Macroeconomics Chapters 6-9 Study Guide

question

On the supply side of the GDP, Structures account for around __________ of U.S. GDP.

answer

question

The value of what businesses provide to other businesses is captured in the final products at the end of the __________ chain.

answer

production

question

Which of the following is included in GDP?

answer

the fees charged for a stock broker's services

question

The nominal value of any economic statistic refers to the number that is actually announced at that time, while the ________________ refers to the statistic after it has been adjusted for inflation.

answer

real value

question

Which of the following are most likely classified by economists as consumer durable goods?

answer

automobiles, furniture

question

In order to avoid double counting, statisticians just count the __________________.

answer

final goods and services

question

Which of the following statements is true?

answer

GDP includes spending on recreation and travel, but it does not cover leisure time.

question

Investment (I) includes:

answer

the amount spent on new factories and machinery.

question

In 1990, the GDP of Canada was $680 billion as measured in Canadian dollars, and the exchange rate was that $1 Canadian was worth 85 U.S. cents. In 2000, the GDP of Canada was $1000 billion as measured in Canadian dollars, and the exchange rate was that $1 Canadian was worth 69 U.S. cents. By what percentage did the GDP of Canada increase from 1990 to 2000 in Canadian dollars?

answer

47%

question

On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year.

answer

households

question

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are:

answer

expansion, peak, recession, trough

question

___________ is a small category that refers to the goods produced by one business that have yet to be sold to consumers, and are either still sitting in warehouses and on store shelves.

answer

Inventories

question

_______________, which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country.

answer

Economic growth

question

Consumption is the purchase of goods and services by:

answer

households

question

Which of the following is not included in GDP?

answer

cash income paid to a day laborer that is not reported to the tax authorities

question

The difference between real GDP and nominal GDP is:

answer

real GDP adjusts for inflation

question

For most high-income countries of the world, GDP _________________ over time.

answer

has risen gradually

question

_________ is calculated by taking _________ and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year.

answer

NNP; GNP

question

___________ is about two-thirds of the demand side of GDP, but it moves relatively little over time.

answer

Consumption

question

Which of the following is not counted as a part of GDP?

answer

the purchase of 100 shares of AT&T stock by your grandfather.

question

Which of the following is included in the calculated Gross Domestic Product?

answer

A local ice cream store sells $17,000 worth of cones and sundaes on July 1.

question

GDP does not directly include:

answer

the value of intermediate goods sold during a period.

question

The difference between nominal GDP and real GDP is:

answer

nominal GDP includes inflation

question

Ethiopia has a GDP of $8 billion (measured in U.S. dollars) and a population of 55 million. Costa Rica has a GDP of $9 billion (measured in U.S. dollars) and a population of 4 million. Calculate per capita GDP for each country.

answer

Ethiopia = $145.00 Costa Rica = $2250.00

question

The change in inventories, a component of aggregate supply, comprises roughly __________ of GDP.

answer

0.5%

question

GDP is:

answer

the value of all final goods and services produced domestically.

question

_________ are now the largest single component of the supply side of GDP, representing over half of GDP.

answer

Services

question

Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then:

answer

imports exceed exports by $50 billion.

question

Which of the following is true?

answer

The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude.

question

Final goods or services used to compute GDP refer to:

answer

goods and services purchased by the ultimate users.

question

GDP in the United States in 2012 was about __________.

answer

$16.2 trillion

question

To compare the GDP of two different countries with different currencies, it is necessary to use _________________________.

answer

an exchange rate

question

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.

answer

The Industrial Revolution

question

An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical.

answer

GDP per capita

question

Investment in human capital:

answer

is characterized by both b) and c).

question

Assuming a country's economy maintains an 8% rate of growth, young adults starting at age 20 would see the average standard of living in their country more than double by the time they had reached age __________.

answer

question

A nation can achieve higher economic growth if:

answer

it devotes more resources to research and development.

question

Which of the following best describes the relationship between economic growth and literacy?

answer

Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.

question

Country Able and Country Baker initially have the same real GDP per capita. Country Able experiences no economic growth, while Country Baker grows at a sustained rate of 7 percent. In 12 years, Country Baker's GDP will be approximately ___________ that of Country Able.

