ECON10003 Chapter Notes - Chapter 4: Output Gap, Potential Output, Unemployment

39 views3 pages

orangemole587

25 May 2018

School

University of Melbourne

Department

Economics

Course

ECON10003

Professor

Nahid Khan, Lawrence Uren

For unlimited access to Textbook Notes, a Class+ subscription is required.

The classical cycle is a representation of GDP throughout a period of time

A peak is a point in time where subsequent GDP growth is relatively disappointing

A trough is a point in time where a fall in real GDP bottoms out

Contraction is the period between a peak and a trough

Expansion is the period between a trough and a peak

Looks at how quickly the level of GDP has grown over time

The growth cycle is based on whether the growth rate of the economy was significantly different

from its historical average

Occurs when there are two consecutive quarters in which the rate of growth of real GDP is

negative

Unemployment rate increases significantly

Recession is a type of contraction

Industries that produce durable goods are more affected by recessions and booms

Industries that provide services and non

durable goods are less sensitive

Contractions and expansions

Thursday, 10 August 2017 10:12 AM

Intro Macro Page 1

Unlock document

This preview shows page 1 of the document.
Unlock all 3 pages and 3 million more documents.

Already have an account? Log in

Document Summary

The (cid:272)lassi(cid:272)al (cid:272)(cid:455)(cid:272)le is a (cid:396)ep(cid:396)ese(cid:374)tatio(cid:374) of gdp th(cid:396)oughout a pe(cid:396)iod of ti(cid:373)e. A peak is a poi(cid:374)t i(cid:374) ti(cid:373)e (cid:449)he(cid:396)e su(cid:271)se(cid:395)ue(cid:374)t gdp g(cid:396)o(cid:449)th is (cid:396)elati(cid:448)el(cid:455) disappoi(cid:374)ti(cid:374)g. A t(cid:396)ough is a poi(cid:374)t i(cid:374) ti(cid:373)e (cid:449)he(cid:396)e a fall i(cid:374) (cid:396)eal gdp (cid:271)otto(cid:373)s out. Co(cid:374)t(cid:396)a(cid:272)tio(cid:374) is the pe(cid:396)iod (cid:271)et(cid:449)ee(cid:374) a peak a(cid:374)d a t(cid:396)ough. E(cid:454)pa(cid:374)sio(cid:374) is the pe(cid:396)iod (cid:271)et(cid:449)ee(cid:374) a t(cid:396)ough a(cid:374)d a peak. The g(cid:396)o(cid:449)th (cid:272)(cid:455)(cid:272)le is (cid:271)ased o(cid:374) (cid:449)hethe(cid:396) the g(cid:396)o(cid:449)th (cid:396)ate of the e(cid:272)o(cid:374)o(cid:373)(cid:455) (cid:449)as sig(cid:374)ifi(cid:272)a(cid:374)tl(cid:455) diffe(cid:396)e(cid:374)t f(cid:396)o(cid:373) its histo(cid:396)i(cid:272)al a(cid:448)e(cid:396)age. Looks at ho(cid:449) (cid:395)ui(cid:272)kl(cid:455) the le(cid:448)el of gdp has g(cid:396)o(cid:449)(cid:374) o(cid:448)e(cid:396) ti(cid:373)e. O(cid:272)(cid:272)u(cid:396)s (cid:449)he(cid:374) the(cid:396)e a(cid:396)e t(cid:449)o (cid:272)o(cid:374)se(cid:272)uti(cid:448)e (cid:395)ua(cid:396)te(cid:396)s i(cid:374) (cid:449)hi(cid:272)h the (cid:396)ate of g(cid:396)o(cid:449)th of (cid:396)eal gdp is (cid:374)egati(cid:448)e. I(cid:374)dust(cid:396)ies that p(cid:396)odu(cid:272)e du(cid:396)a(cid:271)le goods a(cid:396)e (cid:373)o(cid:396)e affe(cid:272)ted (cid:271)(cid:455) (cid:396)e(cid:272)essio(cid:374)s a(cid:374)d (cid:271)oo(cid:373)s. I(cid:374)dust(cid:396)ies that p(cid:396)o(cid:448)ide se(cid:396)(cid:448)i(cid:272)es a(cid:374)d (cid:374)o(cid:374)-du(cid:396)a(cid:271)le goods a(cid:396)e less se(cid:374)siti(cid:448)e. A (cid:271)ig (cid:272)o(cid:374)t(cid:396)a(cid:272)tio(cid:374) o(cid:396) e(cid:454)pa(cid:374)sio(cid:374) is o(cid:374)e i(cid:374) (cid:449)hi(cid:272)h output a(cid:374)d u(cid:374)e(cid:373)plo(cid:455)(cid:373)e(cid:374)t (cid:396)ate de(cid:448)iate sig(cid:374)ifi(cid:272)a(cid:374)tl(cid:455) f(cid:396)o(cid:373) thei(cid:396) (cid:374)o(cid:396)(cid:373)al o(cid:396) t(cid:396)e(cid:374)d le(cid:448)els.

