media presence would be considered what? | Microeconomics |
| If GDP was $4,466.1 billion in 1965 and $17937.8 in 2015, what was the growth rate in real GDP from 1965 to 2015? | 301.6% |
| Which is the largest component of GDP? | consumption goods and services. |
| From an economist’s perspective, what would not be considered as investment spending? | savings, stocks, or bonds |
| What is not counted in the calculation of GDP? | Illegal activities, transfer payments, and services that are produced but not sold are not counted in GDP. |
| What is not a use for GDP data | a measure of inflation. |
| What can lower the level of frictional unemployment over time? | more online job search engines |
| How can you determine the health of an economy? | we can compare the actual rate of unemployment with the natural rate of unemployment |
| if actual unemployment equals the natural rate the economy is what? | healthy |
| If the actual rate of unemployment is lower than the natural rate, the economy is? | is expanding past its long-run potential—eventually, unemployment will increase to the natural rate |
| If the actual rate of unemployment is higher than the natural rate, the economy is what? | in a recession. |
| Requirements To be considered unemployed? | a person must be part of the labor force and searching for a job without success. |
| Cyclical unemployment occurs when? | during recessions, when actual unemployment is higher than the natural rate. |
| The labor force participation rate for white men has _________ since 1972. | decreased |
| Which unemployment is the area in which policymakers can have their greatest impact | Cyclical |
| many jobs disappearing as technology has changed. What type of unemployment is this? | Structural |
| Even when inflation rates are high, you don’t see vending machines on your school campus adjusting prices frequently. This is an example of | menu cost |
| If your boss calls you into her office and offers you a promotion, which will include a 5% pay increase, how would you evaluate the value of your raise? | When evaluating a raise, you need to account for the rate of inflation over the course of a year. |
| Suppose the prices of homes go up by 10 % and the prices of concert tickets rise by 20%, which will have the larger impact on the CPI? | the increase in the price of homes will have a larger impact on the CPI. |
| The equation of exchange in rates of growth is | %ΔM + %ΔV ≈ %ΔP + %ΔY (Money supply + velocity = inflation + GDP) |
| What is an example of direct finance? | stocks and bonds |
| Many interest rates in the United States recently fell. Which of the following factors could not have been the cause? | An increase in demand for loanable funds would cause a shortage in the market for loanable funds. |
| Who are the demanders for loanable funds | Firms and governments |
| What will happen to the supply curve when people receive more income or wealth will save more | supply curve will shift to the right |
| How is it described when a person who’s 45 years old saves a large amount of her income for retirement compared to other periods of their lifetime? | They are said to smooth their consumption. |
| The fisher equationn is what? | real interest rate = nominal interest rate – inflation rate. |
| How do secondary markets affect interest rates? | The presence of secondary markets will decrease the interest rates that firms have to pay on bonds issued by them. |
| As time preferences decrease what will happen to supply of loanable funds? | the supply of loanable funds will increase. |
| Someone likes your business idea, and they write you a check to get things going. Is this financing option direct or indirect? | direct |
| Which of the following statements provides the clearest reason for why it is beneficial to the U.S. when China buys U.S. government bonds? | The increased savings from China that come into the U.S. financial markets increase the supply of loanable funds. This puts downward pressure on the interest rate. |
| Suppose you buy a bond for $940 and it will pay you back $1,000 one year from now. What interest rate are you receiving? | 6.4%. |
| You purchased an IBM bond with a face value of $10,000 and an interest rate of 25%. Suddenly the market interest rate changed, which raised your bond price by $600. Based on the given information, calculate the current market interest rate? | 16% |
| how much people pay for bonds is determined by who? | the bond market |
Created by:
v.virgil
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