answer

double

question

_________ is output per hour in the business sector.

answer

Productivity

question

Which of the following factors contribute to economic growth?

answer

an increase in the proportion of the population that is college educated

question

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year.

answer

question

When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis.

answer

GDP per capita

question

Which of the government policies below is most unlikely to encourage per capita economic growth?

answer

high taxes on companies that spend a lot on capital formation

question

Which of the following did not result in economic growth?

answer

Many citizens emigrating from Zimbabwe when a politically repressive regime took office.

question

Which of the following is correct?

answer

Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

question

Of the world's population of 6.7 billion people, _________ are scraping by on incomes that average less than $2 per day.

answer

2.6 billion

question

In the long run, the most important source of increase in a nation's standard of living is a:

answer

high rate of economic growth.

question

Which of the following is most likely to contribute to economic growth as measured by GDP per capita?

answer

increased capital formation

question

The value of what is produced per worker, or per hour worked, is called ____________.

answer

productivity

question

Which of the following is unlikely to affect the rate of economic growth?

answer

the level of government spending

question

Economists typically measure economic growth by tracking:

answer

real GDP per capita.

question

In certain African countries like Niger, Tanzania, Nigeria, and Sudan, for example, GDP per capita at the start of the 2000s was still less than $___________.

answer

300

question

A country will roughly double its GDP in twenty years if its annual growth rate is:

answer

3.5 percent

question

Some prominent members of the slow-economic growth country club include a high-income country like _________.

answer

Germany

question

When society has a higher level of capital per person, it is called ______________.

answer

capital deepening

question

In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________.

answer

an aggregate production function

question

Increased investment alone will guarantee economic growth.

answer

This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

question

Some recent economic research has suggested that African countries' economic growth may have been limited by __________________ .

answer

geography and climate

question

Since the late 1950s, economists have performed "growth accounting" studies in the United States. These have determined that ________________ is typically the most important contributor to U.S. economic growth.

answer

technology

question

In the early 2000s, the illiteracy rate for girls between the ages of 15 and 24 was __________ and the illiteracy rate for males in this age group was ______________.

answer

78%; 75%

question

To achieve a high standard of living, a nation should:

answer

promote economic growth.

question

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________.

answer

business cycle

question

A university student who is enrolled in school fulltime and not seeking employment is considered:

answer

out of the labor force

question

If the unemployment rate is 8 percent, then this means:

answer

8 percent of the labor force is unemployed.

question

The development of a nationwide computerized job bank listing of all job openings would be most likely to reduce:

answer

frictional unemployment.

question

Gomer loses his job as a road construction worker and cannot find another position with equivalent pay and benefits. As a result, he is still checking the want ads and reporting to the unemployment office on a weekly basis. He is considered to be:

answer

underemployed.

question

Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered:

answer

out of the labor force.

question

Insofar as government public policy is concerned, the best way to battle unemployment would be __________________.

answer

to minimize recessions

question

Freelife, New Hampshire has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is:

answer

5.3%.

question

In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483 persons employed. The local unemployment rate:

answer

was 2.1%.

question

If a nation's labor force receives a significant influx of young workers:

answer

the natural rate of unemployment is likely to increase.

question

During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force.

answer

25%

question

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

answer

cyclically unemployed.

question

Frictional unemployment is:

answer

unemployment that is due to normal turnover in the labor market.

question

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:

answer

14.4%.

question

The type of unemployment that occurs because of a recession is called:

answer

cyclical unemployment.

question

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

answer

It would fall.

question

The most significant real economic cost of high unemployment is:

answer

the potential goods and services that might have been produced but weren't.

question

Which of the following statements is incorrect?

answer

Employment insurance compensation increases the opportunity cost of being unemployed.

question

If the unemployment rate is 6 percent and the number of persons unemployed is 6 million, then the number of people employed is equal to:

answer

94 million.

question

The labor force consists of:

answer

all adults who are working or actively seeking work.

question

Cyclical unemployment arises when:

answer

business activity in the macroeconomy declines.

question

Women composed __________ of the paid workforce in 1900 and 50% of the paid workforce in 2010.

answer

18%

question

The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal the quantity supplied.

answer

equilibrium wage

question

A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be:

answer

frictionally unemployed.

