Review Questions Exam 2- Macro-Econ

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24 Terms

1
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A macroeconomist would concentrate on

the unemployment rate in Germany

2
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Gross Domestic Product is calculated by adding together


money value of final goods and services.

3
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Suppose that in 2011 you paid $150,000 for a house that was built in 2005 and sold that year for $210,000. The amount this transaction would add to the GDP in 2011 is

$0

4
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According to economists, one of the signs of an unhealthy economy is a

declining real GDP.

5
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If the labor force grows faster than the number employed, the

unemployment rate will rise

6
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Inflation often bestows unearned income on

homeowners

7
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A productivity decrease would be illustrated bya shift in the production function

downward

8
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The difference between disposable income and consumption spending is

personal saving

9
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The numerical value of the MPC is typically

less than 1

10
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An increase in the U.S. price level will

Shift the expenditure schedule downward

11
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Using the standard 45-degree line diagram, how does a decrease in net exports effect the expenditure schedule?

It shifts the expenditure schedule downward

12
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When the expenditure schedule is too high, the result is an

inflationary gap

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The only factor that can cause movement along the aggregate supply curve is the

price level

14
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What is the main difference between microeconomics and macroeconomics?

  • Microeconomics focuses on individual markets and decisions, while macroeconomics examines the economy as a whole, including issues like GDP, inflation, and unemployment.

15
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Define aggregation in the context of macroeconomics.

Aggregation is the process of combining individual economic factors into a single, comprehensive measure, such as GDP.

16
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How do simple supply and demand interactions affect the macro economy?

Supply and demand influence price levels and resource allocation across the economy, impacting inflation and overall economic stability.

17
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What are some key concerns of macroeconomists?

Unemployment, inflation, economic growth, and stability are primary concerns.

18
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What is GDP, and what are its primary uses?

Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country. It's used to gauge economic performance and compare economic health between countries.

19
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What are the main goals of macroeconomic policy?

Achieving economic growth, low unemployment, and stable prices.

20
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Explain the difference between actual and potential GDP.

Actual GDP is the current output level of the economy, while potential GDP represents the maximum possible output without causing inflation.

21
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What is the production function?

The production function shows the relationship between inputs (like labor and capital) and the output they produce.

22
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How is unemployment measured?

Unemployment is typically measured by the unemployment rate, which is the percentage of the labor force actively seeking work but unable to find it.

23
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What is inflation, and how do you calculate the inflation rate?

Inflation is the rate at which prices increase over time. The inflation rate can be calculated as: Inflation Rate=CPIold​CPInew​

CPIold​​

×100

24
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Explain the difference between real and nominal values.

Real values are adjusted for inflation, reflecting purchasing power, while nominal values are unadjusted and reflect current market prices.