Macro Economics Midterm #2

___________ is the market value of the final goods and services produced in a country during a particular period of time.

GDP (Gross Domestic Product)

The GDP of Ritzland during a particular year was $120,000. If the expenditure on investment was $16,000, the government spent $35,000, Exports totaled $10,000, and imports were $22,000....then, consumer spending must have been ____________.

$81,000

Which of the following primary macroeconomic variables rises in a recession?

Unemployment

If a country only produces one good, and in YR.1 they make 5,000 of that good, YR.2 they make 6,000 units of the good...and price pf YR.1's good us $280, while the price of YR.2's good us $320...THEN, if YR.1 is the base year, what is REAL GDP in YR.1?

$1,400,000

Macroeconomics is the study of __________.

Economic aggregates and the economy as a whole

The GDP expenditure method is not always equal to the GDP income method, primarily due to the ______________, which data collection methods do not capture....which includes illegal and non-reported/taxable income reporting.

Underground economy

Consumer and business expectations regarding their future economic well being is always influenced by ____________...and having the most accurate economic ___________ helps them to form more accurate expectations which quell their uncertainties.

Uncertainty; Forecasts

Economic __________ occur because economic forecast models do not see the shock to the economy - otherwise, these shock variables would be built into their forecasts.

Shocks

Write out the variables (short-hand allowed as long as the definition of each letter is defined) to calculate GDP by the expenditure method:

GDP(expenditure) = C(consumer spending) + I(business investment spending) + G(government spending) + (X= export spending - M= import spending)

Write out the variables (short-hand allowed as long as the definition of each letter is defined) to calculate GDP by the income method:

GDP (income)= W(wage income) + R(rental income) + i(interest income) + P(profit income) + Sc(statistical corrections)

Which of the following explains why the U.S. has historically experienced real GDP growth that is approximately double the rate of real GDP per capita growth from 1950 to now?

The fact that population growth has exceeded growth in $real GDP

Economists generally agree that sustained modern economic growth (future growth) depends upon the following economic conditions:

All of the above

The goal countries have to achieve sustained economic growth involves all of the following historical data trends EXCEPT....?

Decreased satisfaction of existing natural and political environments

What type of capital represents the accumulated amount of education and skills workers accumulate?

Human capital

Countries that develop and utilize new technologies are referred to as __________ nations, whereas countries that adopt existing technologies to catch-up on economic growth rates are referred to as __________ nations.

Leading; Following

Which of the following institutional structures are crucial to a nation's ability to achieve modern economic growth (or, sustained quality of living growth)?

All of the above

Which of the following supply-side factors to growth factors have NOT contributed to short-term and long-term economic growth?

Increases in aggregate demand that matches increases in output

Taking real GDP ($) value divided by the quantity of labor hours represents ________________ and the labor force divided by the working-age population represents the best measure of _____________.

Labor productivity; labor force participation

According to historical data from the 1950s to now, ____________ growth accounts for approximately 82% of real GDP growth rates in the U.S.

Labor productivity

When analyzing an economy as a whole, economic growth can be illustrated with an outward shift in that economy's ___________, where any point along the curve itself would qualify as an ______________.

Production possibility frontier; economically efficient

The labor force includes __________ and __________ persons in an economy's labor market.

Employed; Unemployed

The working-age population includes all of the following types of people EXCEPT...?

Disabled persons

The most current (as of February 2026), the U.S. labor force participation rate was ________, which is lower than the historical average labor force participation rate of ___________.

62.1%; 67 - 68%

The likelihood that someone who wants to work may not have a job is referred to as a/an _______________.

Unemployment rate

The _______________ is the ideal/goal unemployment rate for an economy's labor market, which is an average historic rate of about ____________.

Natural Rate of Unemployment; 4%

During economic _____________, the "U3" unemployment rate is > the natural unemployment rate & real GDP < potential GDP....whereas, during economic _____________, the "U3" unemployment rate is < the natural unemployment rate & real GDP > potential GDP.

Recessions; expansions

Which of the following are causes for a shift in a labor demand curve?

Reasons a, b, & c

Which of the following are causes for a shift in a labor supply curve?

Only a, c, & d

Which 2 types of unemployment are considered "good" types for a healthy, growing economy? AND, which type is considered the "bad" type?

Structural & Frictional; Cyclical

When an economy's labor market experiences an actual U3 unemployment rate that is equal to the natural rate of unemployment, that economy must also be at ______________, i.e.: Economic efficiency.

Full-employment

At a full-employment level, an economy must also be at a ____________ GDP level.

Potential

The business cycle (the pattern of real GDP increases and decreases over time) can be viewed by which two (2) macro variables and their fluctuation around those variables' goal rates?

Real GDP and the Unemployment rate

The difference between an economy's actual real GDP and that economy's potential GDP is called the _______________, which can be (+) or (-) depending on the business cycle phase.

Output/GDP Gap

All of the following are types of economic shocks that fuel an economy's business cycle fluctuations, EXCEPT for.....?

Population Changes

The business cycle theory based on changes in productivity and technology is called ___________; the business cycle theory based on changes in interest rates and financial asset prices is referred to as _____________; and the business cycle theory focusing on changes in expectations and "animal spirits" is called ______________.

RBC (real business cycle); Monetarist/Financial; Keynesian theory

Using the 2021 U.S. BLS labor market data below, please calculate (a) the labor force participation rate, and (b) the unemployment rate. SHOW ALL WORK/equations, even if you use a calculator: ● Total population = 331.9 million people ● Not in the labor force population = 100.2 million people ● Working-age population = 261.4 million people ● Unemployed = 8.6 million people ● Employed = 152.6 million people

a) LFP rate(2021) = (Labor Force/Working-Age Population)

LFP rate(2021)= ((U+E)/Working-Age Population)

= 61.7%

b) Unemployment rate(2021) = (Number of Unemployed ppl./ Labor Force)

Unemployment rate(2021)= (U)/(U+E)

=5.3%

Real GDP (expenditure method) accounts for ___________, whereas, nominal GDP (expenditure method) does not. In order to convert nominal GDP $s to real GDP $s, one can use the ___________.

Inflation; GDP Price Index

What variable of the GDP expenditure method calculation accounts for 67-70% of U.S GDP spending?

Consumer spending

Real GDP per capita is a measure of a country's ______________ (real GDP/population)?

Standard of Living

Which of the following should be included in the calculation of real GDP (expenditure) by the BEA (Bureau of Economic Analysis)?

Value-added of good/service sales

Please (a) fill in the missing value-added column of the table below for wool coat manufacturing/sales AND....(b) indicate which total should be counted towards the calculation of real GDP (expenditure method).

a

Please use the table below to calculate/fill in the missing values for nominal and real GDP for the country that only produces pizzas.

a

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