ecn211 test 1 study guide

ecn211 test 1 study guide - Sheet1 The objective of...

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Unformatted text preview: Sheet1 The objective of economics is to?,"Explain why the world is what it is" Which of the following is not an economic good? wine bicycles refrigerators air pollution education,"<STRONG>4. Air What does it mean for an item to be scarce?,"There is not enough of the item to satisfy everyone who wants it" Analysis that does not impose the value judgements of one individual on the decision of others is called _______ analysis,"Po True or False? The following statement is a normative statement? There should be a higher tax on cigarettes, alcohol, and How an individual firm decides the price of its product is the study of?,"Microeconomics" A good that people will pay to have less of is called an economic ______,"Bad" _______ ____ _______ means that people make the choices that they think will give them the greatest amount of satisfaction Resources also are called _____ __ _____ or ______,"Factors of Production Analysis that does not impose the value judgements of one individual on the decisions of thers is called _______ analysis,"Po _______ analysis involves imposing value judgements on the decisions of thers,"Normative" The _______ __ ___________ is the error of attributing what applies to one to the case of many,"Fallacy of Composition" The mistaken interpretation of __________ __ ________ occurs when unrelated or coincidental events that occur at about the All the combinations of output that could be produced with a given set of resources and current technology, assuming that the Which of the following statements is false? At points inside the production possiblities curve, resources are not being fully A point that lies ______ the production possibilities curve indicates that resources are not being fully or efficiently used,"Inside Points outside the production possibilities curve represent combinations of goods and services that are&nbsp;__________ giv A new semiconductor chip is designed that can deliver more computing power for less cost. As a result, the production possib A society that prohibits certain groups of people from working (for example, women, children, and african americans) is produ It is not possible to produce more of one good without giving up units of another good if a socitety is producing ____ its produ the _______ ________ ____ is the amount of one good or service that must be given up to obtain one additional unit of anoth ________ consists of one or more persons who occupy a unit of housing. Household spending is called __________ and is th _______ ____ is a business organization controlled by a single management. Business firms can be organized as ____ ____ _______ are products the United States sells to foreign countries. _______ are products it buys from other countries,"Exports Household own the _______ __ __________ and sell them to firms in return for income. Business firms combine the factors o Householders _____ to _____ years old make up the largest number of households,"35 to 45" Householders ____ to ____ years old have the largest median annual income,"45 to 54" Households consisting of ___ person(s) make up the largest percentage of households,"2" Household spending, or consumption, is the ______ component of total spending in the economy,"Largest" There are five families living in the small town of North Mayberry. Family A's annual income is $20,000, Family B's annual inco (when ordered numerically, it is the middle number)" In ____ _______________ ___ ____________, the owner of the business is responsible for all the debts incurred by the busi ____ _______________ are the most common form of business organization, but ____________ accounts for the largest sha <EM>Investment, </EM>as used in the text, is ________ ________ __ _______ _____,"Business Spending On Capital Good The United States tends to import primary products such as agricultural produce and minerals from&nbsp; __________ count About one-third of U.S. imports and more than one-third of U.S. exports came from trade between the United States and ____ A trade surplus occurs when ___ ______ ___ _______,"Net Exports are Positive" Low-income countries are concentrated heavily in _____ and ____,"Africa and Asia" Which of the following statements is false? Exports are products that a country sells to another country Net exports equal exports minus imports Net exports equal imports minus exports,"3. Net exports equal imports minus exports" Which of the following statements is false? firms buy the factors of production from households The value of output must equal the value of income The