Related Questions

A business cycle is the period of time in which:

1. the price level varies with real GDP.
2. a business is established and ceases operations.
3. there are four phases: peak, recession, trough, and recovery.
4. expansion and contraction of economic activity are equal.
5. none of these are true.

coralleopard200

16. Investment () includes:

A. The amount spent on new factories and machinery.

B. The amount spent on stocks and bonds.

C. The amount spent on consumer goods that last more than one year.

D. The amount spent on purchases of art.

17. Which of the following is true?

A. A depression is a recession that is mild and relatively brief.

B. The expansions and contractions of real-world business cycles last varying lengths of time and often differ in magnitude.

C. The timing of business fluctuations is regular and therefore easily predictable

D. During the contractionary phase of the business cycle, the rate of unemployment is generally quite low

18. If imports exceed exports, as in recent years, then exists

A. A trade surplus.

B. A trade deficit.

C. A trade imbalance.

D. Trade disequilibrium.

19. which can be approximated by the growth of the gross domestic product, ultimately determines the prevailing standard of living in a country

20. The difference between nominal GDP and real GDP is:

A. Nominal GDP measures actual productivity.

B. Nominal GDP adjusts for inflation.

C. Real GDP adjusts for inflation.

D. Real GDP excludes imports and exports.

silverhamster62

1. Which of the following transactions would add to the value of the U.S. GDP?

A. A college student buys a used car.
B. A college student sells her used textbooks back to the bookstore.
C. A grocery store purchases new freezers made in the United States.

D. U.S. citizen buys a new television manufactured in Asia.

2. The growth rate of real GDP:
A. depends on which year is used as the base year.
B. depends on how quickly prices are rising.
C. is always equal to the rate of growth of nominal GDP. D. is always more than the rate of growth of nominal GDP.

3. Which statement is true about GDP?
A. GDP includes the values of all final and intermediate goods and services.
B. Only the products made by American workers are included in the calculation of the US GDP.

C. Sales of old houses and used cars are included in the calculation of GDP for the current year.

D. In the US, GDP is calculated both annually and quarterly.

4. Which statement is true about GDP growth?
A. The GDP deflator is a measure of economic growth.
B. If we want to compare GDP over time, we should always compare real GDP.
C. Most economists choose nominal GDP growth as a single indicator of economic performance.

D. The GDP deflator tells the quantity change of production.

5. Which of the following is a way to compute GDP?

A. add up the wages paid to all workers

B. add up the quantities of all final goods and services
C. add up the market value of all final goods and services

D. add up the rents paid by all tenants

6. A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called:
A. inventory goods
B. transitory goods

C. final goods
D. intermediate goods

7. Martin, a US citizen, travels to Mexico and buys a newly manufactured motorcycle there. His purchase is included in:

A. both Mexican GDP and US GDP.

B. Mexican GDP, but not in US GDP.

C. US GDP, but not in Mexican GDP.

D. neither Mexican GDP nor US GDP.

8. Which of the following is included in Singapore GDP?

A. The value of production by a Singaporean working in the US.
B. The value of production by an American working in Singapore.
C. The value of production by a Singaporean that crosses the order to work in Malaysia.

