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Macro test 1
| Question | Answer |
|---|---|
| value added is... | Value of output MINUS value of intermediate inputs |
| the value added to the loaf of bread sold at $5 dollars if $3 so how much money did the Intermediate input (flour) cost | $2 |
| what is net exports | exports - imports |
| are transfer payments like a social security checks included in the Gdp | no they are not because it is government moving money from one account to another. not a new generation of money |
| what does real gdp | keeps prices constant and removes the effect of inflation to place emphasis on production growth |
| what is catch up growth | when countries with initial little capital invest in more physical capital per worker their impact on productivity is more significant. |
| who experiences catchup growth | developing countries |
| what is solows steady state | when investments EQUAL depreciation. the new capital being added replaces the capital that is wearing out keeping growth steady at net zero |
| people who are not actively seeking employment are | not included in the labor force |
| the percentage change in Real GDP + The percentage change in prices is equal to | the percentage change in nominal GDP |
| what does constants return to scale imply | that outputs will double if you double all inputs (L,H,K) |
| a country having "government stability" and "property rights" facilitating the environment for economic growth is a product of what | institutions |
| economies of scale | the average cost decreases as product increases |
| why does economies of scale happen | usually when a company is experiencing specialization and becoming quicker and better at production allowing them to spread cost and lower the unit price of production |
| Labor productivity | measures the output produced per hour of work and how efficiently labor is transformed to output |
| does technological progress sustain economic growth in the long run | yes, because new ideas and innovations do not wear out like physical capital ( a lawnmower) |
| technological growth is not | automatic requires incentives and protections such as research and development subsidies and intellectual property rights protection |
| GDP total income perspective | total wages + total perspective |
| GDP Total spending perspective | Y= C + I + G + NX |
| GDP Total output perspective | total sales - cost of inputs |
| GDP per capita is | total gdp divided by the total population which measures the average output per person |
Created by:
Zariii