ECN 204 Chapter Notes - Chapter 6: Nominal Rigidity, Demand Shock, Indian Railways

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ambergerbil979

24 Jan 2017

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Macroeconomics (me): studies the behaviour of the economy as a whole. Concerned with 2 topics: (i) long-run economic growth (ii) short-run fluctuations in output and employment (referred to as the business cycle) Recession: negative growth; decline in output and living standards. Me analyzes real gdp, unemployment and inflation to assess health/development of an economy. Real gdp (gross domestic product): measure value of final goods and services produced within the borders of a country during a specific time period, typically a year. Unemployment: state a person is in if he or she cannot get a job despite being willing to work/actively seeking work. Unemployment = undesirable (waste of skill/labour that could be used to produce goods/services) Inflation: increase in the overall level of prices (can lead to decrease in standard of living) *monetary policy: government policy tools such as manipulating interest rates. *fiscal policy: policy tools such as making changes to tax rates or government spending.

Related Questions

An improvement in technology causes the production possibilities frontier (PPF) to

	shift to the right.
	pivot upward.
	shift to the left.
	pivot downward.

(7)

Which of the following is not shown by the circular flow model?

	The flow of resources in one direction and money in the other
	The equality of aggregate spending and aggregate income
	The interaction of households, firms, and the government
	The total amount of goods and services the economy can produce

(8)

Gross domestic product (GDP) is defined as

	the market value of all final goods and services produced in an economy in a given period of time.
	the market value of all consumption goods and services produced in an economy in a given period of time.
	the market value of all investment goods and services produced in an economy in a given period of time.
	the real value of all investment goods and services produced in an economy in a given period of time.

(9)

Real GDP

	includes all domestic and foreign transactions.
	includes the dollar value of domestic transactions only.
	tries to isolate the effect of changing output, holding prices constant.
	measures GDP in terms of prices of goods and services produced.

(10)

When economists talk about economic growth, they are usually referring to

	the percentage change in nominal GDP.
	the percentage change in real GDP.
	the percentage change in nominal investment.
	the percentage change in real investment.

chocolateant769

GDP can increase at a faster rate than real GDP:

a. only if there is a decline in the price level.

b. only if the unemployment rate is increasing.

c. only if the value of the dollar is stable.

d. only if the population is growing.

e. only if there is inflation.

If our output of goods and services rises, then:

a. real GDP definitely rose.

b. real GDP definitely fell.

c. GDP definitely rose.

d. GDP definitely stayed the same.

Assume that from 2007 to 2009 the U.S. economy experiences inflation. Also, assume that GDP remains constant from 2007 to 2009. Therefore:

a. real GDP rises.

b. real GDP falls.

c. there is no change in real GDP.

d. no conclusion can be reached as to whether real GDP rises, falls, or remains the same.

Which of the following statements is true?

a. GDP is greater than national income, which is greater than NDP.

b. Government spending is the largest sector of GDP.

c. A Social Security check sent to a retiree is counted as part of GDP.

d. The purchase of a new factory is counted in the investment sector of GDP.

The GDP is the value of all final goods and services produced:

a. within the nations boundaries.

b. by domestically owned companies.

c. by citizens of the country.

d. by domestically controlled companies.

National Income is about _____ percent of GDP.

Thank you for helping!

1. Which of the following suggest that real per capita GDP is not a perfect measure of economy well-being?
a. population varies acroâss countries
b. GDP doesn't measure the value-added during home production
c. GDP doesn't take into account income distribution
d. GDP understimates the values of goods and services produced in the economy because of inflation
e. GDP inacurrately measures the values of goods and services produced by the government
2. Suppose that y(t) describes how a variable y varies over time. Then the growth rate of the variable from year t to year t+1 is (approximately) equal to ( select all correct answers)
a. y(t+1) - y(t)
b. y(t+1) / y(t)-1
c. ln(y(t+1) / y(t)-1)
d. ln(y(t+1) / ln(y(t))
3. suppose the economy exhibits three consecutive quarters of negative real per capita growth. Would the policymakers say that the economy is in recession?
a. yes
b. no
4. when do we say that the economy is in a recession (select all the correct answers)
a. when the economy in in distress
b. when GDP is below its trend
c. when real per capita GDP is below its trend
d. when the economy exhibits two consecutive quarters of negative real per capita GDP growth
e. when unemployment is unusually high.

ECN 204 Chapter Notes - Chapter 6: Nominal Rigidity, Demand Shock, Indian Railways

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