value of input must equal the value of household income,"3. The value of input must equal the value of household incom _________ own(s) the factors of prodution,"Households" A(n) _________ consists of one or more persons who occupy a unit of housing,"Households" Household spending is called ___________,"Consumption" Householders between __ and __ years old have the largest median incomes,"45 A household is most likely to consist of __ persons,"2" Page 1 Sheet1 A(n) ________ ____ is a business organization controlled by a single management,"Business Firm" A(n) ____ ______________ is a business owned by one person,"Sole Proprietorship" A(n) ___________ is a business owned by two or more individuals share both the profits of the business and the responsibilit A(n) ___________ is a legal entity owned by shareholders whose liability for the firm's losses is limited to the value of the stoc A(n) _____________ business is a firm that owns and operates produing unites in foreign countries,"Multinational" In the United States, the most common form of business organization is the ____ ______________,"Sole Proprietorship" __________ is the expenditure by business firms for capital goods,"Investment" ____________ account(s) for the largest percentage of business revenue,"Corporations" The _____ ____ is an international organization that makes loans to developing countries,"World Bank" Low-income economies are heavily concentrated in _____ and ____,"Africa Products that a country buys from another country are called ______,"Imports" Products that a country sells to another country are called ______,"Exports" The United States trades the most with two countries, ______ and _____,"Canada A trade ______ exists when exports exceed imports,"Surplus" A trade _______ exists when imports exceed exports,"Deficit" ___ ______ equal(s) exports minus imports,"Net Exports" ________ net exports signal a trade surplus, _______ net exports signal a trade deficit,"Positive List Three Factors of Production:,"Land Labor Capital" The ________ ____ _______ is a model showing the flow of output and income from one sector of the economy to another.," _______ ______ is directed toward control of money and credit,"Monetary Policy" ______ ______ is directed toward government spending and taxation,"Fiscal Policy" The book assumes that the government sector does not interact directly with ______ ________,"Foreign Countries" Which of the following statements is false? Money flows from the government to households The value of private production equals the value of household income,"The value of private production equals the value of ho Combined government spending on goods and services is larger than __________ but smaller than __________,"Investment ______ ______ occurs when federal spending exceeds federal revenues,"Budget Deficit" The _______ ___ ___ ________ is (are) responsible for fiscal policcy, and the _______ _______ is (are) responsible for mon In ___ ______ ______, government spending (as a percentage of total output) is lower than that of Japan,"The United States Government in the United States exists at the _______, _____, and _____ levels,"Federal The household sector obtains government goods and services primarily by ______ _____,"Paying Taxes" The ________ ____ _________ illustrrates how the main sectors of the economy fit together,"Circular Flow Diagram" The macroeconomic functions of government are ______ and ________ policies,"Fiscal The _______ ________ is the central bank of the United States,"Federal Reserve" Monetary policy is directed toward control of _____ and ______,"Money Fiscal Policy is directed toward __________ ________ and _________,"Government Spending Monetary policy is the responsibility of the _______ _______,"Federal Reserve" Fiscal policy is the responsibility of the ________ ___ ___ _________,"Congress and the President" The _________ usually initiates major policy changes,"President" If federal government spending is less than tax revenue, a budget ______ exists,"Surplus" If federal government spending is greater than tax revenue, a budget _______ exists,"Deficit" ______ _______ ______ or (___) is the market value of all final goods and services produced in a year in a country.,"Gross D Name the three domestic producer categories:,"Households Businesses Government (Business firms produce the largest part of the U.S. GDP)" Page 2 Sheet1 Groups that purchse the GDP are households, businesses, government, and the international sector. Household spending is called ___________ Business spending is called __________ Government spending is called __________ ________ International component spending is called ___ ______,"Consumption What equation is GDP