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Chapter 12-13 Test

An example of a durable good would be
a used car
Compared with the expenditure approach to calculating GDP, the income approach is
more accurate
The main economic variables that affect business cycles include all fo the following EXCEPT
personal savings levels
The agency that maintains the National Income and Product Accounts (NIPA)
the US Department of Commerce
An example of capital deepening would be
paying for an employee to take college course
All of the following actions promote capital deepening EXCEPT
saving less and spending more of one’s disposable income
Compared with the income approach to calculating GDP, the expenditure approach is
more practical
GDP expressed in constant, or unchanging, prices is called
real GDP
The amount of money a person has left of his or her income after taxes is called
disposable personal income
An accurate statement about the Great Depression would be that
it ended largely because of an increase in defense spending related to WWII
how is nominal GDP converted into real GDP
through eliminating the effects of price increases on GDP growth
Which of the following is an example of a final good or service?
A cake purchased from a bakery for a wedding
In atypical business cycle, what stage immediately follows a peak?
contraction
Which of these is an example of depreciation?
A construction worker’s truck breaks down more often after 80,000 miles of work-related driving
What do economists believe about the future of business cycles to an end.
Business cycles will continue to drive our economy in the future, but the Federal Reserve may be able to better cushion the economy from the worst extremes
What is an example of a positive external shock to aggregate supply
Good weather leads to an unusually productive harvest for corn farmers
An economy that experiences the decreases real GDP and increasing prices is said to suffer from
stagflation
Higher savings leads to higher GDP in the future because
more capital is available for investment, leading to higher output through capital deepening
When the economy is working properly, what is the employment rate?
4 to 6 percent
The “market basket” that is used by the Bureau of Labor Statistics to calculate prices is made of the following?
typical goods and services for an urban household
What is a major problem for businesses during a period of chronic inflation?
They cannot anticipate their costs
According to the cost-push theory, what is responsible for inflation?
Producers raise prices to meet increased costs
Which of the following is correct? The unemployment rate is
(labor force-employed)/labor force x 100
If the number of people employed is 150,000 and the labor force is 160,000 the unemployment is
6.25%
When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at a large urban university, she is
frictionally umeployed
A knitting factory worker who loses her job because the company has relocated the plant to another country is an example of
structural umemployment
If jackson is paid an interest rate of 10% on his savings, but the inflation rate has risen to 20%, the purchasing power of his savings is
decreased by 10%
What is the possible consequence of the following scenario? Because of high unemployment rates in the country of Lavernia, employers offer higher wages. To meet their higher payroll costs and maintain profits, they charge consumers more for goods and services
a wage-price spiral of ever-increasing prices
Which of the following people is most likely to be classified as “working poor”?
Jim, who is a full-time student with a work study in the college library
Which of the following is the most likely to be worried about high inflation?
a retired couple on a fixed income
a system that collects marcoeconomic statistics on production, income, investment, and savings
national income accounting
the dollar value of all final goods and services produced within a country’s borders in a given year
GDP
the total amount of goods and services in the economy available at all possible price levels
aggregate supply
the loss of the value of capital equipment that results from normal wear and tear
depreciation
a decline in GDP combined with a rise in the price level
stagflation
a prolonged economic contraction
recession
the lowest point in the economic contraction, when real GDP stops falling
trough
an increase in efficiency gained by producing more output without using more inputs
technological progress
a system that collects macroeconomic statistics on production, income, investment, and savings
national income accounting
the annual income earned by US owned firms and US residents
GNP
the amount of goods and services in the economy that will be purchased at all possible price levels
aggregate demand
the loss of the value of capital equipmnt that results from normal wear and tear
depreciation
a decline in GDP combined with a rise in the price level
stagflation
key economic variables that economists use to predict a new phase of a business cycle
leading indicators
an increase in efficiency gained by producing more output without using more inputs
technological process
percentage of the nation’s labor force that is not employed
unemployment rate
a general increase in prices
inflation
income that does not increase even when prices go p
fixed income
area where companies can locate free of certain local, state, and federal taxes and restrictions
enterprise zone
a person who wants a job but has given up looking
discouraged worker
a measurement that shows how the average price of a standard group of goods changes over time
price index
government issued coupons that are exchanged for food
food stamps
an official count of the population
census
what occurs when people take time to find a job
fictional employment
the ability to buy goods and services
purchasing power
inflation that remains low for a long time
creeping inflation
a sustained drop in the price level
deflation
inflation that rises steadily from month to month over a long period
chronic inflation
the income level below which income is insufficient to support a family or a household
poverty threshold
federal funds given to the states in lump sums
block grant
the idea that too much money in the economy causes inflation
quantity theory

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