question

The _________________ argument points out that if an employer reacts to poor business conditions by reducing pay for all workers, then the best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives, are more likely to stay.

answer

adverse selection of wage cuts

question

Each month the Census Bureau carries out the Current Population Survey (CPS) (which has been carried out every month since 1940). A total of __________ households are contacted every month.

answer

60,000

question

The unemployment rate may underestimate the true extent of unemployment if:

answer

many people become discouraged and cease looking for work.

question

The unemployment rate may overestimate the true extent of unemployment if:

answer

either B) or C) occurs.

question

During the deep recessions of the early 1980s and of 2007-2009, unemployment reached roughly __________.

answer

10%

question

Craigburg has a working age population of 20 million. Of those, 11 million are employed and 1 million are unemployed. The unemployment rate is ________ and the participation rate is __________.

answer

8.3%; 60%.

question

Frictional unemployment occurs when:

answer

a worker decides to quit one job to seek a different job.

question

Karen chooses to go to university fulltime rather than to work. Karen:

answer

is not part of the labor force.

question

While one occasionally sees references to inflation over short time periods, the term typically implies a(n)_____________ in prices.

answer

ongoing rise

question

What distinguishes the real value of a statistic from the nominal value of a statistic?

answer

adjusting for inflation

question

In the early 1990's extremely high inflation rates of 2500% were common in Russia. During that time, we can say that as a result of those inflation rates, Russia was experiencing ___________________.

answer

hyperinflation

question

A payment is said to be ________________ if it is automatically adjusted for inflation.

answer

indexed

question

The situation where the buying power of money in terms of goods and services increases is called:

answer

deflation.

question

The basket of goods in the Consumer Price Index consists of about _________ products; that is, several hundred specific products in over __________ broad-item categories.

answer

80,000; 200

question

An economics professor is discussing a measure of inflation over time based on a basket of goods comprised of all the components of GDP. Which measure is it?

answer

GDP Deflator

question

The __________________ is the nominal interest rate minus the rate of inflation.

answer

real interest rate

question

The effects of inflation are seen in:

answer

goods, services, wages and income levels

question

When a price, wage, or interest rate is adjusted automatically with inflation, it is said to be __________.

answer

indexed

question

The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer's true cost of living, because it doesn't take into account that the person can substitute between goods according to changes in their relative prices.

answer

overstate

question

Another term used to describe negative inflation is:

answer

deflation

question

The GDP deflator is a price index that includes the following components of GDP:

answer

Consumption, Investment, Government plus Exports minus Imports

question

In the 1970s and 1980s, labor unions commonly negotiated wage contracts that had _______________________ which guaranteed that their wages would keep up with inflation.

answer

cost of living adjustments

question

If the price index moves from 107 to 110, the rate of inflation is:

answer

2.8%

question

Inflation implies that the level of all prices _____________________.

answer

increase

question

What name is given to the index based on the prices of exported or imported merchandise?

answer

International Price Index

question

__________ implies that pressure for price increases reaches across _______________markets, not just one.

answer

inflation; most

question

When we want to measure wage inflation in the labor market, we use the:

answer

Employment Cost Index

question

A lender demands an interest rate in part to compensate for any expected ___________, so that the money that is repaid in the future will have at least as much buying power as the money that was originally loaned.

answer

inflation

question

The percentage change in the price level from one time period to the next, whether the price level is measured in terms of money or as a price index, will be the _____________.

answer

inflation rate

question

Two factors that complicate the calculation of the inflation rate are:

answer

substitution and quality/new product bias

question

Nancy's union has negotiated a three-year wage contract that provides for a 2.4% increase indexed to inflation. The rates of inflation are forecast to be 1.62%, 1.93% and 2.21% respectively. How will Nancy's wage increase be expressed in the new contract?

answer

COLA plus 2.4%

question

Alex wants to measure the nominal 1998 GDP of $993 billion in 2008 dollars. From the data he gathered, he knows the deflator for 1998 is 30 and for 2008, it is 74, and that real interest in those years was 6.23% and 3.21% respectively. If he avoids making a misleading calculation, what will the value be?