written as income?,"<STRONG>GDP = Wages + Interest + Rent + Profit - net factor income from abro Two income categories that are not payments to the factors of production are included in the GDP are:,"Capital Consumption Indirect Business Taxes" _______ (___) measures output in terms of its current dollar value. A rise in (same answer) can be from an increase in physic ____ (___) measures output in constant prices. (same answer) can increase only if the production of physical goods and serv A _____ _____ measures the level of average prices and shows how prices, on average, hae changed. If a pair of running sh The market value of all final goods and services produced in a year within a country's borders,"Gross Domestic Product (GDP Unsold goods that the firm had expected to be able to sell during the year they were produced,"Unplanned inventory" The largest component of total expenditures is?,"Consumption" To get NNP from GNP, we subtract what?,"Capital consumption allowance" For a hypothetical economy in a given year, GDP equaled $1,895, investment equaled $303, goods exported equaled $110, g Measures output in terms of its current dollar value,"Nominal GDP" Measures average prices received by producers,"The producer price index (PPI)" Measures output in constant prices,"Real GDP" A price index equal to 90 in a given year indicates what?,"prices were lower than prices in the base year" Total expenditures on final goods and services are equivelent to what?,"the total value of goods and services produced and to Gross domestic product is the ______ value of all _____ goods and services produced in a year within a country's borders,"M ____________ _____ are goods that are used in the production of a final product,"Intermediate Goods" _____ _____ is the difference between the value of output and the value of the intermediate goods used in the production of t _________ is a firm's stock of unsold goods,"Inventory" The estimated value of capital goods used up or worn out in a year plus the value of accidental damage to capital goods is ca A lei maker buys flowers from a nursery fro $125. She makes 50 leis from the flowers and sells each lei for $3.99. What is the The lei maker gets $3.99 for each of her 50 leis, for a total of $199.50. Since her cost for the flowers was $125, her value add A kansas farmer sells wheat to a craftsperson to make in decorative ornaments. The farmer sells his wheat to the craftsperson The total of the values added is $300 +$200 + $50 = $550. The 110 ornaments are worth $550, or $5 each." Unplanned inventory _______&nbsp;(is, is not) included in GDP,"Is" Government spending on goods and services _____ (is, is not) the largest component of GDP as expenditures,"Is Not" An increase in the _______ _____ index can indicate a coming change in the CPI,"Producer Price" Why isn't nominal GDP a good measure of the strength or weakness of the economy? What measure would be better?,"Incre ________ ______ are recurring patterns of ups and downs in real DGP. A typical cycle has four stages: expansion, peak, con The ____________ ____ is the percentage of the labor force that is not working. Economists do not include the entire popula __________ unemployment occurs when previously employed workers change jobs or new workers seek their first jobs.&nbs ________ unemployment is a product of regular, recurring changes in the hiring needs of certain industries. Both these types __________ unemployment, on the other hand, results from fundamental changes in the structure of the economy and can be __________ unemployed persons who are out of work because the economy is in a recession may be unemployed for a long The cost of unemployed resources is lost output. _________ ____ ___ is the level of output that can be produced if all non lab Economists do not advocate a zero unemployment rate. Some unemployment is necessary so that workers by be channeled _______ is a sustained rise in the average level of prices. This does not mean that all prices will rise. Some may rise and som Why is inflation a problem?,"Inflation is not a problem if prices and incomes rise at the same rate" In correct sequence, the four stages of the business cycle are?,"Peak, Contraction, Trough , and Expansion" What causes the unemployment rate to be overstated?,"Underground Economic Activities" A graduating college basket ball star who has one month off before reporting to his new NBA team is an example of ________ Unemployed migrant workers are examples of _______ unemployment,"Seasonal" A person who finds that her skills are no longer needed because she has been replaced by a machine is an example of _____ A steelworker who has been laid off during a recession is an example of _______ unemployment,"Cyclical" Which of the following statements is false? 