Econ 202 Midterm 1

In the table above, what price level belongs in space D?

130

Inflation is a problem when

Answer: All of the above answers are correct. it causes resources to be diverted from productive uses. it is unpredictable. it causes the value of money to vary unpredictably.

If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 BMWs for a total of $500,000 from Germany

U.S. GDP decreases because net exports are negative.

The unemployment rate is calculated as

[(unemployment) ÷ (labor force)] × 100.

An example of "investment" in computing real GDP using the expenditure approach is the purchase of

a new set of tools by an auto mechanic, for use in repairing cars.

Which of the following is NOT considered to be in the labor force?

a person who is not working and who has not tried to find a job

Real GDP is not a perfect indicator of economic welfare because

economic welfare depends on many factors not measured or not measured accurately by real GDP.

Gross domestic product can be calculated

either by valuing the nation's output of goods and services or by valuing the income generated in the production process.

The percentage of people employed aged 16 years and older divided by the working-age 10) population is known as the

employment-to-population ratio.

Net exports of goods and services equal the

exports of goods and services minus the imports of goods and services

Cyclical unemployment

fluctuates over the business cycle.

Unemployment caused by the normal labor turnover is called ________ unemployment.

frictional

The three types of unemployment are

frictional, structural, cyclical

By itself, an increase in exports

increases GDP.

The total number of people aged 16 years and over who are not institutionalized

is the working-age population.

When the unemployment rate is less than the natural unemployment rate

the output gap is positive.

The unemployment rate equals

the percentage of the labor force currently unemployed.

The circular flow diagram shows that

the total amount of income generated by the economy equals the total purchases of final goods and services

Intermediate goods are excluded from GDP because

their inclusion would understate GDP.

In September 2014, the labor force participation rate fell from 62.8 percent to 62.7 percent. This 23) change could have been caused by

unemployed workers giving up looking for a job.

Business cycles are

unpredictable, but always have two phases and two turning points.

Hyperinflation is defined as

very high inflation rates.

The official U-3 unemployment rate includes the total number of people who

are available and looking for work but unable to find employment.

Which of the following is a macroeconomic decision or concept?

b. the unemployment rate for each firm

In part, microeconomics is concerned with

c. how a business firm decides upon the amount it produces and the price it sets

Macroeconomics differs from microeconomics in that

c. macroeconomics focuses on the national economy and the global economy

Full employment occurs when

cyclical unemployment is zero

If Frito Lay, an American snack company, opens a new manufacturing facility in Mexico and produces snacks which are distributed in South America, then Mexico's GDP ________ and U.S. GDP ________.

d. increases; does not change

Gross domestic product is the total ____ produced within a country in a given time period

d. valuing production according to the market price

in the definition of GDP, "market value" refers to

d. valuing production according to the market price

In the above figure, a recession begins at point ________ and an expansion begins at point

d; c

Depreciation is defined as the

decrease in the stock of capital due to wear and tear.

The relationship between real GDP and potential GDP is that

real GDP fluctuates about potential GDP.

If this year's price level exceeds last year's

the inflation rate is accelerating.

Use the information in the table above to calculate the value of net exports.

$10 million

Using the information in the table above, calculate the value of GDP.

$140 million

he above table shows some (but not all) national income accounting data for a hypothetical country. According to these data, the value of GDP is ________ billion.

$2,100

Based on the data in the above table, gross domestic product equals

$2,465.

If the CPI was 121.5 at the end of last year and 138.3 at the end of this year, the inflation rate over these two years was

(138.5/121.5)x100=13.8 percent.

The information in the table above gives the 2016 reference base period CPI basket and prices used to construct the CPI for a small nation. It also has the 2017 prices. What is the value of the CPI for2017?

(2016) : (4x5)+(2x3)+(4x1)=30 (2017): (4x7.50)+(2x3)+(4x1.50)=42 42/30x100=140 140

If the basket of goods and services used to calculate the CPI cost $200 in the reference base period and $450 in a later year, the CPI for the latter year equals

(450-200)/200x100=125 225

If the number of people unemployed is 100, the number of people employed is 1,000, and the 18) working-age population is 1,400, then the labor force is

1,100.

