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Which of the following examples would support the goals of macroeconomic policy?
a policy that reduces payroll taxes with the intention of creating jobs
an increase in government spending with the intention of stimulating economic growth
an increase in money supply, which results in a lower interest rate
all of the above
all of the above
The three goals of macroeconomic policy are economic growth, lower unemployment rates, and lower inflation rates. All of these examples support the goals of macroeconomic policy.
Which of the following is not a component of demand used to measure GDP?
consumption
government spending
income taxes
net exports
income taxes
The components of demand used to measure the GDP are consumption, investment, government spending, and net exports (exports minus imports). Income taxes are not a component of demand and are not included in the expenditure approach to calculating GDP.
In a trade deficit, ________.
Select the correct answer below:
exports are greater than imports
imports are greater than exports
exports and imports are equal
exports and imports have no impact on GDP
imports are greater than exports
By definition, a trade deficit occurs when imports exceed exports. This could also be referred to as a negative trade balance.
If total GDP for this economy is $17.04 trillion for the year shown in the table below, what was the total amount of government spending? Round your answer to the nearest hundredth.
2.45 trillion
GDP=Consumption+Investment+Government spending+Trade balanceGDP=C+I+G+(X−M)
For this economy,Government spending=17.04−11.61−3.11−(2.71−2.84)=$2.45 trillion
Using the information below, determine what percentage of total GDP for this country consists of durable goods. Round your answer to the nearest tenth.
16.7%
GDP=Durable goods+Nondurable goods+Services+Structures+Change in inventories
For this economy,GDP=3.21+2.55+11.12+1.76+0.56=$19.2 trillion
To find the percentage of durable goods,
3.21/19.2×100=16.7%
Calculate total GDP for this economy given the following components of supply. Round your answer to the nearest hundredth.
Note: In this scenario, GDP is measured by what is produced, not by components of demand.
18.12 trillion
GDP=Durable goods+Nondurable goods+Services+Structures+Change in inventories
For this economy,GDP=5.21+0.75+9.80+1.85+0.51=$18.12 trillion
Everything that we purchase somebody must first produce. What a country produces is divided into five categories: durable goods, nondurable goods, services, structures, and the change in inventories.
True or false?
The total value of a nation’s output is equal to the total value of a nation’s income.
True
The total value of a nation’s output is equal to the total value of a nation’s income. This is why the terms GDP and national income are sometimes used interchangeably.
__________ factors in the value of how much physical capital is worn out, or reduced in value due to aging, over the course of a year.
Select the correct answer below:
gross national product (GNP)
gross domestic product (GDP)
national income
net national product (NNP)
net national product (NNP)
We calculate net national product (NNP) by taking gross national product (GNP) and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year.
Consumption, investment, government spending, and net exports are all _________.
Select the two correct answers below.
Select all that apply:
components of GDP on the demand side
components of GDP on the supply side
used to measure the total income of a country
used to measure the size of a nation’s overall economy
components of GDP on the demand side
used to measure the size of a nation’s overall economy
The components of demand used to measure GDP are consumption, investment, government spending, and net exports (imports minus exports). In general, GDP is used to measure the size of a nation’s overall economy, so taking these components together is one way to find that measurement.
Each of the market transactions that enter into GDP must involve both a buyer and a seller. We can measure an economy's GDP either by the total dollar value of what consumers purchase in the economy or by the total dollar value of what is the country produces. Who buys all of this production? We can divide this demand into four main parts: consumer spending (consumption), business spending (investment), government spending on goods and services, and spending on net exports.
True or false?
The goals of macroeconomic policy include low rates of inflation, lower unemployment, and perfect competition in markets.
False
The three goals of macroeconomic policy are economic growth, lower unemployment rates, and lower inflation rates. Perfect competition in markets is not a goal of macroeconomic policy
The entire underground economy of services paid “under the table” and illegal sales is not counted in GDP because _________________.
Select the correct answer below:
it does not represent production
it is impossible to track these sales
illegal economic activity doesn't generate real national income
all of the above
it is impossible to track these sales
The entire underground economy of services paid “under the table” and illegal sales is not counted in GDP because it is impossible to track these sales. In Friedrich Schneider's recent study of shadow economies, he estimated the underground economy in the United States to be 6.6% of GDP, or close to $2 trillion in 2013 alone.
What does a positive value of (X - M) indicate?
Select the two correct answers below.
Select all that apply:
a trade deficit
a trade surplus
exports are greater than imports
imports are greater than exports
a trade surplus
exports are greater than imports
Exports are denoted by X and imports by M, which means that exports would be greater than imports when (X-M) is positive. This is a trade surplus.
Which description best fits the definition of gross national product (GNP)?
Select the correct answer below:
the value of what is produced by individuals and firms of a country in a given year, regardless of where the production takes place
the amount of all income earned in a nation
the gap between exports and imports
the value of the output of all goods and services produced within a country in a year
the value of what is produced by individuals and firms of a country in a given year, regardless of where the production takes place
Gross national product (GNP) is defined as the value of what is produced domestically and what is produced by individuals and firms of a country in a given year, regardless of where the production takes place.
