Macroecon Midterm

If the current year's consumer price index is 214 and last year's was 209, then the rate of inflation is: 2.4%. 5%. 3%. 2.8%.

2.4%

Workers who want to work but have been frustrated by the inability to find work and have stopped searching are known as: the invisible unemployed. temporary workers. discouraged workers. the disgruntled unemployed.

Discouraged workers

Arlina got a 5% raise while the rate of inflation was 6%. Arlina's standard of living: rose by about 1%. rose by about 2%. fell by about 3%. fell by about 1%.

Fell by about 1%

The twin perils of the modern macroeconomy are said to be: government and the trade deficit. unemployment and the trade surplus. inflation and unemployment. inflation and the trade deficit.

Inflation and Unemployment

If actual unemployment is at its natural rate: inflation is very low. there is deflation. the unemployment rate is zero. interest rates are rising.

Inflation is very low

The _____ economy can include illegal transactions or those not reported to the IRS for tax collection.

Informal

Kelly is an adjunct professor of economics at a small college. She recently landed a tenure track position at a larger school closer to where most of her family lives. She plans not to teach any classes over the summer so that she can look for a house near her new school. What type of unemployment does this contribute to?

Frictional Unemployment

The _____ is an index of the average prices for all goods and services in the economy, including consumer goods, investment goods, government goods, services, and exports.

GDP Deflator

_____ is equal to the total market value of all final goods and services produced by resources supplied by U.S. residents in a given year, whether produced domestically or abroad.

GNP

Not used in the calculation of GDP

Gross domestic private investment

Which of the following items is NOT included in the GDP deflator? bubble gum turbines fire engines imported mangoes

Imported mangoes

Which one of the following would NOT lead to higher prices? strong consumer demand higher gas prices an increase in the supply of money increases in the supply of food

Increases in the supply of food

We are most likely to see a recession if interest rates on long-term bonds are:

Lower than interest rates on short-term bonds

How recessions occur is studied by....

Macroeconomics

Cheryl lost her job six months ago and filled out her last job application about two months ago. She has, however, been searching want ads and asking friends and family about job openings. The Bureau of Labor Statistics would classify her as:

Marginally Attached

Assume the U.S. economy increased about 1.1% quarter to quarter. What is the annualized percent change in real GDP?

4.4%

An employer who pays above market equilibrium wages to reduce turnover and improve morale is said to be paying _____wages.

efficiency

U.S. business cycles since 1950 have shown:

expansions to be longer than recessions.

The GDP deflator is an index that includes prices of all but: consumer goods. investment goods. imports. government goods and services.

imports

Labor includes:

mental and physical talents of people

Full employment: is an unemployment rate of zero. consists of frictional and cyclical unemployment. consists of structural and cyclical unemployment. occurs if cyclical unemployment is zero.

occurs if cyclical unemployment is zero.

A business cycle is:

the periodic fluctuation of economic activity.

Why are real measures of GDP useful?

They allow for relatively accurate comparisons in output from year to year.

Which of the following persons is considered to be unemployed? Ahmed, who is on vacation Sarah, who is on strike duty Tiffany, who is going on interviews, hoping to get her first job Carmen, who works three days a week at her father's business but is not paid

Tiffany, who is going on interviews, hoping to get her first job

Suppose that anticipated inflation is 4% for the coming year, with loan contracts set at 7% in the expectation of a 3% return after inflation. If the actual inflation rate at the end of the year is 2%: creditors gain at debtors' expense. people on a fixed income see the purchasing power of their incomes rising. debtors gain at creditors' expense. there's a redistribution of income from creditors to debtors.

creditors gain at debtors' expense.

The catch-up effect tends to slow over time unless:

new technologies are developed to keep the growth rate high.

Suppose the consumer price index in 2006 was 140 and its corresponding basket of goods was $17,000. If the consumer price index was 150 in 2010, what was the cost of that same basket of goods in that year?

