Econ Ch 2
what is the labor force participation rate
(labor force/population) x 100
how is the consumer price index calculated
(market basket in year y/market basket in base year) x 100
what is the unemployment rate
(unemployed/labor force) x 100
Why are capital goods and inventories treated differently from intermediate goods in the production approach to measuring GDP?
Capital goods and inventories represent economic activity that is not counted elsewhere
How is GDP defined in the expenditure approach to measuring economic activity?
Y=C+I+G+NX
Identify the four major expenditure components in the national
consumption, investment, government spending, and net exports
what is the difference between ex ante and ex post real interest rates
ex ante real rates are calculated using expected inflation, while ex post rates use actual inflation
the major subcategories of investment are
fixed investment (tools, machinery, equipment), residential investment (structures, factory, warehouses, office space), and inventory investment (increase in inventory. products that are unused. finished but not sold products)
Is GDP a flow or stock measure
flow measure
As a borrower, would you benefit more from a higher or lower actual inflation rate
higher
which category is a farmer's purchase of a new tractor to work his or her field included in
investment category
Does a household purchase of a home built in 1985 count toward GDP
No, it would have been counted in the year it was built
what is the difference between intermediate goods and final goods
Intermediate goods are completely used up in production. Final goods are final products
Which category is a household purchase of a newly built dishwasher included in
consumption category
the production of intermediate goods and services...
are included in the value of final market goods
the production of goods and services that are not sold in markets (both legal and illegal)...
are not included in GDP
the purchase of used goods and imported goods and services...
are not included in GDP
The consumer price index is a measure of
average prices of consumer goods and services
Flow variables represent...
changes in levels
the major subcategories of consumption are
consumer durables (long lived, car, fridge, microwave), nondurable goods (food, clothing), and services (doctor, haircut)
Which category is the US department of defense buying 10 helicopters just built in brazil included in
it is counted as government spending and subtracted as imports
does a disabled individual's receiving a transfer from the US government count towards GDP
no
the difference between nominal and real interest rates
real rate: amount of extra purchasing power a lender must be paid for the rental of their money. the ex ante and ex post real rates may be different. nominal rate: does not change on a fixed rate loan, includes the rate of inflation the real rate does not
If the price of a new good is higher that the current iphone, how will CPI measure the change in cost of living
the CPI will overstate the change in the cost of living because the new Iphone is an improved product
Stock variables measure...
the accumulation of values over time
consumer price index is collected by
the bureau of labor statistics
what is the definition of GDP by production approach?
the current market value of all final goods and services newly produced in the economy during a fixed period
What is the formula for labor force
unemployed + employed