Chapter 6 Homework:

price index:

(price of the market basket in year 2 / price of the market basket in the base year year 1) * 100

Which of the following can make the unemployment rate fall? a. An increase in the number of people who are looking for work. b. A decrease in the number of people who are looking for work. c. An increase in the number of people with jobs. d. A decrease in the number of people who are looking for work and an increase in the number of people with jobs.

a decrease in the number of people who are looking for work and an increase in the number of people with jobs

In measuring gross domestic product (GDP), goods produced by foreign firms in the United States are a. counted, and so are goods produced by American firms in foreign countries. b. counted, but goods produced by American firms in foreign countries are not counted. c.not counted, but goods produced by American firms in foreign countries are counted. d. not counted, and goods produced by American firms in foreign countries are also not counted.

counted but goods produced by american firms in foreign countries are not counted

Gross domestic product (GDP) is counted using two methods: one which counts all the ways people _____ money and another which counts all the ways people _____ money. a, earn, spend b.loan, borrow c.earn, save d.spend, save

earn,spend

Seasonal adjustment is used in economic data to _____ the changes in those variables that are the result of regular patterns associated with the calendar. a.overcome b.prepare for c.eliminate d.accentuate

eliminate

Suppose this is the base year and there are only two goods (Good A and Good B) and the average person buys 8 of Good A in a year and 6 of Good B. If the Price of Good A is $8 and the Price of Good B is $6, the price index a. is 100. b. is 64. c. is 36. d. is 50.

is 100

The consumer price index (CPI) is a heavily criticized measure of inflation because a.the government constantly makes adjustments to it without a good reason. b. the government does nothing to fix its known deficiencies. c. it consistently understates the increase in the cost of living. d. it consistently overstates the increase in the cost of living

it consistently overstates the increase in the cost of living

Which measure of productivity describes the increase in production that occurs after accounting for the changes in all inputs? a. labor force productivity b. marginal productivity c.multifactor productivity d. tangential productivity

multifactor productivity

Inflation is measured using _________ in a price index. a.logarithm-adjusted absolute increase b.the absolute increase c.a multiyear weighted average increase d.the percentage year-to-year increase

the percentage year to year increase

Which population group is largely responsible for the increase in the labor force participation rate during the period from 1950 to 2000? a. women bMen c. Teens d. The elderly (delaying their retirement)

women

If a society has 250 million people over the age of 16, 145 million who are working, and 5 million who are looking for work, with 100 million others neither working nor looking for work, the labor force participation rate is a.40% (145/250). b.58% (145/250). c.60% (150/250). d.42% ((5+100)/250).

c.60% (150/250).

If there are 325 million Americans, 162 million with jobs (with 2 million of those in the active duty military), 8 million who are out of work and looking for jobs, and 155 million who do not have jobs and are not looking for work, what is the unemployment rate? a. 163/325 or 50.2 percent b. 8/168 or 4.8 percent c. 8/170 or 4.7 percent d. 8/155 or 5.2 percent

8/168 or 4.8 percent

The expenditures approach to GDP equals a. Employee Compensation + Profit + Net Property Income + Indirect Business Taxes + Depreciation - Income Earned Abroad. b.Consumption + Gross Investment + Government Purchases + Net Exports. c. Consumption + Net Investment (Gross Investment-Depreciation) + Government Purchases + Net Exports. d. Employee Compensation - Profit - Net Property Income - Indirect Business Taxes-Depreciation - Income Earned Abroad.

consumption + gross investment + government purchases + networks

If Real GDP contracted by more than 10%, economists would label that a a. recession b.expansion c.recovery d.depression

depression

Of these, economists consider this the worst: a. inflation of 5 percent b.recession c. deflation of 1 percent d. depression

depression

Unemployment rates typically increase dramatically from December to January because the holiday sales season ends. For this reason, it is best to a.seasonally adjust the data. b.politically adjust the data. c. focus on January increases. d. focus on November/December decreases.

focus on november/december decreases

Suppose there are only two goods (Good A and Good B) and the average person buys 8 of Good A in a year and 6 of Good B. If the Price of Good A is $8 and the Price of Good B is $6, the price of the market basket a. is 100. b. is 64. c. is 36. d. is 50.

is 100

One problem with using real gross domestic product (RGDP) as a measure of social welfare is that a. it fails to count home production b. it double, triple, and sometimes quadruple counts goods that are produced in stages. c.it fails to count services, a growing part of the economy. d.it fails to account for imports, a growing part of the economy

it fails to count home production

On a graph of real gross domestic product over time, recessions appear as a. long, sharp declines on an otherwise increasing path. b. the periods where the rate of growth, while still positive, slows. c.relatively short and shallow drops on an otherwise increasing path. d. the dips on a path that increases and decreases equally.

relatively short and shallow drops on an otherwise increasing path

If the price of gasoline has increased from $3 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 266.66, then you know that the inflation adjusted price of gasoline has a. increased b. decreased c. remained constant

remained constant

In 2019, General Motors announced the closure of its Lordstown, Ohio assembly plant. Those laid off as a result would likely be classified as a. structurally unemployed b. frictionally unemployed. c. cyclically unemployed. d. seasonally unemployed.

structurally unemployed

inflation rate =

((year 2 index - year 1 index) / year 1 index)) *100

If a market basket was defined in 2018 and it cost $10,000 to purchase the items in that basket in 2018, while it cost $11,000 to purchase those identical goods in 2019, then the inflation rate from 2018 to 2019 is a. (100-100)/100*100%=0%. b.(100-90.9)/100*100%=9.1%. c.(110-100)/100*100%=10%. d.unknown given this data.

(110-100)/100*100%=10%.

Suppose a DVR is bought from China for $200 and sold in the US for $250. GDP will count this a. as nothing. b. as a net of $50 ($250 sale minus $200 import). c.as $200. d.as $250.

as a net of $50 ($250 sale minus $200 import).

The "core rate" of inflation a. adds in food and energy to the price index. b.removes food and energy from the price index. c.only includes the price of food and energy in the price index. d.is a price index associated with the important things people buy.

removes food and energy from the price index

The major difference between nominal GDP and real GDP is a. nominal GDP measures the value of output with constant output levels, while real GDP measures output using current-year output levels. b. nominal GDP measures the value of output with current-year output levels, while real GDP measures output using constant output levels. c. nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices. d. nominal GDP measures the value of output in constant prices, while real GDP measures output using current-year prices.

nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices.

Suppose a Boeing 777 is sold to a Chinese company for $250 million and resells it to a Hong Kong airline for $251 million. GDP will count this as a.nothing. b.$250 million. $251 million. $451 million.

b. $250 million

If inflation increases unexpectedly due to an increase in oil prices, this helps a.people on fixed incomes. b. lenders. c. workers. d. borrowers

borrowers

With 125 million people working, 8 million out of work and looking for work, and 147 million neither working nor looking for work, "underemployment" would be illustrated by a. 125 million losing their jobs. b. 8 million ending their search for work. c. part of the 125 million holding low-skill jobs when they were qualified for only low-skill jobs. d. part of the 125 million holding low-skill jobs when they were qualified for high-skill jobs.

part of the 125 million holding. low skill jobs when they were qualified for high skill jobs