1. The influx of women and baby boomers into eh labor force has increased in t Page 3 Sheet1 If a college professor's income has increased by 3 percent at the same time that prices have risen by 5 percent, the professor Which groups benefits from unanticipated inflation?,"Debtors" Which of the following could be a cause of demand-pull inflation? 1. Suppliers who increase their profit margins by raising p High rates of inflation are generally caused by rapid growth of the _____ ______,"Money Supply" A lender who does not expect any change in the price level is willing to make a mortgage loan at a 10 percent rate of interest. The recurring pattern of real GDP rising and then falling is called a(n) _______ _____,"Business Cycle" When real GDP is growing, the economy is in the ________ phase, or boom period, of the business cycle,"Expansion" The ______ marks the end of a contraction and the start of a new business cycle.,"Trough" The ____ marks the end of the expansion phase of a business cycle.&nbsp;,"Peak" Real GP falls during the contraction, or ________ phase of the business cycle,"Recession" The (____) _______ ______ __ ______ ________ has the responsibility of officially dating recessions in the United States,"(N A(n) ________ is a prolonged period of severe economic contraciton,"Depression" ______ _________ change before real GDP changes,"Leading Indicators" __________ _________ are economic variables that tend to changes at the same time real output changes,"Coincident Indic Variables that do not change their value until after the value of real GDP has changed are called ________ _________,"Lagg The __________ ____ is the percentage of the labor force that is not working,"Unemployment Rate" ___________ _______ have given up looking for work because they believe that no one will hire them.&nbsp;,"Discouraged W The employment of workers in tasks that do not fully utilize their productive potential is called _____ _______&nbsp;,"Under E ________ unemployment is a product of business-cycle fluctuations,"Cyclical" ______ unemployment is a product of regular, recurring changes in the hiring needs of certain industries over the months or s __________ (or search) enemployment is a product of short-term movements of workers between jobs an of first-time job see ___________ unemployment is a product of technological change and other changes in the structure of the economy,"Structu The level of output produced when non labor resources are fully utilized and unemployment is at its natural rate is called ____ The ______ ____ __ __________ is the unemployment rate that would exist in the absence of cyclical unemployment,"Natura Potential real &nbsp;GDP minus actual real GDP equals the ___ ___,"GDP Gap" The existence of _____________ ______ and _____ ___________ causes the official enemployment rate in the United State The existence of the underground economy causes the official unemployment rate in the United States to be ___________,"O Economists measure the cost of unemployment in terms of ____ ______ (or the GDP gap),"Lost Output" Since 1951, the unemployment rate in the United States has varied between a low of ___ percent and a high of ___ percent," Which age group usually has the highest unemployment rate?&nbsp;,"Teenagers" In most years, the unemployment rate for men is _____ ____ the unemployment rate for women,"Lower than" __________ is a sustained rise in the average level of prices,"Inflation" The higher the price level, the _____ the purchasing power of the dollar,"Lower" The observed rate of interest in the market is called the _______ rate of interest,"Nominal" The nominal interest rate minus the rate of inflation equals the ____ interest rate,"Real" Unexpectedly high inflation hurts _________ and benefits _______ because it lowers real interest rates,"Creditors ______ _____ inflation is the result of increased spending that is not offset by increases in the supply of goods and services& Increases in prices caused by increases in production costs characterize ____-____ inflation,"Cost-Push" A very high rate of inflation is called a(n) _____-_________,"Hyper-Inflation" ______ -push pressures are created by suppliers who want to increase their profit margins by raising prices faster than their c ____ - push pressures are created by labor unions and workers who are able to increase their wages faster than their product The tin country of Lanastan has a civilian labor force of 40,000, of whom 38,000 are employed. There are ____ unemployed p 500 of the unemployed people become discouraged and quit looking for a job. Now the official unemployment rate in Lanasta