MacroEconomics

Which​ ​component​ ​of​ ​GDP​ ​does​ ​the​ ​following​ ​examples​ ​contain?
A mechanic fixes his own transmission

• Consumption
• Investment
• Government spending 
• Not counted towards GDP

All​ ​of​ ​these​ ​are​ ​components​ ​of​ ​the​ ​expenditure​ ​approach​ ​to​ ​GDP​ ​​EXCEPT

• ​Consumption
• Investment
• Taxes
• Government Spending

The​ ​Consumer​ ​Price​ ​Index​ ​(CPI)​ ​can​ ​be​ ​defined​ ​as

• The​ ​market​ ​value​ ​of​ ​all​ ​final​ ​goods​ ​and​ ​services
• A​ ​measure​ ​of​ ​inflation​ ​based​ ​on​ ​the​ ​cost​ ​of​ ​a​ ​fixed​ ​“market​ ​basket”
• ​The​ ​rise​ ​and​ ​fall​ ​of​ ​economic​ ​activity​ ​relative​ ​to​ ​the​ ​long-term​ ​growth​ ​trend
• ​A​ ​decline​ ​in​ ​total​ ​production​ ​lasting​ ​at​ ​least​ ​two​ ​consecutive​ ​quarters

The​ ​increase​ ​in​ ​unemployment​ ​caused​ ​by​ ​the​ ​recession​ ​phase​ ​of​ ​the​ ​business​ ​cycle​ ​is  ​ ​​ ​​ ​​ ​​ ​called 

• Frictional​ ​unemployment
• Structural​ ​unemployment 
• Cyclical​ ​unemployment 
• Seasonal Unemployment

 ​The​ ​labor​ ​force​ ​participation​ ​rate​ ​equals 

• The number in the labor force divided by the adult population  
• The unemployment rate divided by the labor force 
• The adult population multiplied by the unemployment rate
• The labor force added to the adult populaiton

An​ ​example​ ​of​ ​a​ ​progressive​ ​tax​ ​would​ ​be​ ​a

• Flat tax
• Social Security Tax
• Federal Income Tax
• Sales Tax

If​ ​the​ ​economy​ ​is​ ​in​ ​a​ ​recession,​ ​which​ ​policy​ ​would​ ​Congress​ ​want​ ​to​ ​enact​ ​to​ ​fix​ ​the  ​ ​​ ​​ ​​ ​​ ​​ ​problem? 

• expansionary monetary policy
• contractionary monetary policy
• expansionary fiscal policy
• contractionary fiscal policy

​Which​ ​type​ ​of​ ​economists​ ​believe​ ​that​ ​the​ ​economy​ ​is​ ​self​ ​correcting​ ​and​ ​does​ ​not  ​ ​​ ​​ ​​ ​​ ​need​ ​government​ ​intervention?

• Keynesian economists (Keynes)
• Monetarist economists
• Supply-side economists 
• Classical economists (Hayek)

​An​ ​economy’s​ ​maximum​ ​sustained​ ​output​ ​in​ ​the​ ​long​ ​run​ ​(long​ ​run​ ​aggregate supply)​ ​is​ ​known​ ​as​ ​its

• Total Output

• Resource Output

• Potential Output

• Market Output

Which​ ​of​ ​the​ ​following​ ​is​ ​an​ ​example​ ​of​ ​discretionary​ ​fiscal​ ​policy? 

• Income tax payments grow
• Congress spends an extra $2 billion to provide jobs 
• Fewer workers receive unemployment compensation
• More people apply for and receive welfare benefits