Reading 10: Aggregate Output, Prices, and Economic Growth

Which of the following items is most likely included in the calculation of Gross Domestic Product (GDP)?

Using the expenditure approach, how is GDP calculated?

If Nominal GDP in 20X6 is 213 billion dollars and the GDP deflator relative to the base year is 122.3, what is the Real GDP for 20X6?

Which measure of income represents the amount households have available to save or spend after taxes?

According to the fundamental relationship among saving, investment, the fiscal balance, and the trade balance, which equation is correct?

The aggregate demand (AD) curve slopes downward due to which of the following reasons?

Which of the following factors would cause a shift in the Long-Run Aggregate Supply (LRAS) curve?

What is the immediate effect of an increase in aggregate demand on the economy in the short run, assuming the economy starts at full employment?

Stagflation is characterized by which combination of economic indicators?

In the Solow growth model, total factor productivity (TFP) represents growth in output that cannot be explained by which factors?

If the GDP deflator is 109.1, this indicates that the price level has:

Which component of GDP is typically used to measure the size of the government sector's direct economic activity?

A decrease in the relative value of a country's currency will generally lead to which shift in the Aggregate Demand (AD) curve?

Which of the following best describes the 'wealth effect' in the context of the Aggregate Demand curve?

In the short run, if an economy is in an inflationary gap (producing above potential GDP), what is the likely market correction mechanism without government intervention?

If the government runs a budget deficit (G > T) and private investment equals private savings (I = S), what must be true about the trade balance?

Which curve is considered perfectly elastic (horizontal) in the aggregate supply/demand model?

If labor's share of national income is 0.7 and capital's share is 0.3, a 1 percent increase in the labor force will lead to what increase in potential GDP, assuming no change in TFP or capital?

Which of the following is a characteristic of a recession?

When the government calculates GDP using the sum-of-value-added method, it sums:

If both Aggregate Demand and Short-Run Aggregate Supply increase, what is the effect on Real GDP?

If Aggregate Demand increases and Short-Run Aggregate Supply decreases, what is the effect on the Price Level?

Capital consumption allowance (CCA) is a measure of:

Which of the following is NOT included in personal income?

Assuming a base year of 20X1 (Price = 100), if the price index in 20X2 is 110, what is the annual inflation rate?

An increase in consumer wealth (e.g., rising stock prices) will most likely shift the Aggregate Demand curve in which direction?

The 'interest rate effect' explains the slope of the AD curve because a higher price level leads to:

A decrease in business taxes will most likely shift:

Which of the following is NOT a source of economic growth in the production function model?

Diminishing marginal productivity of capital implies that:

If 20X1 is the base year, nominal GDP in 20X1 is:

Household disposable income is calculated as:

If a government budget deficit increases, what must happen according to the fundamental macroeconomic identity?

Which of the following best describes 'potential GDP'?

A recessionary gap occurs when:

Classical economists argue that a recessionary gap will self-correct through:

Which of the following is a component of 'National Income'?

Expansionary monetary policy generally shifts:

The GDP deflator differs from the Consumer Price Index (CPI) because:

If labor productivity grows by 2 percent and the labor force grows by 1 percent, what is the estimated growth in potential GDP?

Which of the following is classified as a renewable natural resource?

In the context of the production function Y = A * f(L, K), what does 'A' represent?

If the exchange rate of the domestic currency appreciates (becomes stronger), what is the likely effect on Aggregate Demand?

The 'Very Short-Run Aggregate Supply' (VSRAS) curve is best described as:

If 100 dollars of government spending results in a total demand increase of 250 dollars, what is the fiscal multiplier?

Which of the following changes would shift the Short-Run Aggregate Supply (SRAS) curve to the right?

In the context of the business cycle, what happens to the inventory-sales ratio as an expansion reaches its peak?

Per-capita real GDP is often used as a measure of:

A transfer payment (e.g., welfare) is excluded from GDP because:

In a developed economy with high capital-to-labor ratios, which factor is the primary driver of sustainable long-term growth?