Economists define ________ ______ as an increase in real national income, usually measured in terms of the percentage inc The faster the growth of __________ _________ and _____________ ____________, the higher a country's growth rate will Productivity is on way to look at the impact of advances in __________ on economic growth,"Technology" Improvements in technology mean that productivity increases as we find new and better ways to use inputs to produce output Economic growth is defined as an increase in ____ ___ or ____ ___ ______ ___,"Real GDP Economic growth is usually measured as the &nbsp;__________ ________ __ _____ ____,"Percentage increase in real GDP For a country with a constant rate of growth, the time required for real GDP to double can be found by using the rule of __,"72 Per capita real GDP is real GDP divided by __________,"Population" What is the annual economic growth rate in Australia if real GDP at the beginning of the year is $528 billion and real gDP at th Page 4 Sheet1 An abundance of _______ _________ can contribute to economic growth but is not necessary for growth,"Natural Resources Growth in a country's capital stock is tied to ______ and ______ ______,"Current True or False The shape of the aggregate demand curve is not one of the determinants of economic growth,"True" Other things being equal, a country's long-run aggregate supply curve will shift to the right when __________ advances,"Tech Total factor productivity is the ratio of a nation's output to its _____ of _____ and ______,"Stock Economic growth is the sum of growth in _____ ______ ____________ &nbsp;and growth in _________,"Total Factor Produc Suppose that real output is owing at 2 percent, the labor force is growing at 1 percent, and capital stock is rowing at 0.5 perce Economic growth is an increase in ____ ___, usually measured as a percentage change in ____ ___ or ___ ______ ___ ___, SMall differences in rates of growth are magnified over time because growth is __________,"Compounded" In 2005, the real GNP of the country of Lalaland was 200 million Lals; in 2006, the real GNP was 210 million lals. What was th The income of the town of Kennebunkport has been growing by 3 percent per year. If this growth continues in the future, how Looking at growth rates in GNP or GDP per capita does not give you a complete picture of the standard of living in different co Growth in a country's capital stock depends on current and future ______,"Saving" Productivity is the ratio of ______ ________ to the amount of ______,"Output Produced _____ ______ __________ is the nation's real GDP divided by its stock of labor and capital,"Total Factor Production" In the United States, labor receives about 70% of national income and capital receives about 30%. If total factor productivity in List four factors that may help explain why productivity changes.&nbsp;,"Quality of he labor force Page 5 Sheet1 n why the world is what it is" ic good? wine bicycles refrigerators air pollution education,"<STRONG>4. Air Pollution</STRONG>" ce?,"There is not enough of the item to satisfy everyone who wants it" udgements of one individual on the decision of others is called _______ analysis,"Positive" is a normative statement? There should be a higher tax on cigarettes, alcohol, and other "sin" items to discourage people from buying th f its product is the study of?,"Microeconomics" f is called an economic ______,"Bad" le make the choices that they think will give them the greatest amount of satisfaction,"Rational Self Interest" Inputs" udgements of one individual on the decisions of thers is called _______ analysis,"Positive" e judgements on the decisions of thers,"Normative" r of attributing what applies to one to the case of many,"Fallacy of Composition" _ __ ________ occurs when unrelated or coincidental events that occur at about the same time are believed to have a cause-and-effect r be produced with a given set of resources and current technology, assuming that the resources are fully and efficiently used,"Production P e? At points inside the production possiblities curve, resources are not being fully or efficiently used. Points outside the production pos ssibilities curve indicates that resources are not being fully or efficiently used,"Inside" curve represent combinations of goods and services that are&nbsp;__________ given current resources and technology,"Unnatainable" at can deliver more computing power for less cost. As a result, the production possibilities curve will shift ______,"Outward" people from working (for example, women, children, and african americans) is producing at a point ______ its production possibilities,"Insid good without giving up units of another good if a