Macro Exam 2

Unemployment rate =

# of unemployed / labor force x 100

If there are constant returns to scale, the production function can be written as

Y/L = A F(xL, xK, xH, xN)

the measure of the cost of a basket of goods and services bought by firms

producer price index

If a country's saving rate increases, then in the long run_________

productivity and real GDP per person are both higher

Consumption consists of spending by households on goods and services, with the exception of ______

purchases of new houses

When a union raises the wage above the equilibrium level, it __________

raises the quantity of labor supplied and reduces the quantity of labor demanded, resulting in unemployment.

A recession has traditionally been defined as a period during which______

real GDP declines for 2 consecutive quarters

Interest rate corrected for inflation

real interest rate

GDP deflator reflects only prices of all goods and services ________

sold domestically

organized withdrawal from a labor firm by a union

strike

unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one

structural unemployment

People who are unemployed because wages are, for some reason, set above the level that brings labor supply and demand into equilibrium are best classified as_____

structurally unemployed

society's understanding of the best way to produce goods and services

technological knowledge

What agency calculates the CPI?

the Bureau of labor statistics

GDP is defined as

the market value of all final good and services produced within a country in a given period of time

For any given year, the CPI is the price of the basket of goods and services in the _____

given year divided by the price of the basket in the base year, then multiplied by 100

What items are included in US GDP?

goods produced by foreign citizens working in US

Investment in_______

physical capital, like investment in human capital, has an opportunity cost

CPI=

current year/base year x 100

GDP is equal to_______

-C + I + G + NX -Y -the market value of all final goods and services produced within a country in a given period of time

In a market economy, we know that a resource has become scarcer when

-its price rises relative to other prices -it is non-renewable and some of it is used -people search for substitutes

What is a widely acknowledged problem with using the CPI as a measure of the cost of living?

-unmeasured quality change -substitution bias -introduction of new goods

The Bureau of Labor Statistics places people in the "employed" category if they__________

-work without pay in a family member's business -are temporarily absent from their jobs -are self-employed

In the base year, the GDP deflator is always

100

If 2009 is the base year, then the CPI for 209 was____

100 (x/x x100)=100 for when base year is same year as being asked

Real GDP=

Base year price x current year quantity

when bo office receips are corrected for inflation, the most popular movie of all time is?

Gone with the wind

Who is included in the labor force?

Izumi, who does not have a job, but has applied for several in the last week Kawanari, who is on temporary layoff

Jenna is searching for a job that suits her tastes about where to live and coworkers. Mary is looking for a job that makes best use of her skills.

Jenna and Mary are both frictionally employed

GDP per person=

Nominal GDP/Population

The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called

Physical capital

Nominal GDP =

Price x Quantity

Inflation rate=

current yr- price index (last year)/price index (last year)

Who would not be included in the labor force by the Bureau of Labor Stats?

Takaju; who has retired and is not looking for work

The market values of both owner-occupied housing services and rental housing services are included in GDP. T/F

True

The CPI is a measure of the overall cost of the goods and services bought by _______

a typical consumer

The deviation of unemployment from its natural rate is called

cyclical unemployment

indexation

automatic correction by law or contract of a dollar amount for the effects of inflation

the deviation of unemployment from its natural rate

cyclical unemployment

Suppose that an American opens and operate a candy factory in Finland. This is an example of ________

foreign direct investment. American saving is used to finance Finish investment

spending by households on goods and services, with the exception of purchases of new housing

consumption

the property that where-by countries start off poor tend to grow more rapidly than countries that start off rich

catch-up effect

the process by which unions and firms agree on the terms of employment

collective bargaining

a measure of the overall cost of the goods and services bought by a typical consumer

consumer price index

unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills

frictional unemployment

People who are unemployed b/c of job search are best classified as ________

frictionally unemployed

the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases

diminishing returns

A leading environmental group recently published a report contending that humans are running a "resource deficit" because we are using natural resources faster than they can be regenerated. The group claims that this means that economic growth will eventually stop, and will even be reversed. An economist would

disagree with the report, in part because it ignores the mitigating effects of technological change.

individuals who would like to work but have given up looking for a job

discouraged workers

above-equilibrium wages paid by firms to increase worker productivity

efficiency wages

labor force =

employed + unemployed

For an economy as a whole, income must equal expenditure b/c

every dollar of spending by some buyer is a dollar of income for some seller

net exports of goods and services =

exports - imports

stock of equipment and structures used to produce goods and services

physical capital

the knowledge and skills workers acquire through education, training, and experience

human capital

Countries that have lower levels of real GDP per person than the United States _______

in some cases have growth rates that are higher than the US and in other cases that are lower than the US

the percentage of change in the price index from the preceding period

inflation rate

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and service?

investment

spending on capital equipment, inventories, and structures, including household purchases of new housing

investment

process where workers find jobs according to tastes and skills

job search

Proprietary technology is knowledge that is _____

known only by the company who discovered it

labor force participation rate =

labor force / adult population x 100

the percentage of the adult population that is in the labor force

labor force participation rate

In countries that experience political instability, standards of living tend to be low because of ________

lack of respect for property rights

GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home b/c

measuring them is so difficult

When there is no cyclical unemployment

natural rate of unemployment

the inputs into the production of goods and services that are provided by nature, such as land, rivers, and mineral deposits

natural resources

The GDP deflator is the ratio of _____

nominal GDP to real GDP times 100

the interest rate usually reported without correction for inflation

nominal interest rate

Real interest rate =

nominal interest rate - inflation rate

GDP deflator=

nominal/real x100

Transfer payments are ______

not included in GDP b/c they are not payments for currently produced goods or services

Productivity is defined as

the quantity of goods and services produced from each unit of labor input.

Labor force =

unemployed + employed

a government program that partially protects workers' incomes when they become unemployed

unemployment insurance

% of labor force that is unemployed

unemployment rate

a worker association that bargains with employers over wages, benefits, and working conditions

union

What is not a widely acknowledged problem with using the CPI as a measure of the cost of living?

unmeasured price change