answer

$2,449 billion

question

An analyst needs to adjust the nominal GDP for the years 2000 and 2010 into real terms to conclude his comparison analysis. The nominal GDP in 2000 was $672 billion and $1,690 billion for 2010; the real interest rate was 6.79% in 2000 and 3.71% in 2010; the 2000 deflator was 24 and 51 in 2010. What is the real gain?

answer

18.34%

question

The most commonly cited measure of inflation in the United States is:

answer

the Consumer Price Index (CPI).

question

Inflation can be calculated in terms of how the overall cost of ___________________ changes over time.

answer

the basket of goods

question

With regard to the economy, the term negative inflation is synonymous with which of the following?

answer

deflation

question

Which of the following is an example of one of the major categories in the overall CPI?

answer

recreation

question

When Anders took out his first two-year membership with Maxima Gym in 2004, the fee was $540.00. He renewed his membership three times; in 2006 for $580.00, in 2008, for $600.00, and again in 2010, for $630.00. What is the overall rate of inflation for Anders' gym membership?

answer

16.66%

question

One of the reasons that a rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer's true cost of living, is:

answer

substitution bias

question

Which of the following is the name used to describe the price index that consists of intermediate goods and finished goods?

answer

Producer Price Index

question

The ____________________ is based on the prices of merchandise that are exported or imported.

answer

International Price Index

question

The Producer Price Index is based on prices paid for supplies and inputs by:

answer

producers of goods and services

1 of 128

question

On the supply side of the GDP, Structures account for around __________ of U.S. GDP.

answer

question

The value of what businesses provide to other businesses is captured in the final products at the end of the __________ chain.

answer

production

question

Which of the following is included in GDP?

answer

the fees charged for a stock broker's services

question

The nominal value of any economic statistic refers to the number that is actually announced at that time, while the ________________ refers to the statistic after it has been adjusted for inflation.

answer

real value

question

Which of the following are most likely classified by economists as consumer durable goods?

answer

automobiles, furniture

question

In order to avoid double counting, statisticians just count the __________________.

answer

final goods and services

question

Which of the following statements is true?

answer

GDP includes spending on recreation and travel, but it does not cover leisure time.

question

Investment (I) includes:

answer

the amount spent on new factories and machinery.

question

answer

47%

question

On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year.

answer

households

question

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are:

answer

expansion, peak, recession, trough

question

___________ is a small category that refers to the goods produced by one business that have yet to be sold to consumers, and are either still sitting in warehouses and on store shelves.

answer

Inventories

question

_______________, which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country.

answer

Economic growth

question

Consumption is the purchase of goods and services by:

answer

households

question

Which of the following is not included in GDP?

answer

cash income paid to a day laborer that is not reported to the tax authorities

question

The difference between real GDP and nominal GDP is:

answer

real GDP adjusts for inflation

question

For most high-income countries of the world, GDP _________________ over time.

answer

has risen gradually

question

_________ is calculated by taking _________ and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year.

answer

NNP; GNP

question

___________ is about two-thirds of the demand side of GDP, but it moves relatively little over time.

answer

Consumption

question

Which of the following is not counted as a part of GDP?

answer

the purchase of 100 shares of AT&T stock by your grandfather.

question

Which of the following is included in the calculated Gross Domestic Product?

answer

A local ice cream store sells $17,000 worth of cones and sundaes on July 1.

question

GDP does not directly include:

answer

the value of intermediate goods sold during a period.

question

The difference between nominal GDP and real GDP is:

answer

nominal GDP includes inflation

question

answer

Ethiopia = $145.00 Costa Rica = $2250.00

question

The change in inventories, a component of aggregate supply, comprises roughly __________ of GDP.

answer

0.5%

question

GDP is:

answer

the value of all final goods and services produced domestically.

question

_________ are now the largest single component of the supply side of GDP, representing over half of GDP.

answer

Services

question

Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then:

answer

imports exceed exports by $50 billion.

question

Which of the following is true?

answer

The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude.

question

Final goods or services used to compute GDP refer to:

answer

goods and services purchased by the ultimate users.

question

GDP in the United States in 2012 was about __________.

answer

$16.2 trillion

question

To compare the GDP of two different countries with different currencies, it is necessary to use _________________________.

answer

an exchange rate

question

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.