socitety is producing ____ its production possibilities curve,"On" nt of one good or service that must be given up to obtain one additional unit of another good or service,"Marginal Opportunity Cost" Consumption" Sole Proprietorships Imports" Circular Flow Diagram" make up the largest number of households,"35 to 45" ve the largest median annual income,"45 to 54" ake up the largest percentage of households,"2" the ______ component of total spending in the economy,"Largest" own of North Mayberry. Family A's annual income is $20,000, Family B's annual income is $30,000, Family C's annual income is $50,000, le number)" _____, the owner of the business is responsible for all the debts incurred by the business and may have to pay those debts from his or her Corporations" xt, is ________ ________ __ _______ _____,"Business Spending On Capital Goods" y products such as agricultural produce and minerals from&nbsp; __________ countries,"Developing" than one-third of U.S. exports came from trade between the United States and ______ ___ _____,"Canada and Japan" ___ _______,"Net Exports are Positive" eavily in _____ and ____,"Africa and Asia" ? to another country ,"3. Net exports equal imports minus exports" ? ouseholds of income of household income,"3. The value of input must equal the value of household income" n,"Households" persons who occupy a unit of housing,"Households" __,"Consumption" 54" persons,"2" Page 6 Sheet1 ization controlled by a single management,"Business Firm" s owned by one person,"Sole Proprietorship" y two or more individuals share both the profits of the business and the responsibility for the firm's losses,"Partnership" by shareholders whose liability for the firm's losses is limited to the value of the stock they own,"Corporation" at owns and operates produing unites in foreign countries,"Multinational" rm of business organization is the ____ ______________,"Sole Proprietorship" ss firms for capital goods,"Investment" percentage of business revenue,"Corporations" ization that makes loans to developing countries,"World Bank" Asia" r country are called ______,"Imports" ountry are called ______,"Exports" Japan" ed imports,"Surplus" eed exports,"Deficit" rts,"Net Exports" Negative" showing the flow of output and income from one sector of the economy to another.,"Circular Flow Diagram" ol of money and credit,"Monetary Policy" ment spending and taxation,"Fiscal Policy" ector does not interact directly with ______ ________,"Foreign Countries" ? seholds e value of household income,"The value of private production equals the value of household income" Consumption" nding exceeds federal revenues,"Budget Deficit" Federal Reserve" ding (as a percentage of total output) is lower than that of Japan,"The United States" State t goods and services primarily by ______ _____,"Paying Taxes" es how the main sectors of the economy fit together,"Circular Flow Diagram" Monetary" k of the United States,"Federal Reserve" Credit" Taxation" _______ _______,"Federal Reserve" ______ ___ ___ _________,"Congress and the President" licy changes,"President" n tax revenue, a budget ______ exists,"Surplus" than tax revenue, a budget _______ exists,"Deficit" arket value of all final goods and services produced in a year in a country.,"Gross Domestic Product (GDP" ories:,"Households of the U.S. GDP)" Page 7 Sheet1 Investment ,"<STRONG>GDP = Wages + Interest + Rent + Profit - net factor income from abroad + Capital Consumption Allowance + Indirect Busine ents to the factors of production are included in the GDP are:,"Capital Consumption Allowance of its current dollar value. A rise in (same answer) can be from an increase in physical goods and services, a rise in prices, or both,"Nomin rices. (same answer) can increase only if the production of physical goods and services increases. (same answer) is thus a better indicato rage prices and shows how prices, on average, hae changed. If a pair of running shoes costs $75 this year, then 10 pairs of running shoe rvices produced in a year within a country's borders,"Gross Domestic Product (GDP)" to be able to sell during the year they were produced,"Unplanned inventory" res is?,"Consumption" ,"Capital consumption allowance" ar, GDP equaled $1,895, investment equaled $303, goods exported equaled $110, government spending equaled $110, goods imported e llar value,"Nominal GDP" ducers,"The producer price index (PPI)" indicates what?,"prices were lower than prices in the base year" rvices are equivelent to what?,"the total value of goods and services produced and total income from selling goodsa dn services" Final" used in the production of a final product,"Intermediate Goods" e value of output and the value of the intermediate