ECON-2301 Macroeconomics Unit 2 Test Verified Test Answer Dump

The calculation of Spending GDP at this stage of our Circular Flow would be ___________________ .

3500 + 500 +1000 + 500 - 500

Unemployment and inflation are the two major causes of economic ____________ .

instability

____________ include veterans' payments, welfare, and social security payments.

Transfer Payments

IE 6-2....Business Cycle diagram - Point "x" represents an economy with a "natural" level of Unemployment of about ________ whose Price Level has _______________ .

4% ... increased moderately

IE 5-1....Suppose that a Demand shift (a change in income & spending) moves this economy to Point G with an Employment of 121 million people. The Circular Flow will be producing a Real GDP of ____________ billion with a movement toward Point S in the PPF. This is a(n) ______________ situation.

$5100 ... Inflation

To accommodate for unanticipated increases in inflation, savers may require a premium on their interest rate to hedge against that possible loss of _______________.

purchasing power

The National Income figure is reduced by that amount that people earn through business ownership, but do not actually receive because it is retained as ___________ to be re-invested in the business.

Undistributed Corporate Profits

Assume you borrowed $100,000 at a fixed rate of 7 percent for 30 years to purchase a house. If the inflation rate is 7 percent, then your repayments to the lender have ___________ purchasing power as the dollars that s/he loaned to you.

the same

IE 4-2....If the result of a SUPPLY shift in the Mini-economy is an Equilibrium at Point D, then the Quantity of Goods produced will be __________ and the Total Nominal Income will be ___________ .

2600 ... $4992

Tax revenues in the U.S. (as a percentage of GDP) are high compared to other nations of the world.

TRUE

The output of government sectors in the United States provides about ______ percent of the production in the nation.

30

GDP is the ____________ of all final goods and services produced in the nation within a year.

total monetary value

A _________ value in Xn can pose a problem for an economy over the longer term.

large negative

The basic principles of effective taxation would choose to avoid over-reliance on any one tax that can create ________ on the inflows.

up and down cycles

The National Bureau of Economic Research (NBER) may officially declare a recession in the United States after _______ consecutive quarterly declines in real national income, but they also look at other data such as rising unemployment.

two

If widespread "pessimism" continues and deepens in this example, there could be a significant risk of sliding into a _____________ .

depression as experienced in this country in the 1930's

The unemployment rate in the United States is _________ in most industrialized nations of the world.

less than

___________ unemployment occurs when workers do not have the required skills for existing jobs.

Structural

Government spending for goods and services is a(n) ____________ part of total spending in our economy.

significant

A monopoly is a _________ firm industry.

one

The sum of the ________ flows is equal to the cost of the goods and services at their final use.

income

IE 5-3....Suppose a chain reaction of human choices leads to a move from Point X to Point Y on the PPF. The Cost of this move would be the loss of $100 billion worth of ______________ sector goods and in the longer run the loss of some __________________ .

Private ... Efficiency and Growth

Use the table below to answer the question that follows.

"Nominal" GDP in 2001 was ______ .

$40

The GDP gap is the difference between potential output at ______________ employment and the current or a given output.

full

IE 4-3....Suppose that a Demand shift (a change in confidence) moves this economy to Point F with an Employment of 110 million people. Households in the Circular Flow will be earning a Nominal Income of _________ billion and there will be an equilibrium at Point U in the PPF. This is a ______________ situation.

$3840 ... Major Recession or Depression

All three of the $5000 billion GDP figures (Production, Income and Spending) are in ____________ dollars.

inflation adjusted, real

IE 6-5....AS/AD model - If improved technology and innovation lead to an increase in productivity and Real Income, then the equilibrium in this economy would shift from ________________ and that would be _____________.

Year 4 to 6 ... Sustained Growth

The "consumption of fixed capital" account (known as ________ ) is important because it indicates whether the economy is increasing its capital base or decreasing that base.

CFC

Regressive taxation is present when marginal (additional) tax rates ____________ with additional income.

none of the above

IE 6-4....AS/AD model - If Aggregate Income and Spending continue to increase after this economy reaches Full Employment, then the equilibrium could shift from ________________ and that would be a _____________.

Year 3 to 4 ... Inflation (Demand side)

People with _______ incomes tend to spend all of their funds and are, therefore, subject to the "regressive" nature of a sales tax.

Low

When there are negative externalities, government can cause the resources involved to be re-allocated through laws restricting output, through direct payments, or through specific __________.

taxes

IE 4-5....Suppose a chain reaction of human choices leads to a move from Point X to Point W on the PPF. A Risk of this move would be an increase in the possibility of a move from W to ______ and, therefore, an increase in ________________ .

S ... inflation

The term _____________ primarily represents the purchase of "productive equipment" and does not include stock market certificates nor does it include bonds.

Investment

The amount of capital equipment used up or destroyed is called the ____________.

CFC

A cost push inflation may be caused by a combination of increasing raw material prices, a ____________ spiral, and monopoly power of firms.

Wage/Price

By the Rule of 70 if a nation's prices are inflating at 10 percent it will take _____ years for the prices to double.

7

In recent times, the top ______ percent of households by income made over $320,000.

5

One benefit of the recessionary decline in this example is that ___________ has been kept under control (and there might even be some decrease in the price level).

inflation

Net domestic product (NDP) equals the output of the economy (GDP) ________ the depreciation of the nation's capital goods. This is an indicator of how much a nation must "invest" to continue that current GDP.

minus

IE 6-7....AS/AD Model - If this economy moves from Year 3 to Year 4, then the Unemployment Rate will be _______ and the Inflation Rate for that twelve month period is ________ .

2.4% ... 17%

Use the table below to answer the question that follows -

Investment Spending by the Business sector must be ___________ billion.

$500

In the Private Sector, there are many choices to be made by Business managers regarding which "projects" to borrow for and which "projects" to invest in. These choices often contain a great deal of ______________________ as well as the potential for benefits (profits).

both a. and b.

Corporations have limited liability, but lose ultimate control of corporate assets to the ______________ .

stockholders

Use the table below (in trillions) to answer the question that follows.

The amount of real increase (after adjustment for inflation) is about _________ billion ... less than the nominal increase of $791 billion.

$228

The distribution of income in United States is has become _________ than it was before 1990.

less equal

Commissions on the sale of _________ goods and commissions on financial transactions are counted in the GDP as part of "services provided at cost".

a. and b.

_________ values in economics are those that have been adjusted to remove the impact of inflation so that meaningful comparisons can be made.

Real

The "quantity of life" is ____________ a complete a measure of happiness.

not always