If the number of people unemployed is 100, the number of people employed is 1,000, and the working-age population is 1,400, then the labor force is

1,100.

Suppose that you have data for a simple macroeconomy with 3 goods: bows, arrows, and swords. In 2009, there were 5 bows produced at a market value of $100 each, there were 10 arrows-produced at a market value of $10 each, and there were 3 swords produced at a market value of$500 each. In 2019, there were 10 bows produced at a market value of $200 each, there were 30 arrows produced at a market value of $10 each, and there were 5 swords produced at a market value of $1000 each. What was the value of real GDP in 2019?

3,800

In an economy, 42 million people are in the labor force, 38 million are employed, and 47 million are of working age. How many people are not in the labor force?

5 million

The population of Tiny Town is 100 people and the labor force is made up of 75 people. If 5 of these 7) people are unemployed, the unemployment rate is

5/75 × 100.

f the population is 300 million, with 70 million under the age of 16 and institutionalized, another 70 million not in the labor force, 10 million unemployed and 150 million employed, the labor force participation rate is

69.6 percent.

In an economy, 23 million people are employed and 2 million are unemployed, but 5 million 21) part-time workers would prefer full-time work. What is the unemployment rate?

8 percent

In an economy, 43 million people are employed, 3 million are unemployed, and 4 million are not in 22) the labor force. What is the employment-to-population ratio?

86 percent

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed persons is ________ and the new unemployment rate is ________.

94.1 million; 5.9 percent

Which of the following are equal to one another? I. aggregate production II. aggregate expenditure III. aggregate income

A) I equals II, equals III.

Person A: Now that the kids are in school for a full day, this person is looking for work and has interviewed for three jobs during the past two weeks. Person B: This person has been laid off from a job but expects to be called back as soon as the economy improves. Person C: This person has just graduated from college and will start a new job in three weeks. In the meantime this person will tour the great American beaches. Person D: This person was laid off last year when new equipment was installed at the plant, reducing the number of workers needed. Shortly after being laid off, this person looked for a new job, was unable to find one and then stopped looking, even though this person still wants a job and is available for work. The above table shows answers given by people interviewed in a government survey of households. Which individuals are considered to be a part of the labor force?

A, B, and C

GDP equals

C + I + G + (X - M).

According to the BEA, in the second quarter of 2012 personal consumption expenditures grew by 1.7 percent, gross private domestic investment grew by 3.0 percent, government expenditure on-goods and services decreased by -0.9 percent, imports grew by 2.9%, and exports grew by 6.0%. Given these data, it is most likely that

GDP growth was positive in the 2nd quarter.

Suppose the Consumer Price Index is 143.6. What does that number mean?

Prices rose 43.6 percent over the reference base period, on average.

_______ refers to a period when the ________ decreases.

Productivity growth slowdown; growth rate of output per person

The word "final" in the definition of GDP refers to

not counting intermediate goods or services

The labor force is the sum of the

number of employed people and the number of unemployed people

The labor force is the sum of the

number of employed people and the number of unemployed people.

A common definition of a recession is a period of time

of at least 6 months during which real GDP decreases.

The working-age population can be divided into two groups

people in the labor force and people who are not in the labor force

The working-age population is defined as the number of

people over the age of 16 who are not in jail, hospital, or other institution.

If depreciation is less than gross investment, then net investment is

positive.

The maximum amount of production that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation is called

potential GDP.

Which of the following is NOT included in real GDP?

production that takes place in the underground economy

Transfer payments

refer to payments made by the government that are not made to purchase a good or service.

Which of the following is not a phase or turning point of the business cycle?

shutdown

Suppose that over a period of years the country of Quasil and switched from being an agriculturally-based economy to a technologically-based economy. As a result, many people lostjobs because they lacked the correct skills. As they search for new jobs, these people are part of

structural unemployment.

Which labor market statistic tends rise during recessions and fall during expansions?

the employment-to-population ratio

Which, if any, of the following causes a country's reported GDP to be less than its total economic production?

the exclusion of household production

The components of the expenditure approach to measuring GDP include all of the following EXCEPT

the implicit payments for unpaid household work.

The table below shows Vietnam's price index between 2004 and 2007. From the data, we can conclude that

the inflation rate 2005 and 2006 was 7.5 percent.