goods used in the production of that output,"Value Added" ds,"Inventory" d up or worn out in a year plus the value of accidental damage to capital goods is called ______ ________ ________, or depreciation,"Ca ro $125. She makes 50 leis from the flowers and sells each lei for $3.99. What is the value added for the lei maker?,"$74.50 50 leis, for a total of $199.50. Since her cost for the flowers was $125, her value added is $199.50-$125=$74.50" rson to make in decorative ornaments. The farmer sells his wheat to the craftsperson for $300. The craftsperson adds labor, valued at $20 200 + $50 = $550. The 110 ornaments are worth $550, or $5 each." is not) included in GDP,"Is" ices _____ (is, is not) the largest component of GDP as expenditures,"Is Not" can indicate a coming change in the CPI,"Producer Price" of the strength or weakness of the economy? What measure would be better?,"Increases in nominal GDP can come about from a rise in p Recession" ge of the labor force that is not working. Economists do not include the entire population in the labor force: it is of little consequence, for ex previously employed workers change jobs or new workers seek their first jobs.&nbsp;,"Frictional" regular, recurring changes in the hiring needs of certain industries. Both these types of unemployment tend to be short term,"Seasonal" hand, results from fundamental changes in the structure of the economy and can be long term. (answer) unemployed persons can't find a re out of work because the economy is in a recession may be unemployed for a long time,"Cyclically" output. _________ ____ ___ is the level of output that can be produced if all non labor resources are fully utilized and unemployment is a ployment rate. Some unemployment is necessary so that workers by be channeled to their most productive employment as their skills cha e level of prices. This does not mean that all prices will rise. Some may rise and some may fall, but inflation occurs when the average leve t a problem if prices and incomes rise at the same rate" e business cycle are?,"Peak, Contraction, Trough , and Expansion" e overstated?,"Underground Economic Activities" has one month off before reporting to his new NBA team is an example of ________ unemployment&nbsp;,"Frictional" es of _______ unemployment,"Seasonal" longer needed because she has been replaced by a machine is an example of _______ unemployment,"Structural" g a recession is an example of _______ unemployment,"Cyclical" Men have higher unemployment rates than women because women move out of the labor force to have children" Page 8 Sheet1 sed by 3 percent at the same time that prices have risen by 5 percent, the professor's real income has decreased by __%,"2%" inflation?,"Debtors" &nbsp d by rapid growth of the _____ ______,"Money Supply" e in the price level is willing to make a mortgage loan at a 10 percent rate of interest. If that same lender anticipate a future inflation rate of nd then falling is called a(n) _______ _____,"Business Cycle" is in the ________ phase, or boom period, of the business cycle,"Expansion" n and the start of a new business cycle.,"Trough" phase of a business cycle.&nbsp;,"Peak" _______ phase of the business cycle,"Recession" ________ has the responsibility of officially dating recessions in the United States,"(NBER) Natural Bureau of Economic Research&nbsp evere economic contraciton,"Depression" DP changes,"Leading Indicators" riables that tend to changes at the same time real output changes,"Coincident Indicators" ntil after the value of real GDP has changed are called ________ _________,"Lagging Indicators&nbsp of the labor force that is not working,"Unemployment Rate" king for work because they believe that no one will hire them.&nbsp;,"Discouraged Workers" do not fully utilize their productive potential is called _____ _______&nbsp;,"Under Employment" business-cycle fluctuations,"Cyclical" ular, recurring changes in the hiring needs of certain industries over the months or seasons of the year,"Seasonal" s a product of short-term movements of workers between jobs an of first-time job seekers,"Frictional" t of technological change and other changes in the structure of the economy,"Structural&nbsp bor resources are fully utilized and unemployment is at its natural rate is called ________ ___ ___,"Potential Real GDP" unemployment rate that would exist in the absence of cyclical unemployment,"Natural Rate of Unemployment&nbsp al GDP equals the ___ ___,"GDP Gap" Under employment" y causes the official unemployment rate in the United States to be ___________,"Overstated" yment in terms of ____ ______ (or the GDP gap),"Lost Output" 9.7%" unemployment rate?