Question 1

Because of the increase in population over the past 50 years,

Accepted Answer

The increase in population means that there are more people in the country. Real GDP is the total output of goods and services produced by a country's economy, while real GDP per capita is the total output divided by the population. Since the population has increased, the rate of increase in real GDP per capita has been less than the rate of increase in real GDP.

Question 2

Between the early 1980s and 2006, the U.S. economy was in a period of

Accepted Answer

This is known as the period of "Great Moderation" where there was a steady economic growth, low inflation, and low unemployment.

Question 3

Suppose a country's real GDP increased 3 percent between 2016 and 2017, while its population increased 2 percent. Between 2016 and 2017, real GDP per capita of this country

Accepted Answer

Real GDP per capita is calculated by dividing real GDP by population. Between 2016 and 2017, real GDP increased by 3 percent and population increased by 2 percent. Therefore, real GDP per capita increased by 1 percent (3% - 2%).

Question 4

The long-run upward trend in real GDP is called

Accepted Answer

The long-run upward trend in real GDP is called economic growth. While the business cycle and economic fluctuations refer to short-term fluctuations in economic activity around this trend, inflation refers to the increase in the prices of goods and services over time. Recession refers to a period of declining economic activity.

Question 5

The average annual growth rate of the U.S. economy over the past 50 years has been about

Accepted Answer

The average annual growth rate of the U.S. economy over the past 50 years has been about 3 percent. This is in line with historical trends and is considered a healthy rate of growth for a developed economy.

Question 6

Which of the following trends were not observed in the 1980-2006 period?

Accepted Answer

Sub-Saharan African countries did not experience a dramatic expansion of their economies in the 1980-2006 period.

Question 7

Over the past 50 years, the average rate of increase in U.S. real GDP per capita has been about

Accepted Answer

The average rate of increase in U.S. real GDP per capita over the past 50 years has been around 2 percent. This means that the output of goods and services has been increasing steadily over time, adjusting for inflation and population growth.

Question 8

According to the textbook, which of the following is one of the most important developments of the 1980-2006 period?

Accepted Answer

The Great Moderation refers to a period of relatively low and stable inflation, low volatility in GDP growth, and a decline in the frequency and severity of economic recessions during the 1980-2006 period. It is considered one of the most important developments of this time period. The end of the World Trade Organization, the dissolution of the European Union, and the beginning of the Great Depression are not accurate or relevant to this time period.

Question 9

According to the textbook, which of the following is one of the most important developments of the period between 2007 and 2009?

Accepted Answer

The Great Recession, which occurred in the United States from 2007 to 2009, is considered one of the most significant developments of that period as it had far-reaching economic and social consequences not only in the US but also globally. The other options are not accurate or significant as the European Monetary Union did not experience rapid growth during that period, the Federal Reserve was not dissolved, and the Great Depression occurred in the 1930s, not in the 2000s.

Question 10

The increase in U.S. production over the past 50 years

Accepted Answer

The U.S. has seen significant economic growth over the past 50 years, outpacing many other developed nations. Its increase in production is indeed larger than the current combined real GDPs of Germany and Japan, reflecting its substantial economic expansion and dominance in global markets.

Question 11

GDP is

Accepted Answer

GDP (Gross Domestic Product) is a measure of the total value of all goods and services produced in a country during a specific period of time, typically a year. It is used as an indicator of the size and health of a country's economy.

Question 12

GDP is the total value of all goods and services newly produced in the economy during a specified period of time, adjusted for inflation.

Accepted Answer

GDP measures the total value of all goods and services produced over a specific time period but is not inherently adjusted for inflation; that adjustment is made to calculate real GDP, as opposed to nominal GDP which is not adjusted for inflation.

Question 13

The increase in real GDP per capita over the past 50 years is closest to

Accepted Answer

According to the World Bank, global real GDP per capita (adjusted for inflation) was around $3,270 in 1960 and around $11,543 in 2019. The difference between these two figures is approximately $8,273. However, the question asks for the increase in real GDP per capita over the past 50 years specifically, so we need to adjust for inflation over that time period. According to the US Bureau of Labor Statistics inflation calculator, $1 in 1971 (50 years ago) is equivalent to $6.58 today. Therefore, the $8,273 increase in real GDP per capita from 1960 to 2019 is equivalent to an increase of approximately $1,257 in 1971 dollars. Rounded to the nearest thousand, this is $1,000. Thus, answer choice (A) is incorrect. Answer choice (B) is an increase in trillions, which is too large to be plausible based on the data. Answer choice (D) is an increase of $100,000 per capita, which is also far too large. Answer choice (E) is an increase of only $3,000, which is too small given that real GDP per capita in the US is currently over $55,000. Therefore, answer choice (C), an increase of $30,000, is the closest to the actual increase in real GDP per capita over the past 50 years.

Question 14

Economic growth and economic fluctuations can occur simultaneously.

Accepted Answer

This is true. Economic growth refers to a long-term increase in a country's real GDP, while economic fluctuations refer to short-term movements in GDP due to business cycles. Both can happen at the same time, such as when a country experiences a period of economic growth but also goes through ups and downs in the business cycle.

Question 15

The economy of the United States was increasingly less stable in the period of 1980-2006, with economic fluctuations at the end of the 1990s that were much larger than those experienced during the rest of the twentieth century.

Accepted Answer

The U.S. economy experienced significant growth and stability for much of the period from 1980 to 2006, including the longest peacetime economic expansion during the 1990s. While there were recessions and fluctuations, the economic instability was not markedly greater at the end of the 1990s compared to earlier periods in the twentieth century.

Question 16

The adjective real, in the term real GDP, is used to indicate that

Accepted Answer

Real GDP is adjusted for inflation, which means it accounts for changes in price levels over time to provide a more accurate measure of economic output.

Question 17

The Great Recession and other economic developments in the United States between 2007 and 2016 were isolated, so they were not shared by other industrial nations in Europe.

Accepted Answer

False. The Great Recession and other economic developments in the United States between 2007 and 2016 had global repercussions, including in Europe. The economic crisis impacted many countries worldwide, resulting in high unemployment, a decline in GDP, and other economic hardships.

Question 18

The field of economics that studies the whole market economy is known as

Accepted Answer

Macro means large or big, so macroeconomics studies the overall, big picture of the economy, including topics like inflation, unemployment, and economic growth. Microeconomics, on the other hand, looks at individual markets and how individuals and firms make decisions within those markets.

Question 19

Over the past 50 years, the U.S. population

Accepted Answer

According to the U.S. Census Bureau, the population has increased from approximately 179 million people in 1960 to over 328 million people in 2019, which is an increase of slightly over 120 million people.

Question 20

The term per capita refers to

Accepted Answer

Per capita refers to the measurement of a statistic such as income, GDP, or consumption divided by the number of people in a country, region, or group. It is a way to measure the average amount of something that each person has. Therefore, per capita refers to the population.

Quiz 17: Macroeconomics: the Big Picture