Exam 5: Introduction to Macroeconomics

A change in the Leading Economic Index is supposed to reflect:

GDP includes the value of illegal transactions, which means the level of economic activity in a country is overstated.

The two approaches used by the government in estimating GDP are:

The simple circular flow diagram shows that economic aggregates can be calculated either by the _____ flows in the product market or by the _____ flowing to households in the resource market.

The Leading Economic Index sometimes predicts recessions that do not occur.

_____ are almost 70% of GDP, while _____ are about 17% of GDP.

Suppose an economy has historically grown at a rate of 2.25%. The economy is growing at a rate of 3%, and the unemployment rate is low by historical standards. The economy is expected to continue to grow in the near future, but monetary authorities are concerned that inflation may increase. This economy is probably in the _____ stage of the business cycle.

Karl's Keychain Company produces keychains that sell in its stores for $1 each. On January 1, 2015, the company had inventory of 10,000 keychains. During 2015, the company produced 900,000 keychains. At the end of the business year on December 31, 2015, the company's inventory of keychains was 8,000. What was the value of Karl's inventory investment in 2015?

Government expenditures include _____ and _____ but NOT _____.

For calculations of employee compensation in the national income and product accounts, nonmonetary benefits, such as in-kind benefits, are excluded.

The _____ is a weighted average of 85 indicators of aggregate economic performance, designed to pinpoint signs of a recession in a reasonable time frame.

Which of the following will NOT be included in the GDP?

Which of the following statements is true about the National Activity Index?

When Andrea was a poor college student, she changed the oil in her car herself. Now that she has a real job, she takes her car to her mechanic to have the oil changed. GDP is not affected by this change.

Over the past few decades, net exports in the United States have been a positive percentage of GDP.

Because GDP excludes nonmarket transactions, the level of economic activity in a country is understated.

(Table) Look at the above table (Macroeconomic Data for Econoland); which time period covers one complete business cycle with no duplicate stages? Quarter GDP Unemployment rate 1 st 2014 S800 billion 5\% 2nd 2014 s808 billion 4\% 3 rd 2014 \ 808 billion 4\% 4th 2014 5800 billion 5\% 1 st 2015 S790 billion 6\% 2nd 2015 5790 billion 6\% 3rd 2015 \7 95 billion 5.5\% 4th 2015 s800 billion 5\% 1 st 2016 5800 billion 5\% 2nd 2016 S785 billion 6.5\% 3rd 2016 5780 billion 7\% 4th 2016 S790 billion 6\%

When interest rates on short-term bonds exceed those on long-term bonds, a recession is likely to occur.

The largest component of national income is:

Which equation summarizes the expenditures approach to measuring GDP?