answer

The Industrial Revolution

question

An economy's rate of productivity growth is closely linked to the growth rate of its ______________, although the two aren't identical.

answer

GDP per capita

question

Investment in human capital:

answer

is characterized by both b) and c).

question

answer

question

A nation can achieve higher economic growth if:

answer

it devotes more resources to research and development.

question

Which of the following best describes the relationship between economic growth and literacy?

answer

Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education.

question

answer

double

question

_________ is output per hour in the business sector.

answer

Productivity

question

Which of the following factors contribute to economic growth?

answer

an increase in the proportion of the population that is college educated

question

During the last two centuries, the average rate of growth of GDP per capita in the leading industrialized countries has averaged about _________ per year.

answer

question

answer

GDP per capita

question

Which of the government policies below is most unlikely to encourage per capita economic growth?

answer

high taxes on companies that spend a lot on capital formation

question

Which of the following did not result in economic growth?

answer

Many citizens emigrating from Zimbabwe when a politically repressive regime took office.

question

Which of the following is correct?

answer

Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

question

Of the world's population of 6.7 billion people, _________ are scraping by on incomes that average less than $2 per day.

answer

2.6 billion

question

In the long run, the most important source of increase in a nation's standard of living is a:

answer

high rate of economic growth.

question

Which of the following is most likely to contribute to economic growth as measured by GDP per capita?

answer

increased capital formation

question

The value of what is produced per worker, or per hour worked, is called ____________.

answer

productivity

question

Which of the following is unlikely to affect the rate of economic growth?

answer

the level of government spending

question

Economists typically measure economic growth by tracking:

answer

real GDP per capita.

question

In certain African countries like Niger, Tanzania, Nigeria, and Sudan, for example, GDP per capita at the start of the 2000s was still less than $___________.

answer

300

question

A country will roughly double its GDP in twenty years if its annual growth rate is:

answer

3.5 percent

question

Some prominent members of the slow-economic growth country club include a high-income country like _________.

answer

Germany

question

When society has a higher level of capital per person, it is called ______________.

answer

capital deepening

question

In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________.

answer

an aggregate production function

question

Increased investment alone will guarantee economic growth.

answer

This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

question

Some recent economic research has suggested that African countries' economic growth may have been limited by __________________ .

answer

geography and climate

question

answer

technology

question

In the early 2000s, the illiteracy rate for girls between the ages of 15 and 24 was __________ and the illiteracy rate for males in this age group was ______________.

answer

78%; 75%

question

To achieve a high standard of living, a nation should:

answer

promote economic growth.

question

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________.

answer

business cycle

question

A university student who is enrolled in school fulltime and not seeking employment is considered:

answer

out of the labor force

question

If the unemployment rate is 8 percent, then this means:

answer

8 percent of the labor force is unemployed.

question

The development of a nationwide computerized job bank listing of all job openings would be most likely to reduce:

answer

frictional unemployment.

question

answer

underemployed.

question

Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered:

answer

out of the labor force.

question

Insofar as government public policy is concerned, the best way to battle unemployment would be __________________.

answer

to minimize recessions

question

Freelife, New Hampshire has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is:

answer

5.3%.

question

In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483 persons employed. The local unemployment rate:

answer

was 2.1%.

question

If a nation's labor force receives a significant influx of young workers:

answer

the natural rate of unemployment is likely to increase.

question

During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force.

answer

25%

question

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

answer

cyclically unemployed.

question

Frictional unemployment is:

answer

unemployment that is due to normal turnover in the labor market.

question

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:

answer

14.4%.

question

The type of unemployment that occurs because of a recession is called:

answer

cyclical unemployment.

question

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

answer

It would fall.

question

The most significant real economic cost of high unemployment is:

answer

the potential goods and services that might have been produced but weren't.

question

Which of the following statements is incorrect?

answer

Employment insurance compensation increases the opportunity cost of being unemployed.

question

If the unemployment rate is 6 percent and the number of persons unemployed is 6 million, then the number of people employed is equal to:

answer

94 million.

question

The labor force consists of:

answer

all adults who are working or actively seeking work.

question

Cyclical unemployment arises when:

answer

business activity in the macroeconomy declines.

question

Women composed __________ of the paid workforce in 1900 and 50% of the paid workforce in 2010.

