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Macroeconomics is mostly focused on: |
the economy as a whole |
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The two topics of primary concern in macroeconomics are: |
short-run fluctuations in output and employment and long-run economic growth. |
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The term "recession" describes a situation where: |
output and living standards decline. |
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Real GDP measures the: |
value of final goods and services produced within the borders of a country, corrected for price changes. |
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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. |
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Real GDP is preferred to nominal GDP as a measure of economic performance because: |
nominal GDP uses current prices and thus may over- or understate true changes in output. |
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Inflation is defined as: |
an increase in the overall level of prices. |
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The three statistics that are the main focus for those measuring macroeconomic health are: |
real GDP, inflation, and unemployment |
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Before the period of modern economic growth: |
rates of population growth virtually matched rates of output growth. |
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Which of the following countries would economists say definitively is achieving modern economic growth? |
Nigeria experiences a 2.7 percent increase in real GDP per person. |
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What is nominal GDP? |
GDP measured in terms of the price level at the time of measurement; GDP not adjusted for inflation. |
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Savings are generated whenever: |
current income exceeds current spending |
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When economists refer to "investment," they are describing a situation where: |
resources are devoted to increasing future output. |
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Which of the following would an economist consider to be an investment? |
a. Boeing building a new factory. |
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For an economy to increase investment, it must: |
increase saving |
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Increased present saving: |
comes at the expense of reduced current consumption. |
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Banks and other financial institutions: |
promote economic growth by helping to direct household saving to businesses that want to invest. |
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Demand shocks: |
refer to unexpected changes in the desires of households and businesses to buy goods and services. |
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Which of the following is an example of a supply shock? |
A dramatic increase in energy prices increases production costs for firms in the economy. |
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When demand shocks lead to recessions, it is mainly due to: |
price inflexibility |
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Assuming this market is representative of the economy as a whole, a negative demand shock will |
lower prices but leave output unaffected |
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Assuming this market is representative of the economy as a whole, a positive demand shock will |
raise the price level but leave output unchanged |
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