ECON-1010 Chapter Notes - Chapter 3: Gross Domestic Product, Unemployment Benefits

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brownmule668

4 Feb 2020

School

Vanderbilt University

Department

Economics

Course

ECON-1010

Professor

Buckles Stephen

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ECON-1010 Full Course Notes

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Investment--spending on new buildings, machines, tools, and new residential construction. Investment spending represents an increase in capacity to produce future output: government spending--the total spending on goods and services by all levels of government. If gdp is growing more slowly than the labor force (even when not in a recession) unemployment increases: unemployed--individuals without jobs and actively looking for work, unemployment rate--number of unemployed divided by the number in the labor force. [summary--gross domestic product is the value of all the final goods and services produced in an economy in a year; it is the statistic most commonly used to measure the size of an economy. When comparing changes over time, real gdp is a more accurate measure of changes in production as it removes the effects of changes in prices. Changes in real gdp per capita provide indications of economic growth that result in an improvement of living standards over time.

Related Questions

1. Classical economists believed that

a. the government can best help the economy by leaving it alone

b. the economy is controlled by the government

c. laissez-faire will hurt the economy

d. the government should play an active role in controlling the economy

e. economists should offer guidance to governmental leaders.

2. If real GDP is increasing at a 2 percent annual rate while the unemployment rate is 7 percent, the economy is

a. experiencing high prices and low inflation

b. experiencing a slump

c. experiencing an increase of 2 percent in real annual per capita GDP

d. not achieving full economic potential

e. producing along its production possibilities frontier

3. From 1929 to 1993, the first four years of the Great Depression, U.S. output dropped by more than

a. 5 percent

b. 10 percent

c. 80 percent

d. 25 percent

e. 50 percent

4. Economists regard some inflation as good for the economy.

a. True

b. False

5. The inflation rate in the United States has always been positive.

a. True

b. False

6. Why is inflation considered a problem?

a. It is costly for society.

b. Government gains too much economic power

c. Firms gain too much economic power

d. It is always very high when it exists.

e. People prefer falling prices

viridianfly251

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.

1. In the actual economy, households

a. spend all of their income.

b. divide their income among spending, taxes, and saving.

c. buy all goods and services produced in the economy.

d. Both (a) and (c) are correct.

2. Gross domestic product is defined as

a. the quantity of all final goods and services demanded within a country in a given period of time.

b. the quantity of all final goods and services supplied within a country in a given period of time.

c. the market value of all final goods and services produced within a country in a given period of time.

d. Both (a) and (b) are correct.

3. GDP adds together many different kinds of products into a single measure of the value of economic activity by using prices determined by

a. banks.

b. economists.

c. the government.

d. markets.

4. Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

a. caused measured GDP to fall.

b. not caused any change in measured GDP.

c. caused measured GDP to rise.

d. probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.

5. A steel company sells some steel to a bicycle company for $150. The bicycle company uses steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

a. $150 to GDP.

b. $250 to GDP.

c. between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle.

d. $400 to GDP.

6. The total sales of all firms in the economy for a year

a. equals GDP for the year.

b. is larger than GDP for the year.

c. is smaller than GDP for the year.

d. Any of the above is possible.

7. GDP is equal to

a. the market value of all final goods and services produced within a country in a given period of time.

b. Y.

c. C + I + G + NX.

d. All of the above are correct.

8. The consumption component of GDP includes spending on

a. durable goods and nondurable goods, but not spending on services.

b. durable goods and services, but not spending on nondurable goods.

c. nondurable goods and services, but not spending on durable goods.

d. durable goods, nondurable goods, and services.

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ECON-1010 Chapter Notes - Chapter 3: Gross Domestic Product, Unemployment Benefits

ECON-1010 Full Course Notes

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