D. All of the above are correct.

9. In the equation Y = C + I + G + NX,
A. Y represents the economy's total expenditure.

B. C represents household on durable goods.
C. all of the variables are always positive numbers.

D. All of the above are correct.

10. Consumption consists of spending by households on goods and services, except

purchases of intangible services.

purchases of durable goods.

purchases of new houses.

spending on education.

11. Which of the following is included in government purchase?

A. unemployment benefits a state government pays

B. social security payments the US government makes
C. the services of a US government attorney valued at the cost of her salary

D. All of the above are correct.

12. Transfer payments are:

A. included in GDP because they represent income to individuals.
B. included in GDP because they eventually will be spent on consumption.
C. not included in GDP because they are not payments for currently produced goods or services.

D. not included in GDP because taxes will have to be raised to pay for them.

13. Net exports equal
A. exports plus imports

B. exports minus imports

C. imports minus exports

D.GDP minus imports

14. In the economy of TAMIU in 2015, exports were $200, GDP was $2000, government purchases were $200, imports were $270, and investment was $500. What was TAMIU's consumption in 2015?

A. $830

B. $1230

C. $1370

D. $1770

15. Nominal GDP will increase when

A. prices increase and output increases.
B. prices increase and output decreases.
C. prices decrease and output increases.

D. All of the above are correct.

16. Changes in real GDP reflect:

A. only changes in prices.

B. only changes in the amounts being produced.
C. both changes in prices and changes in the amounts being produced.

D. neither changes in prices nor changes in the amounts being produced.

17. Which of the following is correct?
A. Nominal GDP is always less than real GDP.

B. Nominal GDP is always greater than real GDP.
C. Nominal GDP equals real GDP in the base year.
D. Nominal GDP equals real GDP in all years but the base year.

18. The GDP deflator is the ratio of:

A. real GDP to nominal GDP.

B. real GDP to the inflation rate.
C. real GDP to nominal GDP.
D. nominal GDP to the inflation rate.

19. In 2012 the nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?
A. $6.7 billion
B. $10 billion

C. $40 billion D. $100 billion

20. In the base year, the GDP deflator is always equal to A. -1
B. 0
C. 2

D. 1

21. GDP does not reflect:

A. the value of leisure.

B. the value of goods and services produced at home.

C. the quality of the environment.
D. All of the above are correct.

22. When economists talk about growth in the economy, they measure that growth as the:

A. absolute change in nominal GDP from one period to another.

B. percentage change in nominal GDP from one period to another.

C. absolute change in real GDP from one period to another.
D. percentage change in real GDP from one period to another.

23. The term economists use to describe a situation in which the economyâs overall price level is rising is:

A. economic growth

B. inflation
C. recession
D. business cycles

Use information from the Bureau of Economic Analysis (BEA) website, http://www.bea.gov/, answer question 24 and 25.

24. What is the real GDP growth rate in the 4th quarter of 2015 for the United States?

A. 1%
B. 2%
C. 3%

D. 4%

25. What is the value of real GDP in 1998 for the United States?

A. $11525.9 billion

B. $9089.2 billion

C. $11321.2 billion

D. $8889.7 billion

goldgnu271

ECON10003 Chapter Notes - Chapter 4: Output Gap, Potential Output, Unemployment

Document Summary

Get access

Related Documents

ECON10003 Lecture Notes - Lecture 6: Exogeny, Deflation, Market Failure

ECON10003 Lecture Notes - Lecture 7: Unemployment, Output Gap, Potential Output

ECON10003 Chapter Notes - Chapter 1: Business Cycle, Resource Depletion, Environmental Quality

Related Questions