National income is: D. If your nominal wage is going up faster than the general
ID: 1095100 • Letter: N
Question
National income is:
D.
If your nominal wage is going up faster than the general price level in the economy:
Keynesians would likely agree that:
structural and cyclical unemployment are more common than frictional unemployment.
The economy is MOST likely to be above potential output when:
the rate of capacity utilization is relatively high and the unemployment rate is relatively low.
The size of underground economies differs across countries. In Greece it has been estimated to be as big as 30% of GDP, in Spain 25%, in Italy 20%, and in the United States roughly 7%. Given this information, official GDP measures understate true economic activity the most (in terms of percent of GDP) for:
A. a measure of the market value of total output. B. a measure of income households have available to spend before paying personal taxes. C. a measure of income household and business earnings from the sale of productive resources.D.
If your nominal wage is going up faster than the general price level in the economy:
A. your real wage is declining. B. your real wage is increasing. C. your nominal wage is declining. D. your purchasing power is declining.Keynesians would likely agree that:
A. if a person isn't working, that's his or her choice. B. the target rate of unemployment is 0%. C. all unemployment is frictional unemployment. D.structural and cyclical unemployment are more common than frictional unemployment.
The economy is MOST likely to be above potential output when:
A. the rate of capacity utilization is relatively low and the unemployment rate is relatively high. B. the rate of capacity utilization is relatively low and the unemployment rate is relatively low. C. the rate of capacity utilization is relatively high and the unemployment rate is relatively high. D.the rate of capacity utilization is relatively high and the unemployment rate is relatively low.
The size of underground economies differs across countries. In Greece it has been estimated to be as big as 30% of GDP, in Spain 25%, in Italy 20%, and in the United States roughly 7%. Given this information, official GDP measures understate true economic activity the most (in terms of percent of GDP) for:
A. the United States. B. Greece. C. Italy. D. Spain.Explanation / Answer
1) National Income is a measure of the market value of total output of the economy. Thus the correct answer is A.
2) Real Wage is represented as Nominal wage divided by price level (RW = NW/P). If the Nominal wage rises faster than the price level then your real wage is rising. Thus, the correct answer is B.
3) Keynes saw the possibility that involuntary unemployment can exist as opposed to classical. Thus the correct answer is D.
4) The correct answer is D. If the capacity utilisation is high and lower unemployment rate then it will lead to a higher output in the economy.
5) Since, the economic activities in underground economies are not taken into consideration while calculating nation's GDP, thus higher the underground economic activity, lower will be the true measure of GDP for that country. Thus, for Greece GDP measures understate the true economic activity the most. The correct answer is B.
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