Deck 17: Monitoring Macroeconomic Performance

Question 1

In the United States,over time GDP

A) stays relatively constant with occasional increases.
B) increases most of the time and decreases occasionally.
C) increases and decreases roughly about the same amount.
D) decreases more often than it increases.

Answer 1

B

Question 2

A significant decline in activity spread across the economy,lasting more than a few months is called

A) a recession.
B) an expansion.
C) a peak.
D) inflation.

Answer 2

A

Question 3

The difference between nominal GDP and real GDP is that real GDP eliminates the effects from

A) depreciation.
B) inflation.
C) the unemployment rate.
D) changes in productivity.

Answer 3

B

Question 4

The circular flow model shows that GDP can be calculated by

A) both the expenditure and income methods because aggregate expenditure equals aggregate income.
B) only the expenditure method in which the four components of aggregate expenditure must be measured in the aggregate.
C) both the expenditure and income methods, even though aggregate expenditure is usually less than aggregate income.
D) only the income method in which the four components of aggregate income must be measured separately.

Question 5

Comparing the unemployment rate and the business cycle we see that

A) the unemployment rate generally increases during expansions and generally decreases during recessions.
B) there is virtually no relationship between the business cycle and the unemployment rate.
C) the unemployment rate eventually falls during expansions and rises during recessions.
D) higher unemployment rates are the cause of most business cycles.

Question 6

The labor force is defined as

A) all people aged 16 and over and not institutionalized.
B) the entire population.
C) those people employed and unemployed.
D) only those people with jobs.

Question 7

In the United States over the past 40 years,the

A) labor force participation rate has remained relatively constant and the unemployment rate has trended upwards.
B) both the unemployment rate and real GDP have tended to increase.
C) labor force participation rate has fallen and real GDP has increased.
D) unemployment rate has fluctuated and the labor force participation rate has risen.

Question 8

At full employment,

A) real GDP equals potential GDP.
B) the unemployment rate is zero.
C) real GDP is above potential GDP.
D) the business cycle is at its peak.

Question 9

The accumulated loss of output that results from a slowdown in the growth rate of GDP per person is called the

A) Keynesian gap.
B) Okun gap.
C) Lucas wedge.
D) unemployment wedge.

Question 10

GDP is defined as

A) gross demanded prices.
B) generally demanded product.
C) gross domestic product.
D) generally demanded prices.

Question 11

In the expenditure approach to measuring GDP,the components of GDP are

A) consumption, investment, government expenditure, and net exports.
B) consumption, taxes, saving, and investment.
C) inflation, unemployment, saving, and investment.
D) frictional unemployment, structural unemployment, and cyclical unemployment.