Ch_10_MC_Algo

Macroeconomics Overview

• Macroeconomists Study:

  • a. Individual households & firms

  • b. Interactions between households & firms

  • c. Regulations on firms & unions

  • d. Economy-wide phenomena. (Correct Answer)

Tools of Economic Analysis

• the bacsic Supply and Demand Tools:

  • a. Only for individual markets

  • b. For overall economy, not individual markets

  • c. Central to microeconomics, seldom for macroeconomics

  • d. Central to both macroeconomic and microeconomic analysis. (Correct Answer)

Economic Well-being Measures

• Which of the following statistics is usually regarded as the best single measure of a society's economic well-being?

  • a. Stock market index

  • b. Producer price index

  • c. Gross Domestic Product (GDP) (Correct Answer)

  • d. Trade deficit

Understanding GDP

• GDP Definition Gross domestic product measures

  • a. Measures both income and expenditures.(Correct Answer)

  • b. Measures expenditures only.

  • c. Measures income only.

  • d. Neither income nor expenditures.

•  Expenditures on a nation's domestic production

  • a. Less than production

  • b. Equal to dosmestic production. (Correct Answer)

  • c. Greater than production

  • d. Could vary

• For an economy as a whole,

  • a. Wages = profit

  • b. Consumption = income

  • c. Income = expenditure. (Correct Answer)

  • d. Consumption = saving

GDP Accounting Relationship

• In the GDP accounts production equals

  • a. Income. (Correct Answer)

  • b. Income + saving

  • c. Income - government expenditures

  • d. Income - imports

Transactions and GDP

• Transaction Impact on GDP:

  • a. More closely associated with income than expenditure. (Correct Answer)

  • b. Every transaction contributes equally

  • c. Firms must equal households in flow

  • d. Profits zero in circular-flows

  • Because every transaction has a buyer and a seller,

  • a. GDP is more closely associated with an economy's income than it is with an economy's expenditure.

  • b. every transaction contributes equally to an economy's income and to its expenditure.( correct answer)

  • c.the number of firms must be equal to the number of households in a simple circular-flow diagram.

  • d.firms' profits are necessarily zero in a simple circular-flow diagram.

• If an economy's GDP rises, then it must be the case that the economy's

  • a. Rises = income & saving rise

  • b. Falls with market value rise

  • c. Market value falls & income rises

  • d. income and the market value of all production both rise.. (Correct Answer)

Circular-Flow Diagram Insights

• Total Income & Expenditure in Circular Flow:

  • a. Never equal

  • b. Seldom equal

  • c. Equal only government doesn’t purchase

  • d. Always equal. (Correct Answer)

• Household Spending in Actual Economy:

  • a. Spend all income.

  • b. Divide among sectors(Correct Answer)

  • c. Buy all goods produced

  • d. Save all income

• In the actual economy, goods and services are purchased by

  • a. Households only

  • b. Households & firms only

  • c. Households & government, no firms

  • d. Households, firms, and government. (Correct Answer)

GDP Computation from Circular Flow

•  According to the circular-flow diagram, GDP can be computed as

  • a. either the revenue firms receive from the sales of goods and services or the payments they make to factors of production.(Correct Answer)

  • b. Sales revenue only

  • c. Payments only

  • d. Neither

• GDP from Market Relationships:

  • Figure 24-1:Refer to Figure 24-1. Which of the following pairs correctly identify W and Y?

    • a. W = Markets for factors, Y = Markets for goods.

    • b. Firms & households(Correct Answer)

    • c. Expenditures & income

    • d. Consumption & investment

Flow of Dollars

• Correct Flow Identification in Figure 24-1:

  • a. A, L, N, B. (Correct Answer)

• Identifying X and Z in Figure 24-1:

  • a. Market flows and outputs. (Correct Answer)

Computing GDP

• GDP as Household Income:

  • a. Income from wages, rent, and profit. (Correct Answer)

  • b. Wages only

  • c. Payments for labor

  • d. Profits only

GDP Definition

• GDP Defined:

  • a. Value of all goods produced in a country. (Correct Answer)

  • b. By citizens regardless of location

  • c. Final goods only

  • d. Final goods by citizens only

Calculating Aggregate GDP

• Computation Basis for GDP:

  • a. Market prices. (Correct Answer)

• Contribution Value Based on Prices:

  • a. Dress is five times as boots contribution

  • b. Boots contribute one-fifth of dress. (Correct Answer)

GDP Components

• Included in GDP:

  • a. Market value of rental housing only

  • b. Market value of owner-occupied and rental housing. (Correct Answer)

• Calculating GDP in Purchase Context:

  • a. Tutoring by a resident is included. (Correct Answer)

  • b. Foreign textbook purchase is not

  • c. Supplies by companies are included

  • d. Used textbook purchase excluded

Home Productions & GDP

• Home Goods Contribution:

  • a. Included in GDP illegally

  • b. Home produced excluded; illegal included. (Correct Answer)

• Behavioral Changes Impacting GDP:

  • a. Shift from home cooking to eating out increases GDP. (Correct Answer)

• Correct Statements on Purchases:

  • Only grocery store purchases from Jane. (Correct Answer)

Goods Classification

• Farmer Goods Classification:

  • a. Final goods

  • b. Intermediate goods. (Correct Answer)

• Bicycle Company Contribution:

  • b. $230 to GDP. (Correct Answer)

Production Levels & GDP

• Reduction in Production Indicator:

  • b. GDP likely decreased. (Correct Answer)

• U.S. Citizen Purchase Abroad:

  • b. Included in Aruba's GDP, not U.S.'s. (Correct Answer)

• Statistical Discrepancy Understanding:

  • a. Data imperfection causes discrepancies. (Correct Answer)

Income Measures Comparison

• Order of U.S. Income Measures:

  • c. GNP, NNP, National income, PI, DPI. (Correct Answer)

• Relation of GDP to GNP:

  • d. GNP = GDP - Income by foreign earned. (Correct Answer)

• Net Factor Payments Calculation:

  • c. GDP lower than GNP. (Correct Answer)

• Citizen Working Abroad Income:

  • b. Included in GDP only. (Correct Answer)

Understanding Depreciation

• Term for Depreciation in Accounts:

  • a. "Consumption of fixed capital." (Correct Answer)

National Income vs. Net Product

• Difference in National Income:

  • b. Statistical discrepancy factor. (Correct Answer)

Disposable Personal Income

• Definition of Disposable Personal Income:

  • c. Households post taxes. (Correct Answer)

• Knowing Disposable Personal Income Definition:

  • d. Total after government obligations. (Correct Answer)

Table Insights

• GDP for Krugeveaux Calculation:

  • b. $600. (Correct Answer)

• GNP Calculation for Krugeveaux:

  • c. $594. (Correct Answer)

• Net National Product Calculation:

  • a. $590. (Correct Answer)

• Personal Income Calculation:

  • d. $593. (Correct Answer)

• Disposable Personal Income Calculation:

  • c. $719. (Correct Answer)

Investment Definitions

• Investment in GDP:

  • c. Capital investments, inventories, structures. (Correct Answer)

• Household Expenditure Types as Investment:

  • c. New house purchase. (Correct Answer)

Expenditures in GDP

• Counted in GDP for Growth:

  • c. Spending on services. (Correct Answer)

• Inventory Value Adjustment in GDP Context:

  • c. Treated as investment. (Correct Answer)

Government Spending Context

• Government Purchases Definition:

  • c. All government levels. (Correct Answer)

• Understanding Transfer Payments:

  • d. Excluded as not current production. (Correct Answer)

Inflation and GDP

• Net Exports Calculation:

  • c. Y - (C + I + G). (Correct Answer)

• Interpreting Negative Net Exports:

  • d. Imports > exports. (Correct Answer)

• Impact on GDP from Social Security:

  • b. Increases $220. (Correct Answer)

• GDP and GNP Relational Equality:

  • b. Domestic production equal to ownership. (Correct Answer)

Activity Reporting

• Reporting Spending Changes:

  • c. Change in output or prices. (Correct Answer)

• Real GDP Definition:

  • b. The valuation at constant prices. (Correct Answer)

• Growth Measurement:

  • d. Percentage change in real GDP. (Correct Answer)

• GDP Deflator Understanding:

  • c. Nominal to real GDP ratio. (Correct Answer)

Price Changes and GDP

• Changes in GDP Deflator Reasons:

  • a. Changes in prices only. (Correct Answer)

• Describing Overall Rise in Prices:

  • b. Inflation. (Correct Answer)

• Percentage Level Change Calculation:

  • b. Inflation Rate. (Correct Answer)

• Calculating Real GDP from Nominal:

  • c. $57.1 billion. (Correct Answer)

Historical GDP Analysis

• Identifying GDP Deflator & Inflation Rate:

  • b. 9.16, -10.3. (Correct Answer)

• GDP Growth Rate from Previous Years:

  • a. -8.62%. (Correct Answer)

Price Consistency

• Impact of Constant Prices on Nominal GDP:

  • a. 8.62% decrease. (Correct Answer)

Inflation Rate Computation

• Inflation Rate Change from 2016 to 2017:

  • b. 23.1%. (Correct Answer)

GDP Measurement Concepts

• GDP for Lahland Measurement:

  • b. $10,000. (Correct Answer)

• Recession Definition:

  • c. Decline in real GDP for two quarters. (Correct Answer)

GDP Per Person Understanding

• Interpretation of GDP per Person:

  • c. Average person in economy. (Correct Answer)

Welfare Measurement

• Society Value Measures:

  • c. GDP indicates purchasing power for welfare. (Correct Answer)

• Impact of Production Law Changes:

  • b. GDP increases excluding leisure effect. (Correct Answer)

Nominal vs. Real GDP Growth

• Evaluation of Nominal GDP Growth:

  • b. Real GDP per person grew less than nominal. (Correct Answer)

Summary of International Data

• International Data Insights on GDP & Well-being:

  • c. Correlation between GDP and quality of life. (Correct Answer)

• Quality of Life & GDP Correlation:

  • b. Positive correlation with longer life expectancy. (Correct Answer)