Homework from Exam 1
The CPI in 2016 was 241.4. The CPI in 2017 was 246.8. The inflation rate in 2017 was _______ percent.
2.2
1. 18 million people had full-time jobs 2. 11 million people had part-time jobs 3. 6 million people were without work but were available for work and had made specific efforts to find a job within the past four weeks or were waiting to be recalled from a layoff or had a new job to start within the next 30 days 4. 2 million part-time workers were looking for full-time jobs 5. 39 million people of working age did not have jobs and did not want jobs In Blogsville last month, ______ million people were in the labor force and ______ million people were in the working-age population. A. 35; 74 B. 35; 85 C. 40; 74 D. 29; 35
A. 35; 74
The inflation rate is calculated as _________. A. [(CPI this year −CPI last year) ÷CPI last year] ×100 B. [(CPI this year −CPI in the base year) ÷CPI in the base year] ×100 C. [(CPI this year −CPI last year) ÷CPI this year] ×100 D. [(CPI in the base year −CPI last year) ÷CPI this year] ×100
A. [(CPI this year −CPI last year) ÷CPI last year] ×100
The reference base period for the CPI is 1982-1984. In April 2017, the CPI was 244.5. Complete the sentence. This CPI in April 2017 tells us that the ______ of the prices paid by urban consumers for a fixed basket of consumer goods and services was ______ . A. average; 144.5 percent higher in April 2017 than the average of 1982-1984 B. average; 244.5 percent higher in April 2017 than the average of 1982-1984 C. inflation rate; 244.5 percent per year D. inflation rate; 144.5 percent per year
A. average; 144.5 percent higher in April 2017 than the average of 1982-1984
Aggregate income in an economy in 2017 is $570 billion. Saving is $30 billion and imports are $ 35 billion. What is aggregate expenditure in the economy in 2017? Aggregate expenditure in the economy in 2017 is ______. A. $570 billion B. $540 billion C. $605 billion D. $635 billion
A. $570 billion
A south sea island has a labor force of 100 workers. 10 workers are unemployed. 5 people would like to have jobs, but are not looking, because they are discouraged by previous failed attempts to find work. What is the unemployment rate (U-3) on the island? A. 10% B. 14% C. 15% D. 5%
A. 10%
The total amount spent _____ is called gross investment. A. buying goods and services B. replacing depreciated capital C. both buying new capital and replacing depreciated capital D. buying new capital
C. both buying new capital and replacing depreciated capital
Depreciation is the _____ in the value of _____ that results from its use and from obsolescence. A. decrease; residual assets B. increase; land C. decrease; capital D. decrease; the dollar
C. decrease; capital
When people find jobs, the unemployment rate U-3: A. stays the same B. increases C. decreases
C. decreases
An increase in discouraged workers ______ the official unemployment rate and ______ the broader measure of unemployment that includes this category. A. does not change; does not change B. decreases; decreases C. increases; increases D. decreases; does not change
D. decreases; does not change
Net exports increase when ______. A. government expenditure increases B. investment increases C. exports decrease and imports increase D. exports decrease but imports decrease by more than exports decrease
D. exports decrease but imports decrease by more than exports decrease
It is possible for GDP to fall by only 1.0 percent given the big cuts in expenditure reported because _______. A. imports increased by more than government expenditure increased B. imports increased but government expenditure didn't change C. imports increased and government expenditure fell D. government expenditure increased by a large amount and imports barely changed
D. government expenditure increased by a large amount and imports barely changed
If the price of cream rises, the supply of low-fat milk _______. A. decreases because dairies will produce more cream and less low-fat milk B. decreases because cream and low-fat milk are substitutes in production C. increases because consumers will buy more low-fat milk and less cream D. increases because cream and low-fat milk are complements in production
D. increases because cream and low-fat milk are complements in production
When a timber mill makes logs from trees it also produces sawdust, which is used to make plywood. a. Explain how a rise in the price of sawdust influences the supply of logs. A rise in the price of sawdust _________. A. decreases the quantity of logs supplied B. decreases the supply of logs C. increases the quantity of logs supplied D. increases the supply of logs