&nbsp;,"Teenagers" men is _____ ____ the unemployment rate for women,"Lower than" rage level of prices,"Inflation" purchasing power of the dollar,"Lower" et is called the _______ rate of interest,"Nominal" f inflation equals the ____ interest rate,"Real" Debtors" reased spending that is not offset by increases in the supply of goods and services&nbsp;,"Demand Pull" in production costs characterize ____-____ inflation,"Cost-Push" _____-_________,"Hyper-Inflation" uppliers who want to increase their profit margins by raising prices faster than their costs increase,"Profit" or unions and workers who are able to increase their wages faster than their productivity,"Wage" 5% To find the number of unemployed persons, we subtract the number employed form the number in the labor force: 40,0 Understated If 500 unemployed people drop out of the labor force, the labor force becomes 40,000 - 500 = 39,500. We still Capita Real GDP" Technological Advancement" ct of advances in __________ on economic growth,"Technology" roductivity increases as we find new and better ways to use inputs to produce output. More specifically, _____ ______ ____________ (__ Real Per Capita GDP" the &nbsp;__________ ________ __ _____ ____,"Percentage increase in real GDP" th, the time required for real GDP to double can be found by using the rule of __,"72" y __________,"Population" in Australia if real GDP at the beginning of the year is $528 billion and real gDP at the end of the year is $509 billion?,"-3.6%" Page 9 Sheet1 n contribute to economic growth but is not necessary for growth,"Natural Resources" Future saving" te demand curve is not one of the determinants of economic growth,"True" -run aggregate supply curve will shift to the right when __________ advances,"Technology" Labor Resources" rcent, the labor force is growing at 1 percent, and capital stock is rowing at 0.5 percent. If labor contributes 80 percent to real GDP and cap Real GDP agnified over time because growth is __________,"Compounded" laland was 200 million Lals; in 2006, the real GNP was 210 million lals. What was the growth rate in Lalaland in 2006?,"5% Growth rate t has been growing by 3 percent per year. If this growth continues in the future, how long it will it take until the town's income has doubled? er capita does not give you a complete picture of the standard of living in different countries. What important factors are not included in the ds on current and future ______,"Saving" Inputs" s real GDP divided by its stock of labor and capital,"Total Factor Production" t 70% of national income and capital receives about 30%. If total factor productivity increses by 1%, labor increases by 1%, and capital inc number of technological innovations Page 10 Sheet1 example of a costless choice,"3. The ""guns or butter"" decisions is a rare example of a costless choice" Partnerships Page 11 Sheet1 Local" Page 12 Sheet1 Government spending we still have only 10 pairs of running shoes. A (same answer) adjusts nominal values for price changes,"Price Index" etter measure, since it rises only when output has increased" D from potential real GDP. The resulting figure indicates the GDP gap- the cost of unemployed resources,"Potential Real GDP" ent. It describes the labor market when the economy is producing what it realistically can produce. Estimates of the natural rate of unemplo Page 13 Sheet1 Increased government spending in the absence of increased taxes" te of available resources.,"Total Factor Productivity (TFP)" Page 14 Sheet1 Capital" Per Capita Real GDP" is case, 72/3= 24, or 24 years to double the town's income" source's share of national income. For this case, growth = 1 (TFP growth) + .7 (1% growth in labor x labor's .7 share of national income) + changes in energy prices Page 15 Sheet1 rare example of a costless choice" Corporations Investment" Page 16 Sheet1 Page 17 Sheet1 Net Exports GDP= C+I+G+X" nominal values for price changes,"Price Index" - the cost of unemployed resources,"Potential Real GDP" t it realistically can produce. Estimates of the natural rate of unemployment vary from 4 percent to around 7 percent&nbsp;,"Natural Rate o Page 18 Sheet1 Page 19 Sheet1 wth) + .7 (1% growth in labor x labor's .7 share of national income) + .9 (3% growth in capital x capital's .3 share of national income)" shift from manufacturing to service industries&nbsp Page 20 Sheet1 Page 21 Sheet1 Page 22 Sheet1 around 7 percent&nbsp;,"Natural Rate of Unemployment" Page 23 Sheet1 Page 24 Sheet1 ital's .3 share of national income)" Page 25 ...
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This note was uploaded on 10/25/2010 for the course ECN 211 taught by Professor Kingston during the Fall '08 term at ASU.

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