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25 Cards in this Set
- Front
- Back
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Which of the following is NOT included in GDP as investment?
A. Expenditures of new factory construction B. Manufactures purchase of a new machine C. Expenditures on new home construction D. Expenditures on Stocks and Bonds E. Accumlations of unsold invesntories |
D
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When is net investment positive?
A. Economy's Capital stock is growing. B. Economy's Capital stock is shringing C. Economy's Capital stock is may be either growing or shrinking D. Depreciation must be 0 or negative E. Gross investment is negative |
A
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The current level of GDP in the US is
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14 trillion
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When Price index is 118.3 .... it means?
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the price level is 18.3 % higher then in the base year
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Calc real rate of Growth of GDP ?
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real 1=Nominal/PI year 1
real 2=Nominal/PI year 2 real2-real1/real 1 |
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T/F-
As a general rule, high inflation si more likely during periods of high unemployment and sluggish growth |
FALSE
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The current unemployment rate is
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8.9%
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The largest componet of GDP under the expenditures definition is
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Consumptions Spending
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The largest component of GDP under the income approach is
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Wages and Salary
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Most economists would agree that in the short run, cyclyical uemployment is usally due to...
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a deficient level of aggregate demand
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a lorenz curve shows
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the degree of income inequality amoug households in a given country ata given time
(% of income vs % of house holds) |
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The closer a country's gini coefficient is to 1
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The GREATER is the degree of income inequality in a country
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Over the past two decades the degree of income inequality ....
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has increased
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The multiplier effect tends to ...
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magnify small changes in spending into large changes in aggregate output
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According to keynes, the interest rate is determined by
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The supply and demand for money
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Bonds:
a decrease in i will... |
will cause bond prices to rise
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According to convential economic theory, an increase in interst rates
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will cause economic agents to want to hold less money
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In the simplest Keynesian model of the determination of income, interest rates are assumed to be
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interest rates are assumed to be exogenous and to remain constant.
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In the development of the IS curve, one variable that turns from exogenous to endogenous is
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investment
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Velocity of Money
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PY/MS
where py = nomianl income, and MS = nominal money supply |
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An increase in the money supply will raise equilibrium GDP if the
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IS curve is negatively sloped
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keynes effect
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if wages are flexible, the price level falls and when the price level falls LM shifts to the right and cases full employment
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Liquidity trap
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i has fallen so low that none expects it to fall any further, no one will anticpate to fall any lower, the LM curve will have a lflat tail and it means thatpolicy or keynes effect wont work
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Pigou Effect/ Real Balance Effect
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People dont want to hold too mjch money cause they will lows the possible of the interst. People will try to buy things instead of of savings and it will cause prices to changes includinthe welaht effect
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Two Regimes of the Supply Curve theory
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Flexible wages, inflexible wages,
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