D. increases the supply of logs
The value of real GDP per person might misrepresent the average Indian's standard of living because ______. A. real GDP includes home production and the black market and both of these are difficult to measure B. India's population is very large C. real GDP includes the goods produced and sold in the black market and India has a relatively small black market D. real GDP does not include home production and India's real GDP is calculated with the low prices that prevail in India
D. real GDP does not include home production and India's real GDP is calculated with the low prices that prevail in India
Retraining programs seek to avoid _______ unemployment because _______. A. cyclical; by giving workers the skills needed for the available jobs, recessions can be avoided B. frictional; by giving workers the skills needed for the available jobs, people entering the labor force will immediately find employment C. all types of; the natural unemployment rate will fall D. structural; the programs aim to give workers the skills needed for the available jobs
D. structural; the programs aim to give workers the skills needed for the available jobs
Given the lower price of strawberries, the ______ and the price of strawberry jam ______. A. demand for strawberry jam increases; rises B. supply of strawberry jam and the demand for strawberry jam both decrease; rises, falls, or remains unchanged C. supply of strawberry jam decreases; rises D. supply of strawberry jam increases; falls
D. supply of strawberry jam increases; falls
The factors that might make the natural unemployment rate change include _______. A. the actual unemployment rate, the scale of structural change, the nominal wage rate, and unemployment benefits B. the age distribution of the population, the output gap, the actual unemployment rate, and the real wage rate C. the scale of structural change, the Z-Pop ratio, the output gap, and unemployment benefits D. the age distribution of the population, the scale of structural change, the real wage rate, and unemployment benefits
D. the age distribution of the population, the scale of structural change, the real wage rate, and unemployment benefits
A south sea island has a labor force of 100 workers. 10 workers are unemployed. 5 people would like to have jobs, but are not looking, because they are discouraged by previous failed attempts to find work. Out of the 10 unemployed workers, 5 decide to stop looking because they think they will not find anything. What is the U-4 rate on the island after the 5 unemployed workers stop looking? A. 15% B. 10% C. 16% D. 14%
D. 14%
A south sea island has a labor force of 100 workers. 10 workers are unemployed. 5 people would like to have jobs, but are not looking, because they are discouraged by previous failed attempts to find work. Out of the 10 unemployed workers, 5 decide to stop looking because they think they will not find anything. What is the U-3 rate on the island after the 5 unemployed workers stop looking? A. 5.3% B. 10% C. 5% D. 14%
A. 5.3%
Hyperinflation is an inflation rate of _____ or higher that grinds the economy to a halt and causes a society to collapse. A. 50 percent a month B. 20 percent a year C. 20 percent a month D. 50 percent a year
A. 50 percent a month
Which of the following is an example of investment? A. Continental buying Airbus planes B. Mike buying an Apple iPad C. Randy buying a BMW D. Ron buying stocks and bonds.
A. Continental buying Airbus planes
In October 2009, the U.S. unemployment rate was 10.0 percent. In October 2011, the unemployment rate was 8.9 percent. Predict what happened to unemployment between October 2009 and October 2011, if the labor force was constant. If the labor force remained constant between October 2009 and October 2011, then the number unemployed _______. A. Decreased B. increased C. did not change D. either increased or decreased, but we can't predict for sure
A. Decreased
Choose the correct equation. A. Depreciation = Gross investment−Net investment B. Net investment−Depreciation = Gross investment C. Net investment−Gross investment = Depreciation D. Net investment = Gross investment + Depreciation
A. Depreciation = Gross investment−Net investment
Which of the following statements by Aqua Springs demonstrates that the firm's selling plans obey the law of supply? A. If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers B. We can easily decrease the production of plain water and increase the production of sparking water. C. We've been hit by a rise in the price of plastic bottles and will lower production. D. At a price of $1 bottle, we plan to sell 2,000 bottles per day.
