# 2

Nominal gross domestic product
Can change when there is a change in either output or price level
Refer to the data. Gross domestic product in this economy is
\$1079 billion
Refer to the data. Personal income in this economy is
\$656 billion
GDP Price index measures changes in
Prices of output produced in the nation
In an economy, the total expenditures for a market basket of goods in year 1 was \$5000 billion. In year 2, the total expenditure for a basket of goods was \$5500 billion. What was the GDP price index for the economy in year 2?
110
In year 1, nominal GDP for the US was \$2250 billion and in year 2 it was \$2508 billion. The GDP deflator was 72 in year 1 and 79 in year 2. Real GDP rose by
1.6 percent
Nation A’s real GDP was \$520 billion in 2013 and \$550 billion in 2014. Its population was 150 million in 2013 and 155 million in 2014. Which of the following is true
Nation A’s and Nation B’s GDP per capita both increased from 2013 to 2014
In the expansion phase of a business cycle
Employment and output increase
The unemployment rate is interpreted as the percentage of the
Labor force that are not employed
Which of the following is the correct way to calculate the unemployment rate?
(Unemployed/labor force) * 100
The best example of a frictionally unemployed worker is one who
Is in the process of voluntarily switching jobs
Kevin has lost his job in an automobile plant because the economy switched to robots for its welding step in the assembly line. The type of unemployment Kevin is faced with is
Structural
When a US importer buys 100,000 pairs of pants from a Hong Kong company, this transaction will represent a
DEBIT on the CURRENT account of the US balance of payments
In the aggregate demand-aggregate supply model, the economy’s price level s assumed to be
VARIABLE, UNLIKE in the aggregate expenditures model
The following factors explain the inverse relationship between the price level and the total demand for output except:
A substitution effect
The interest rate effect on aggregate demand indicates that a
DECREASE in the price level will DECREASE demand for money, DECREASE interest rates, and INCREASE consumption
An increase in personal income tax rates will cause a
Decrease in aggregate demand
A decrease in expected returns on investment will most likely shift the AD curve to the
LEFT because IG will DECREASE
If the national incomes of our trading partners increase, then our
Aggregate demand INCREASES because NET EXPORTS INCREASE
An increase in national incomes abroad
A cut in personal and business taxes
Refer to the list. Investment spending would most likely be influenced by changes in
5 and 10
The slope of the immediate-short run aggregate supply curve is based on the assumption that
Both input and output prices are fixed
The upward slope of the short-run aggregate supply curve is based on the assumption that
Wages and other resource prices do not respond to price level changes
The long-run aggregate supply analysis assumes that
Both input and product prices are variable
If the price of crude oil decreases, then this would most likely
Increase aggregate SUPPLY in the US
If Congress passed new laws significantly increasing the regulation of business, this action would tend to
INCREASE per-unit production costs and shift the aggregate supply curve to the LEFT
If personal income taxes and business taxes increase, then this will
Decrease aggregate demand and aggregate supply
The US economy was able to achieve full employment with relative price level stability between 1996 and 2000 because aggregate
Demand increased and aggregate supply increased
Collective bargaining agreements that prohibit wage cuts for the curation of the contract contribute to
A price level that is inflexible downward
When the Federal government cuts taxes and increases spending to stimulate the economy during a period recession, such actions are designed to be
Countercyclical
Refer to the figure above. The economy is at equilibrium at point B. What would expansionary fiscal policy do?
Move the economy from point B towards point A
A budget surplus means that
Government revenues are greater than expenditures in a given year
A Federal budget deficit is financed by the
Government issuance or sale of Treasury securities
The crowding-out effect from the government borrowing to finance the public debt is reduced when
Public investment complements private investment
Which country is the United States’s largest trading partner in terms of volume of trade

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