Chapter 6

What are the goals of Macroeconomics?

• Eliminate all forms of taxation
• Economic growth

• Low unemployment

• Low Inflation

What do economists use to analyze macroeconomic

changes (such as inflation or recession)?

• Framework

• Government policies and regulations
• Policy tools

• GDP

The tools the federal government uses to influence the macro economy.

• Fiscal policy and monetary policy.
• Trade agreements and tariffs.
• Subsidies and tax breaks.
• Regulatory policies and trade restrictions.

The value of the output of all final goods and services produced within a country in a given

year.

• Gross Domestic Product (GDP)
• Consumer Price Index (CPI)
• Gross National Product (GNP)
• Net National Product (NNP)

What measures the size of a nation’s overall economy?

• Gross Domestic Product (GDP)
• Consumer Price Index (CPI)
• Gross National Product (GNP)
• Net National Product (NNP)

How can GDP be measured?

• calculated using only tax revenue.

• only measured through government spending.

• the total dollar value of what consumers purchase in the economy.

• the total dollar value of what the country produces.

Demand for production can be divided into four main parts:

• Consumer spending

• Retail demand
• Business spending

• Government spending

• Spending on net exports

Consumption is about one-third of GDP, but it moves relatively little over time.

• True

• False, it's about two-thirds.

Business investment hovers around 15% of GDP, but it increases

and declines more than consumption.

• True

• False

Government spending on goods and services is around 20% of GDP.

• True

• False