A. If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers
When people retire, the unemployment rate (U-3): A. Increases B. stays the same C. decreases
A. Increases
The broader measure of unemployment that includes discouraged workers is _______. A. U-4 B. U-1 C. U-2 D. U-3
A. U-4
When unemployed workers stop looking for a job, the unemployment rate (U-3): A. decreases B. increases C. stays the same
A. decreases
Real GDP ______. A. does not include a measure of household production or underground economic activity B. accurately measures inflation and environmental quality but does not accurately measure political freedom and social justice C. accurately measures environmental quality, but does not accurately measure underground economic activity D. accurately measures household production, but does not accurately measure health and life expectancy
A. does not include a measure of household production or underground economic activity
Net exports of goods and services is the value of _____ of goods and services _____ the value of _____ of goods and services. A. exports; minus; imports B. exports; times; imports C. imports; minus; exports D. exports; plus; imports
A. exports; minus; imports
A south sea island has a labor force of 100 workers. 10 workers are unemployed. 5 people would like to have jobs, but are not looking, because they are discouraged by previous failed attempts to find work. Out of the 10 unemployed workers, 5 decide to stop looking because they think they will not find anything. After the 5 unemployed workers stop looking, the U-3 rate: A. falls B. increases C. stays the same
A. falls
In June 2015, the U.S. unemployment rate was 5.2 percent. In June 2017, the unemployment rate was 4.4 percent. Predict what happened to the labor force between June 2015 and June 2017 if unemployment was constant. If unemployment remained constant between June 2015 and June 2017, then the labor force ______. A. increased B. decreased C. either increased or decreased but we can't predict for sure D. did not change
A. increased
Why might the unemployment rate underestimate the underutilization of labor resources? The unemployment rate might underestimate the underutilization of labor resources because it does not include ______. A. marginally attached workers and part-time workers who want full-time jobs B. people who are waiting to start a new job within 30 days C. people who are waiting to be called back to a job from which they have been laid off D. people who are without work and have made specific efforts to find a job within the previous four weeks
A. marginally attached workers and part-time workers who want full-time jobs
When the CPI _______. A. rises slowly, the inflation rate is low B. rises slowly, the inflation rate is negative C. falls, the inflation rate is positive and low D. is constant, the inflation rate is negative
A. rises slowly, the inflation rate is low
If growers did not plow in their plants and instead offered locals "you pick for free", we would expect _______. A. the demand for strawberries at local grocery stores to decrease B. the supply of strawberries to decrease C. the price of strawberries in grocery stores to rise D. the equilibrium quantity of strawberries sold in grocery stores increases
A. the demand for strawberries at local grocery stores to decrease
We observe a rise in the price of bottled water and a decrease in the quantity of bottled water that producers sell. The most likely explanation is that ______. A. the law of supply applies to bottled water, but some other influence on selling plans decreased the supply of bottled water. B. the law of demand applies to bottled water but the law of supply does not C. it is unprofitable to produce bottled water D. First should produce less bottled water
A. the law of supply applies to bottled water, but some other influence on selling plans decreased the supply of bottled water.
The CPI is a _______. A.measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services B. measure of inflation C. measure of the price level of all goods and services that are counted as part of GDP D. list of the items that an average urban household buys and the percentage weight of total expenditure given to each item
A.measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services
CPI = ______. A. (Cost of CPI basket at base-period prices ÷Cost of CPI basket at current-period prices) ×100 B. (Cost of CPI basket at current-period prices ÷Cost of CPI basket at base-period prices) ×100 C. [(Cost of CPI basket at base-period prices −Cost of CPI basket at current-period prices) ÷Cost of CPI basket at current-period prices] ×100 D. [(Cost of CPI basket at current-period prices −Cost of CPI basket at base-period prices) ÷Cost of CPI basket at current-period prices] ×100
B. (Cost of CPI basket at current-period prices ÷Cost of CPI basket at base-period prices) ×100
Choose the correct statement. A. Potential GDP per person grew faster in the 1970s than in the 1960s. B. Real GDP per person is real GDP divided by the population. C. Potential GDP per person grows at a constant rate. D. Real GDP per person in the United States doubled between 1960 and 2016
B. Real GDP per person is real GDP divided by the population.
The natural unemployment rate is the unemployment rate when the economy is _____. A. not at full employment B. facing high interest rates C. at full employment D. facing high inflation
C. at full employment
Which of the following statements illustrates frictional unemployment? A. Thousands of employees were laid off during the 2008-09 recession. B. Robin is quitting his current job to find another that has better prospects. C. Dave lost his job as he did not possess the technical skills required to do his duty. D. Many bank tellers lost their jobs due to the installation of ATM machines.
B. Robin is quitting his current job to find another that has better prospects.
Choose the correct statement. A. Changes in relative prices lead consumers to change the items they buy, and the CPI reflects this substitution. B. When confronted with higher prices, people use discount stores more frequently and convenience stores less frequently, but the CPI does not monitor this outlet substitution. C. The CPI calculation assumes that everyone shops at discount stores and no one shops at convenience stores. D. When the quality of a good improves over time, the CPI does not include the portion of the price rise attributable to the higher quality in its calculation.
B. When confronted with higher prices, people use discount stores more frequently and convenience stores less frequently, but the CPI does not monitor this outlet substitution.
Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan. Toyota assembles cars for the U.S. market in Kentucky. Explain where these activities appear in Japan's National Income and Product Accounts. A. If any parts for the cars come from Japan, the parts are Japanese imports. B. When the wings are sent to the United States, their value appears as Japanese exports in calculating Japan's GDP. C. The production of cars by Toyota in Kentucky is included in Japan's GDP because Toyota is a Japanese firm. D. The production of the wings by Mitsubishi Heavy Industries is included in world GDP but not in Japan's GDP because the wings will be shipped to the United States.
