Macroeconomics Midterm Review: Lectures 1-3

<p>When actual output is less than potential GDP. (A)</p> Signup and view all the answers

<p>A phase characterized by economic growth. (C)</p> Signup and view all the answers

<p>Nominal or Current terms (B)</p> Signup and view all the answers

<p>The value of savings quickly erodes (D)</p> Signup and view all the answers

<p>Menu Costs (A)</p> Signup and view all the answers

<p>The annual percentage change in the price level (C)</p> Signup and view all the answers

<p>Encouragement to hold onto money (C)</p> Signup and view all the answers

<p>Borrowers gain and lenders lose (B)</p> Signup and view all the answers

<p>Price Index (A)</p> Signup and view all the answers

<p>Shoe-Leather Costs (C)</p> Signup and view all the answers

<p>Frictional Unemployment and Structural Unemployment (C)</p> Signup and view all the answers

<p>It promotes leaving the market alone to solve its problems. (C)</p> Signup and view all the answers

<p>Changing tax levels or government spending (D)</p> Signup and view all the answers

<p>The Great Moderation (1985 to 2008) (D)</p> Signup and view all the answers

<p>Raising interest rates and cutting government spending (A)</p> Signup and view all the answers

<p>Average economic output divided by population (B)</p> Signup and view all the answers

<p>A crisis in the US sub-prime mortgage market (A)</p> Signup and view all the answers

<p>Greater environmental degradation (A)</p> Signup and view all the answers

<p>Frictional Unemployment (C)</p> Signup and view all the answers

<p>The percentage of the total labour force that is unemployed (C)</p> Signup and view all the answers

<p>A mismatch between skills and job requirements (B)</p> Signup and view all the answers

<p>Neither Educated, Employed, nor in Training (A)</p> Signup and view all the answers

<p>Stable unemployment rates (C)</p> Signup and view all the answers

<p>The percentage of the population that is engaged in the labour force (B)</p> Signup and view all the answers

<p>Lack of consumer demand during recessions (A)</p> Signup and view all the answers

<p>It is unattainable as unemployment is a natural part of a healthy economy. (C)</p> Signup and view all the answers

<p>Minimum wage laws leading to hiring constraints (C)</p> Signup and view all the answers

<p>Incentivize better worker performance (A)</p> Signup and view all the answers

<p>Investment spending decreases due to higher borrowing costs. (A)</p> Signup and view all the answers

<p>Firms becoming more pessimistic about the future. (D)</p> Signup and view all the answers

<p>Consumption and Investment. (A)</p> Signup and view all the answers

<p>Desired expenditure equals actual national income. (C)</p> Signup and view all the answers

<p>An increase in the marginal propensity to spend. (A)</p> Signup and view all the answers

<p>National income will rise. (B)</p> Signup and view all the answers

<p>The opportunity cost of holding inventories increases. (A)</p> Signup and view all the answers

<p>It reflects the ultimate change in equilibrium national income due to autonomous spending. (D)</p> Signup and view all the answers

<p>A response to consumer demand. (B)</p> Signup and view all the answers

<p>Investment remains constant regardless of income levels. (B)</p> Signup and view all the answers

<p>MPC plus MPS always equals 1. (B)</p> Signup and view all the answers

<p>Used goods (C)</p> Signup and view all the answers

<p>All of the above. (D)</p> Signup and view all the answers

<p>The Expenditure Approach focuses on spending on final goods and services, while the Income Approach focuses on factor payments. (B)</p> Signup and view all the answers

<p>Expenditure components that are influenced by the level of national income. (B)</p> Signup and view all the answers

<p>GDP measures the value of goods and services produced within a country, while GNI measures the income earned by the citizens of a country. (A)</p> Signup and view all the answers

<p>All other factors remain constant. (A)</p> Signup and view all the answers

<p>It represents the point where consumption equals disposable income. (D)</p> Signup and view all the answers

<p>The decline in the value of an asset over time due to wear and tear. (A)</p> Signup and view all the answers

<p>Savings are negative. (D)</p> Signup and view all the answers

<p>The GDP Deflator measures the change in prices of all goods and services produced domestically, while CPI measures the change in prices of a basket of consumer goods. (C)</p> Signup and view all the answers

<p>The ratio of desired consumption to disposable income. (C)</p> Signup and view all the answers

<p>It tells us the average income per person in a country. (A)</p> Signup and view all the answers

The standard unemployment rate fluctuates and includes frictional and structural unemployment.

Temporary unemployment during the transition between jobs.

Unemployment caused by shifts in the economy or industry changes.

An economic approach advocating minimal government intervention.

Government intervention through adjusting tax levels or spending.

Changing money supply and interest rates to influence the economy.

A sustained increase in the production of goods and services over time.

Total economic output divided by the population, indicating average income.

People not working, want to work, but have given up job search.

Not currently working, want to work, but not actively looking because they’re waiting for a job to start.

People working part-time or not fully using their skills in jobs due to lack of full-time opportunities.

The total sum of employed and unemployed individuals.

Percentage of the population aged 15 and over that is part of the labour force.

Percentage of the labour force that is unemployed, typically concerning when above 7%.

Unemployment resulting from economic downturns or recessions, fluctuating with the business cycle.

Youth who are Neither Enrolled in school, nor Employed, nor in Training; at risk of disengagement.

A measure of the economic activity within a country’s borders.

A measure of economic activity not adjusted for inflation.

A measure of economic activity adjusted for price changes/inflation.

Fluctuations of real GDP around its trend value, showing expansion and recession phases.

A period of negative economic growth, typically defined as two consecutive quarters of declining GDP.

A rise in the average price level in the economy.

A fall in the average price level in the economy.

The annual percentage change in the price level.

Money payments adjusted for changing prices.

Money payments that have not been adjusted for inflation.

The average level of all prices in the economy expressed as an index number.

When inflation rates soar out of control.

Increased costs of transactions caused by inflation.

High interest rates lead to lower investment due to high borrowing costs.

High real interest rates increase the opportunity cost for firms considering investment.

High interest rates make holding excess inventories costly for firms.

High interest rates reduce affordability of mortgages, leading to less residential construction.

Firms invest in inventories to meet increased consumer demand.

Firms invest when they are optimistic about future sales opportunities.

Assumes firms wish to invest a fixed amount autonomously, regardless of income.

Relates desired aggregate expenditure to actual national income, expressed as AE = C + I.

Equilibrium occurs when desired aggregate expenditure equals actual national income (Y).

The ratio of the change in equilibrium national income to the change in autonomous spending.

The difference between a country's exports and imports.

Expenditure by households on goods and services.

Spending on capital goods that will be used for future production.

Total government spending on goods and services.

Goods and services produced domestically and sold to foreigners.

Goods and services purchased from foreign producers.

An index measuring the average price change of all items in GDP over time.

GDP plus net income earned from abroad by residents.

The ratio of total consumption to disposable income.

The change in consumption resulting from a change in disposable income.

Income available to households after taxes, available for spending or saving.

A function that shows how consumption changes with disposable income changes.

The relationship between disposable income and savings.