The two topics of primary concern in macroeconomics are: |
short-run fluctuations in output and employment and long-run economic growth. |
The term "recession" describes a situation where: |
output and living standards decline. |
When economists refer to "investment," they are describing a situation where: |
resources are devoted to increasing future output. |
Which of the following statements is most accurate about advanced economies? |
Economies experience a positive growth trend over the long run but experience significant variability in the short run. |
If the prices of all goods and services rose, but the quantity produced remained unchanged, what would happen to nominal and real GDP? |
nominal GDP would rise, but real GDP would be unchanged. |
Why are high rates of unemployment of concern to economists? |
There is lost output that could have been produced if the unemployed had been working. |
Why are economists concerned about inflation? |
Inflation lowers the standard of living for people whose income does not increase as fast as the price level. |
The three statistics that are the main focus for those measuring macroeconomic health are: |
real GDP, inflation, and unemployment. |
Before the period of modern economic growth: |
rates of population growth virtually matched rates of output growth. |
Which of the following is used to measure directly the average standard of living across countries? |
GDP per person |
Savings are generated whenever: |
current income exceeds current spending. |
Shocks to the economy occur: |
when expectations are unmet. |
Real GDP measures the: |
value of final goods and services produced within the borders of a country, corrected for price changes. |
For an economy to increase investment, it must: |
increase saving |
Banks and other financial institutions: |
promote economic growth by helping to direct household saving to businesses that want to invest. |
Which of the following is an example of a demand shock? |
Consumers become worried about job loss and buy fewer goods and services than expected. |
Supply shocks: |
occur when sellers face unexpected changes in the availability and/or prices of key inputs. |
When demand shocks lead to recessions, it is mainly due to: |
price inflexibility. |
macro ch.6
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