B. When the wings are sent to the United States, their value appears as Japanese exports in calculating Japan's GDP.
The natural unemployment rate _______. A. constantly increases as technology moves jobs from labor to capital B. changes as frictions and structural change occur in the economy C. changes with the business cycle D. does not change. It remains constant until recalculated by the Congressional Budget Office
B. changes as frictions and structural change occur in the economy
When a timber mill makes logs from trees it also produces sawdust, which is used to make plywood. Explain how a rise in the price of sawdust influences the supply of plywood. A rise in the price of sawdust _______. A. increases the supply of plywood B. decreases the supply of plywood C. increases the quantity of plywood supplied D. decreases the quantity of plywood supplied
B. decreases the supply of plywood
Producers of smartphones expect the population to increase and the number of firms producing and selling smartphones to increase. You predict that the price of a smartphone will ______ and the quantity of smartphones bought will ______. A. Fall; decrease B. either rise, fall, or remain the same; increase C. Rise; increase D. Rise;increase, decrease, or remain the same
B. either rise, fall, or remain the same; increase
A discouraged worker ______. A. is a member of the labor force B. has stopped looking for a job because of repeated failure to find one C. wants to quit his job because his working conditions are less than ideal D. is a part-time worker who wants full-time employment
B. has stopped looking for a job because of repeated failure to find one
When college graduates start looking for work, the unemployment rate (U-3); A. decreases B. increases C. stays the same
B. increases
An unexpected burst of inflation _______. A. usually leads to hyperinflation B. makes workers worse off and makes employers better off C. borrowers lose and lenders win D. makes workers and employers better off
B. makes workers worse off and makes employers better off
A south sea island has a labor force of 100 workers. 10 workers are unemployed. 5 people would like to have jobs, but are not looking, because they are discouraged by previous failed attempts to find work. Out of the 10 unemployed workers, 5 decide to stop looking, because they think they will not find anything. After the 5 unemployed workers stop looking, the U-4 rate: A. increases B. stays the same C. decreases
B. stays the same
When economic part-timers find full time work, the unemployment rate (U-3): A. increases B. stays the same C. decreases
B. stays the same
When cyclical unemployment increases and other things remain the same, ______. A. the amount of frictional unemployment increases B. the natural unemployment rate does not change C. the amount of structural unemployment decreases D. the natural unemployment rate decreases
B. the natural unemployment rate does not change
The four main ways in which the CPI is an upward-biased measure of the price level are through _______. A. differences in wholesale and retail prices, differences in domestic and international prices, differences among various supply chain costs, and differences among wage rates in different states B. the new goods bias, the quality change bias, the commodity substitution bias, and the outlet substitution bias C. sales taxes, subsidies, quotas, and vouchers D. the intermediate goods bias, the bricks-and-mortar bias, the online bias, and the quality change bias
B. the new goods bias, the quality change bias, the commodity substitution bias, and the outlet substitution bias
The amount by which _____ is called net investment. A. firms' costs decrease B. the value of capital increases C. firms' profits increase D. the value of capital decreases
B. the value of capital increases
The inflation rate is the percentage change in the _____ from one year to the next. Deflation is a situation in which the _____ is _____ and the inflation rate is _____. A. price level; input cost; rising; positive B. interest rate; interest rate; falling; negative C. price level; price level; falling; negative D. interest rate; interest rate; rising; positive
C. price level; price level; falling; negative
Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand? I People are buying less chicken because the price of beef has fallen. II People are buying less chicken because the price of chicken has increased. III People are buying more chicken because the price of chicken has fallen. IV The cost of chicken feed has increased. A. I, II, and III are changes in the quantity demanded and IV is a change in demand. B. I, II, and III are changes in demand and IV is a change in the quantity demanded. C. I is a change in demand and II and III are changes in the quantity demanded. D. I is a change in the quantity demanded and II and III are changes in demand.
C. I is a change in demand and II and III are changes in the quantity demanded.
Which of the following statements illustrates structural unemployment? A. Many women quit jobs to raise their kids. B. Dell laid off many employees when the company's profits dropped during the recession. C. Outsourcing resulted in many job losses in the mid 2000s. D. Jen quit her current job and found another one with a better pay scale.
C. Outsourcing resulted in many job losses in the mid 2000s.
Which of the following is an example of consumption expenditure? A. United buying Dell PCs. B. Mary buying a house. C. Rachel buying a TV. D. Peter buying stocks.
