Question : 11) To compare the economy’s aggregate output in two different : 1384342

11) To compare the economy’s aggregate output in two different time periods, economists compare the

A) nominal national income for the two periods.

B) potential national incomes for the two periods.

C) real national income for the two periods.

D) unemployment rates for the two periods.

E) inflation rates for the two periods.

12) In determining the economy’s real GDP growth rate between two time periods,

A) nominal national income should be used because it compares actual output in each time period.

B) real national income, which is equal to nominal national income corrected for price-level changes, should be used.

C) potential national income should be used.

D) we should ignore prices completely, in order to examine output alone.

E) only the real national product from the latest time period is relevant.

13) In macroeconomics, if the value of the national product increases, there is

A) an even larger increase in the value of income claims on that output, due to value added.

B) a decrease in value of income claims on that output, due to taxation.

C) a decrease in the value of income claims on that output, due to importing.

D) a decrease in the value of income claims on that output, due to household saving.

E) an equal increase in the value of income claims on that output.

14) Suppose Appliance Mart buys a used refrigerator for $100, repairs it, and resells it for $250. The result of this transaction is to

A) increase the value of national product by $250.

B) leave the value of national product unchanged.

C) increase the value of national product by $150.

D) decrease the value of national product by $100.

E) There is insufficient information to know.

15) Real GDP measures

A) the constant-dollar value of the potential output of the nation’s economy over the period of one year.

B) the quantity of total output produced by the nation’s economy over the period of one year.

C) the fluctuations of national income around its long-term trend.

D) the annual growth rate of real national income.

E) the long-term trend in total output produced by the nation’s economy.

16) Consider a small economy with 3 individuals where each individual produces and sells $1000 worth of final goods and services. The national income for this economy is

A) $3000.

B) less than $3000 if some of the income is saved.

C) more than $3000 if some of the income is invested.

D) less than $3000 if there are taxes in this economy.

E) more than $3000 if the individuals are earning profits.

17) Consider a small economy with 3 individuals. Individual A produces 100 chickens that sell for $8 each. Individual B produces 50 bags of corn that sell for $10 each. Individual C produces 40 bushels of apples that sell for $20 each. National product in this economy is

A) 100 chickens plus 50 bags of corn plus 40 bushels of apples.

B) 190 units of goods produced.

C) $2100.

D) $2470

E) Not determinable from the information provided.

18) Which of the following is the best description of the business cycle?

A) the normal cycle of profits and losses by producers in the economy

B) the short-run fluctuations of national income around its trend value

C) a five-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods

D) a ten-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods

E) the fluctuations of one country’s national income in comparison to another country’s national income

19) Potential or full-employment output is

A) the maximum GDP that an economy actually achieves throughout its entire history.

B) achieved during periods when all of the labour force is employed.

C) a goal that can never be achieved by the economy.

D) the GDP that would be produced if the economy’s resources were fully employed at a normal intensity of use.

E) the GDP that could be produced if the economy’s resources were fully employed at their maximum intensity of use.

20) In macroeconomics, the “output gap” is the difference between

A) output in the current year and output in the base year.

B) output and employment.

C) potential real national income and actual real national income.

D) real GNP and real GDP.

E) real and nominal national income.