Macroeconomic Indicators Flashcards
7 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Macroeconomic Indicators flashcards as text
What does a positively sloped yield curve typically signal about economic expectations?
Answer: Future economic expansion and rising short-term rates
A normal upward-sloping yield curve reflects market expectations of economic growth and higher future interest rates.
Which index measures price changes at the wholesale level before goods reach consumers?
Answer: PPI
The Producer Price Index (PPI) tracks the average change in prices received by domestic producers for their output and is a leading signal for consumer inflation.
Country X has a trade deficit and a fiscal surplus. According to the twin deficits hypothesis, this combination is:
Answer: Consistent if private saving exceeds private investment
CA = (S − I) + (T − G); if the government runs a surplus (T > G), private sector saving can still be less than investment, sustaining a trade deficit.
Real GDP per capita is generally preferred over nominal GDP per capita as a living-standard measure because it:
Answer: Controls for changes in the price level
Real GDP per capita adjusts for inflation so comparisons across time reflect actual changes in the quantity of goods and services, not just price increases.
Which statement about the labor force participation rate is correct?
Answer: It falls when discouraged workers stop searching and exit the labor force
Discouraged workers who stop actively seeking work are no longer counted as unemployed OR in the labor force, reducing the participation rate.
Which of the following would cause real GDP to overstate improvements in economic welfare?
Answer: Exclusion of leisure time and environmental quality
GDP omits non-market goods like leisure, clean air, and household production, so rising GDP can coincide with declining overall welfare.
When the Federal Reserve uses open market operations to purchase Treasury securities, the immediate effect is to:
Answer: Increase bank reserves and lower the federal funds rate
Purchasing securities injects reserves into the banking system, increasing the supply of funds and pushing the federal funds rate down.