C. Rachel buying a TV.
An increase in the supply of computers brings a ______ of computers at the original price and a ______ in their price. A. Shortage; rise B. Shortage; fall C. Surplus; fall D. Surplus; rise
C. Surplus; fall
Government funded retraining _______the natural unemployment rate because _______. A. does not change; the natural unemployment rate is constant B. decreases; cyclical unemployment will fall C. decreases; natural unemployment includes structural unemployment D. increases; more unemployed people will enter the labor force
C. decreases; natural unemployment includes structural unemployment
If the price of low-fat milk rises, the supply of low-fat milk _______. A. increases because dairies increase profit by selling more low-fat milk B. does not change because consumer preferences for low-fat milk do not change C. does not change because the relationship between price and quantity supplied does not change D. decreases because consumers purchase less low-fat milk
C. does not change because the relationship between price and quantity supplied does not change
A person is in the labor force if that person is _______. A. waiting to start a new job within the next 3 months B. aged 16 and over and not in jail, hospital, or some other form of institutional care C. either employed or unemployed D. neither working nor looking for work but has indicated that he or she wants and is available for a job and looked for work sometime in the recent past
C. either employed or unemployed
Imports of goods and services are items that _____ in the United States _____ the rest of the world. A. households and governments, but not firms; sell to B. households, firms, but not governments; buy from C. households, firms, and governments; buy from D. firms and governments, but not households; sell to
C. households, firms, and governments; buy from
The standard of living of those living on $2 a day might be underestimated because ______. A. the currencies in India and the United States cannot be compared B. many of the Indian people are well educated C. many of the transactions of the poorest people in India do not occur in markets D. many international firms outsource to India and they pay wages much higher than $2 a day
C. many of the transactions of the poorest people in India do not occur in markets
If the CPI rises from 120 to 126, then ______. A. the price of housing rises by at least 5 percent B. the price of gasoline rises by 6 percent C. on average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 5 percent D. on average, the price paid by urban consumers for a fixed basket of consumer goods and services risers by 6 percent
C. on average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 5 percent
The personal consumption expenditure deflator is calculated as _______. A. (Nominal C ÷Real GDP) ×100 B. (Nominal GDP ÷Real C) ×100 C. (Nominal GDP ÷Real GDP) ×100 D. (Nominal C ÷Real C) ×100
D. (Nominal C ÷Real C) ×100
Real GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices in _____ year. Nominal GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices of _____ year. A. final; that same; final; a base B. intermediate; a base; final; that same C. final; that same; intermediate; a base D. final; a base; final; that same
D. final; a base; final; that same
A south sea island has a labor force of 100 workers. 10 workers are unemployed. 5 people would like to have jobs, but are not looking, because they are discouraged by previous failed attempts to find work. What is the U-4 unemployment rate on the island? A. 10% B. 15% C. 5% D. 14%
D. 14%
Choose the correct statement. A. U-3 includes discouraged workers. B. The unemployment rate includes all underutilized labor. C. U-2 is the unemployment rate of those unemployed for 15 weeks or more. D. A marginally attached worker is a person who currently is neither working nor looking for work but has indicated that he or she wants and is available for a job and has looked for work sometime in the recent past.
D. A marginally attached worker is a person who currently is neither working nor looking for work but has indicated that he or she wants and is available for a job and has looked for work sometime in the recent past.
An increase in the demand for T-shirts together with a decrease in the supply of T-shirts brings a ______ of T-shirts at the original price and a ______ in their price. A. Surplus; rise B. Surplus; fall C. Shortage; fall D. Shortage; rise
D. Shortage; rise
Which of the following is an example of government expenditure on goods and services? A. The Indian government lowering import tariffs. B. Apple outsourcing the manufacture of iPhones. C. The U.S. government lowering the interest rate. D. The White House buying internet services.
D. The White House buying internet services.
Which of the following is an example of investment? A. a person investing $250 a month in the stock market B. a person depositing $100 a week to her savings account C. a person adding money to his retirement fund D. The purchase of pill counting machines by Walgreens
D. The purchase of pill counting machines by Walgreens
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _____ and decreases during _____. A. an expansion; a recession B. imports; exports C. technological stagnation; technological advancements D. a recession; an expansion
D. a recession; an expansion
Dairies make low-fat milk from full-cream milk, and in the process they produce cream, which is made into ice cream. Explain the effect of the following events on the supply of low-fat milk. If the wage rate of dairy workers rises, the supply of low-fat milk _______. A. decreases because consumers prefer to buy full-cream milk B. increases because workers will now be able to afford more milk C. increases because dairies will prefer to sell full-cream milk D. decreases because the cost of producing low-fat milk increases
D. decreases because the cost of producing low-fat milk increases