Macro Exam 2 Word Scramble

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Question	Answer
What is GDP?	The market value of all FINAL GOOD and SERVICES produced within a country in a year. It measures an economy's total output, which includes millions of different goods and services
What is GDP Per Capita?	GDP divided by population.
What is a FINAL GOOD and SERVICES?	They can be sold to firms and then bundled or processed with other goods or services for sale at a later stage. (intermediate good),
What is an Example of an Intermediate Good? (Is not a final good) (tires on a automobile)	EX: If an intel chip were counted in GDP when it was sold to Dell, then counted again when a consumer buys the dell computer, the value of the computer chip be counted twice, To avoid double counting , only the computer (the final good) is included in GDP
Why don't we include sales in GDP	What is calculated is Production. GDP measured of incomes wages are paid based on production (Not transactions)
Why isnt Sales of financial Intermediaries included in GDP?	It is a transfer of wealth and nothing was produced in the end.
What is GNP?	The market value of all final goods and services produced by a country's permanent residents, where ever located, in a year. Ex: Mexican Worker in America contributes to U.s GDP (who produced it) Mexcian worker in America contributes to Mex's GNP.
What does National Wealth and Income refers to?	1.The nations entire stock of assets 2. The flow of the assets.
What is Savings?	Income that is not spent on consumption goods.
What does individual savings contribute to?	The supply of loanable funds
The main reason people save during their working years is ?	A preference towards a smooth consumption path overtime
If individuals become less impatient (or more patient), what will happen in the market of loanable funds ?	The supply of loanable funds will increase, interest rates will fall, and the quantity of saving and borrowing will increase.
An investment tax credit will cause the interest rate to _______and borrowing to_______ .	increase; increase
An increase in government borrowing will cause the interest rate to	rise and private spending to fall.
Which of the following would be included in GDP for the United States	Toyota, a Japanese car company, producing cars in the United States
Gross domestic product (GDP) is the market value of	All final goods and services produced within a country in a year
Business cycles are short-term movements in	real GDP around its long-term trend.
A real variable is one that	includes a correction for inflation
Which of the following is NOT considered a government purchase	unemployment checks
In the national spending approach, investment spending involves the acquisition of which of the following	Capital Goods
Which of the following is TRUE in the calculation of GDP	GDP does not include goods and services produced privately inside the home
Why does South Korea have a higher level of real GDP per capita than North Korea?	South Korea has a better system of incentives than North Korea
The two types of economic growth are	cutting-edge and catching-up.
In a steady state, the level of investment:	is equal to depreciation.
In a steady state, the capital stock	remains constant.
In financial markets, which group best represents the demand side of the market	Stock Markets
Why might it be a good thing for the United States if more people in India and China start dying of cancer and heart disease instead of malnutrition and preventable disease?	Companies will invest more in curing cancer and heart disease.
Which of the following explains why the supply of savings is upward sloping?	An increase in the interest rate leads to an increase in the quantity of saving.
When a given bond’s price increases, we know that the interest rate on this bond	Must Decrease
What is Recession?	A significant widespread decline in real GDP and Employment
What are Business Cycles? (Business Fluctuations)	The short run movements in real GDP around it long term trend.
What is Consumption?	Spending is private on final goods and services.
What is Investment?	Spending is private spending on tools, plants and equipment used to produce future output.
What is Government Purchases ?	Spending by all levels of government on final goods and services. Transfers are not included in these.
What are Net Ports ?	The value of exports minus the value of imports
What is the Factor Income Approach ?	Employee compensation (wages) + Rent+ Interest + Profit
What Are the Issues with GDP?	NO underground Economy (markets of illegal goods) NO Non priced production (household production, female labor force) NO Leisure (Inverse relationship between leisure and income) NO Bads (pollution) NO Income Distribution
The production function is a mathematical function that shows	the relationship between output and the factors of production
In a steady state, the level of investment	is equal to depreciation.
Countries with more human capital tend to have a	higher GDP per capita.
Because of spillovers, the social benefit of research and development	is greater than the private benefit
Investment is	the purchase of new capital goods.
If income and consumption are equal, saving must be	zero
If the interest rate increases, then	both the quantity saved and the quantity supplied of loanable funds will increase.
If the interest rate rises from 5% to 9%, the number of new businesses will	decrease
If the interest rate in the market for loanable funds is below the market-clearing rate, then	there will be a shortage of savings, and demanders will bid the interest rate up as they compete to borrow
Crowding out occurs because the government increases the demand for loanable funds, drives up interest rates, and causes	consumption and investment to fall
An increase in government borrowing will cause the interest rate to	rise and private spending to fall.
If the supply of loanable funds increases and the demand for loanable funds increases at the same time, interest rates will	increase, decrease, or remain the same.
When bond prices increase, interest rates:	must decrease
GNP measures:	production by U.S. citizens wherever they work in the world
A set of tires installed on a vehicle in an automobile factory is counted as	an intermediate good and its market price is not part of GDP.
The value of a car produced and sold in 2005 and sold again in 2011 is included in	2005's GDP only
The value of a country's GDP exceeds that of the country's GNP if the value of the	output produced by foreign workers in the country exceeds the value of output produced by the country's permanent residents in other countries.
What is the most immediate (or direct) cause of growth in real GDP per capita	factors of production
Which best describes the growth process from its ultimate to its immediate causes	institutions → incentives → factors of production → real GDP per capita
Which scenario has the greatest potential for free riding?	a system in which work effort and pay are not connected
Due to economies of scale, average costs decline as	production levels increase
Property rights are important institutions for encouraging investment because	people won't invest if they feel their property is at risk and that they may not realize a return on their investment

Created by: alishabenefield