$18,214

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is: 80. 110. 125. 150.

125

John has an escalator clause in his labor contract by which his salary increases automatically by the amount of the previous year's inflation rate. If John's salary is $100,000, this year's consumer price index is 105, and the previous year's CPI was 100, by what percent will John's salary be increased?

5%

Suppose the consumer price index in 2010 was 120 and its corresponding basket of goods was $23,000. If that same basket of goods cost $19,000 in 2006, what was the value of the CPI in that year?

99.1

Jim has been out of work for more than a year and has given up trying to get a new job until the economy gets better. Jim is considered to be:

A discouraged worker

The idea that all income ultimately goes to households, which then use it to buy goods and services from firms, is a central idea of the:

Circular flow diagram

The largest component of GDP is

Consumption

The periodic fluctuations around the natural rate of unemployment are caused by _____ unemployment.

Cyclical

Inflation was about 5.5% in the middle of 2008 but had fallen to near zero by the end of the year. This is an example of:

Disinflation

_____ is a reduction in the rate of inflation. Disinflation Deflation Hyperinflation The price level

Disinflation

People are counted as employed if they have done any work at all for pay or profit:

During the survey week

People are counted as _____ if they have done any work at all for pay or profit during the survey week.

Employed

Tyler works 20 hours a week on the family farm, but he isn't paid. The Bureau of Labor Statistics would classify him as:

Employed

Cyclical unemployment is the difference between the current unemployment rate and:

Full employment

What is a macroeconomic topic?

How monetary policy affects the inflattion rate

In the business cycle, the point at which an expansion turns into a contraction is known as a(n) _____.

Peak

What does a consumer price index of 130 mean?

Prices have increased 30% from the base year to the current year

Economic period where business investment begin to decline

Recession

What is a person's classification if he or she is available for work and has actively looked for work in the past year but not in the past four weeks?

Marginally attached

_____ let(s) economists judge our nation's economic performance, compare U.S. income and output to that of other nations, and track the economy's condition over the course of the business cycle.

National Income and Product Accounts

What is real GDP per capita?

Real GDP divided by population

Roger worked in a coal mine until it went out of business because fewer people were using coal to heat their homes. Now he is unable to find a new job because he is not qualified for any of the jobs that are available. This is an example of:

Structural unemployment

_____ occurs when there is a change in consumer demand or technology requiring that unemployed people retrain for new jobs.

Structural unemployment

What event was a major influence on the development of macroeconomics? a. the Great Depression b. the Employment Act of 1946 c. the establishment of the Federal Reserve System in the United States d. the U.S. entry into World War II

The Great Depression

If your salary was $50,000 last year and this year you receive a cost-of-living increase tied to the consumer price index (CPI), what will your salary be, assuming the CPI has risen from 110 to 114? $49,114 $50,114 $50,300 $51,818

51,818

If nominal GDP increases by 7.5% in one year, and inflation as measured by the GDP deflator grows by 7.5%, how much has real output increased?

0%

GDP can be found either by adding up all of the __________ or all of the __________ in the economy.

Spending; income

If a product becomes obsolete and the workers who produced that product will need additional training to find new jobs, then they are experiencing: frictional unemployment. cyclical unemployment. full unemployment. structural unemployment.

Structural Unemployment

An economy has historically grown at a rate of 1.25%. Economic activity decreased every quarter over the past year, but the decline stopped this quarter. The economy is expected to grow at a rate of 1.4% in the near future, and the monetary authorities are concerned that inflation may increase. This economy is probably in the _____________ stage of the business cycle.

Trough

Which organization determines the beginning and end dates of a recession?

The Nation Beraeu of Economic Research

What is not considered when measuring GDP per capita?

Environmental Quality

2 ways to measure GDP.....

Expenditures and income

The U.S. gross domestic product is equal to the total market value of all:

Final goods and services produced by resources in the United States.