Macro Quiz #2 and #3 - Assignment Essays

question

unemployment rate equation

answer

if 6% are unemployed that 94% are employed, so you multiply the employed rate by the labor force ex. 140,000,000 x .94

also can be calculated by the number of unemployed by the workforce

question

Goal of the Feds #1

answer

Steady economic growth of GDP

question

Goal of the Feds #2

answer

Low unemployment to not have to pay extra for skilled workers

question

Goal of the Feds #3

answer

Low inflation, hurts anyone on fixed income and it slowly chips away at economic debt

question

frictional unemployment

answer

A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.

question

cyclical unemployment

answer

unemployment caused by a business cycle recession

question

seasonal unemployment

answer

unemployment linked to seasonal work

question

structural unemployment

answer

unemployment that occurs when workers' skills do not match the jobs that are available

question

underemployment

answer

workers are overqualified for their jobs or work fewer hours than they would prefer

question

Potential GDP

answer

the level of real GDP attained when all firms are producing at capacity

question

the unemployment rate

answer

right now it is 3.4% and its the lowest its been in 50 years

question

full-time employment

answer

4% unemployment, businesses should not have to compete for workers by raising their wages

question

who benefits from unemployment

answer

borrowers

question

who does not benefit from unemployment

answer

banks and anyone on a fixed income

question

how to calculate CPI

answer

current price divided by old price

question

Consumer Price Index (CPI)

answer

measures the increase of price of life from year to year

question

personal consumption expenditures (PCE)

answer

picking up people. moving. out of goods that are expanding in price

question

core inflation rate (CPR)

answer

the rate of inflation excluding the effects of food and energy prices

question

Producer Price Index (PPI)

answer

price of production inputs

question

GDP deflator

answer

index trying to measure the inflation of everything within the GDP

question

GDP deflator equation

answer

Nominal GDP/Real GDP x 100

question

Nominal GDP

answer

the production of goods and services valued at current prices

question

Nominal GDP equation

answer

deflator/100 x real GDP

question

Real GDP

answer

GDP adjusted for inflation

question

Real GDP equation

answer

Nominal GDP/GDP Deflator x 100

question

how to get rid of high inflation

answer

recession

question

labor force participation rate (LFPR)

answer

the percentage of the adult population that is in the labor force

question

how to find LFPR

answer

labor force/population

question

nominal rate of increase

answer

divide current GDP from old and find percentage

question

Real wages

answer

nominal wages adjusted for inflation

question

Autonomous consumption

answer

spending NOT dependent on current income; it may be supported by wealth or by borrowing

question

Total consumption

answer

autonomous consumption + consumption dependent on disposable income

question

leakages of flow of funds in the economy

answer

savings, imports, taxes

question

injections of flow of funds in the economy

answer

government spending, investments, exports

question

What causes shift of consumption function?

answer

Change in wealth, Change in borrowing cost (interest rates)

question

what causes movement along consumption function

answer

change in disposable income

question

What causes change in slope?

answer

marginal propensity to consume

question

Aggregate Demand

answer

The total amount that all consumers, business firms, government agencies, and foreigners spend on final goods and services

question

MPC

answer

the portion of that last dollar of disposable income one receives that one uses for consumption.

question

Permanent Income Hypothesis

answer

Consumption depends on long-term expected average income

question

Investment

answer

Investment is negative function of the interest rate

question

net exports

answer

Exports driven by GDPs of trading partners and exchange rates Imports driven by Yd (nxY)

1 of 42

question

unemployment rate equation

answer

if 6% are unemployed that 94% are employed, so you multiply the employed rate by the labor force ex. 140,000,000 x .94

also can be calculated by the number of unemployed by the workforce

question

Goal of the Feds #1

answer

Steady economic growth of GDP

question

Goal of the Feds #2

answer

Low unemployment to not have to pay extra for skilled workers

question

Goal of the Feds #3

answer

Low inflation, hurts anyone on fixed income and it slowly chips away at economic debt

question

frictional unemployment

answer

A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.

question

cyclical unemployment

answer

unemployment caused by a business cycle recession

question

seasonal unemployment

answer

unemployment linked to seasonal work

question

structural unemployment

answer

unemployment that occurs when workers' skills do not match the jobs that are available

question

underemployment

answer

workers are overqualified for their jobs or work fewer hours than they would prefer

question

Potential GDP

answer

the level of real GDP attained when all firms are producing at capacity

question

the unemployment rate

answer

right now it is 3.4% and its the lowest its been in 50 years

question

full-time employment

answer

4% unemployment, businesses should not have to compete for workers by raising their wages

question

who benefits from unemployment

answer

borrowers

question

who does not benefit from unemployment

answer

banks and anyone on a fixed income

question

how to calculate CPI

answer

current price divided by old price

question

Consumer Price Index (CPI)

answer

measures the increase of price of life from year to year

question

personal consumption expenditures (PCE)

answer

picking up people. moving. out of goods that are expanding in price

question

core inflation rate (CPR)

answer

the rate of inflation excluding the effects of food and energy prices

question

Producer Price Index (PPI)

answer

price of production inputs

question

GDP deflator

answer

index trying to measure the inflation of everything within the GDP

question

GDP deflator equation

answer

Nominal GDP/Real GDP x 100

question

Nominal GDP

answer

the production of goods and services valued at current prices

question

Nominal GDP equation

answer

deflator/100 x real GDP

question

Real GDP

answer

GDP adjusted for inflation

question

Real GDP equation

answer

Nominal GDP/GDP Deflator x 100

question

how to get rid of high inflation

answer

recession

question

labor force participation rate (LFPR)

answer

the percentage of the adult population that is in the labor force

question

how to find LFPR

answer

labor force/population

question

nominal rate of increase

answer

divide current GDP from old and find percentage

question

Real wages

answer

nominal wages adjusted for inflation

question

Autonomous consumption

answer

spending NOT dependent on current income; it may be supported by wealth or by borrowing

question

Total consumption

answer

autonomous consumption + consumption dependent on disposable income

question

leakages of flow of funds in the economy

answer

savings, imports, taxes

question

injections of flow of funds in the economy

answer

government spending, investments, exports

question

What causes shift of consumption function?

answer

Change in wealth, Change in borrowing cost (interest rates)

question

what causes movement along consumption function

answer

change in disposable income

question

What causes change in slope?

answer

marginal propensity to consume

question

Aggregate Demand

answer

The total amount that all consumers, business firms, government agencies, and foreigners spend on final goods and services

question

MPC

answer

the portion of that last dollar of disposable income one receives that one uses for consumption.

question

Permanent Income Hypothesis

answer

Consumption depends on long-term expected average income

question

Investment

answer

Investment is negative function of the interest rate

question

net exports

answer

Exports driven by GDPs of trading partners and exchange rates Imports driven by Yd (nxY)

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