answer

18%

question

The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal the quantity supplied.

answer

equilibrium wage

question

A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be:

answer

frictionally unemployed.

question

answer

adverse selection of wage cuts

question

Each month the Census Bureau carries out the Current Population Survey (CPS) (which has been carried out every month since 1940). A total of __________ households are contacted every month.

answer

60,000

question

The unemployment rate may underestimate the true extent of unemployment if:

answer

many people become discouraged and cease looking for work.

question

The unemployment rate may overestimate the true extent of unemployment if:

answer

either B) or C) occurs.

question

During the deep recessions of the early 1980s and of 2007-2009, unemployment reached roughly __________.

answer

10%

question

Craigburg has a working age population of 20 million. Of those, 11 million are employed and 1 million are unemployed. The unemployment rate is ________ and the participation rate is __________.

answer

8.3%; 60%.

question

Frictional unemployment occurs when:

answer

a worker decides to quit one job to seek a different job.

question

Karen chooses to go to university fulltime rather than to work. Karen:

answer

is not part of the labor force.

question

While one occasionally sees references to inflation over short time periods, the term typically implies a(n)_____________ in prices.

answer

ongoing rise

question

What distinguishes the real value of a statistic from the nominal value of a statistic?

answer

adjusting for inflation

question

In the early 1990's extremely high inflation rates of 2500% were common in Russia. During that time, we can say that as a result of those inflation rates, Russia was experiencing ___________________.

answer

hyperinflation

question

A payment is said to be ________________ if it is automatically adjusted for inflation.

answer

indexed

question

The situation where the buying power of money in terms of goods and services increases is called:

answer

deflation.

question

The basket of goods in the Consumer Price Index consists of about _________ products; that is, several hundred specific products in over __________ broad-item categories.

answer

80,000; 200

question

An economics professor is discussing a measure of inflation over time based on a basket of goods comprised of all the components of GDP. Which measure is it?

answer

GDP Deflator

question

The __________________ is the nominal interest rate minus the rate of inflation.

answer

real interest rate

question

The effects of inflation are seen in:

answer

goods, services, wages and income levels

question

When a price, wage, or interest rate is adjusted automatically with inflation, it is said to be __________.

answer

indexed

question

answer

overstate

question

Another term used to describe negative inflation is:

answer

deflation

question

The GDP deflator is a price index that includes the following components of GDP:

answer

Consumption, Investment, Government plus Exports minus Imports

question

In the 1970s and 1980s, labor unions commonly negotiated wage contracts that had _______________________ which guaranteed that their wages would keep up with inflation.

answer

cost of living adjustments

question

If the price index moves from 107 to 110, the rate of inflation is:

answer

2.8%

question

Inflation implies that the level of all prices _____________________.

answer

increase

question

What name is given to the index based on the prices of exported or imported merchandise?

answer

International Price Index

question

__________ implies that pressure for price increases reaches across _______________markets, not just one.

answer

inflation; most

question

When we want to measure wage inflation in the labor market, we use the:

answer

Employment Cost Index

question

answer

inflation

question

The percentage change in the price level from one time period to the next, whether the price level is measured in terms of money or as a price index, will be the _____________.

answer

inflation rate

question

Two factors that complicate the calculation of the inflation rate are:

answer

substitution and quality/new product bias

question

answer

COLA plus 2.4%

question

answer

$2,449 billion

question

answer

18.34%

question

The most commonly cited measure of inflation in the United States is:

answer

the Consumer Price Index (CPI).

question

Inflation can be calculated in terms of how the overall cost of ___________________ changes over time.

answer

the basket of goods

question

With regard to the economy, the term negative inflation is synonymous with which of the following?

answer

deflation

question

Which of the following is an example of one of the major categories in the overall CPI?

answer

recreation

question

answer

16.66%

question

One of the reasons that a rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer's true cost of living, is:

answer

substitution bias

question

Which of the following is the name used to describe the price index that consists of intermediate goods and finished goods?

answer

Producer Price Index

question

The ____________________ is based on the prices of merchandise that are exported or imported.

answer

International Price Index

question

The Producer Price Index is based on prices paid for supplies and inputs by:

answer

producers of goods and services

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order