Macroeconomics Chapter 20
If the inflation rate is 6% and the nominal interest rate is 4%, then the real interest rate is
-2%
If nominal GDP in a given year is $11, and real GDP is $10, then the GDP price deflator in that year equals
110
The census survey asks the employment status of people over this age
16
How many people are sampled in the census survey?
60,000
Formula to find equivalent value
Base year $ x CPI current/CPI base
An average of the prices of the goods and services purchased by the typical urban family of four
Consumer price index
The inflation rate is the percentage change in the
GDP deflator from one year to the next
The stated interest rate on a loan
Nominal interest rate
An average of the prices received by producers of goods and service at all stages of the production process
Producer price index
The nominal interest rate minus the inflation rate
Real interest rate
Which of the following is a better measure of the average prices of all goods and services included in the GDP?
The GDP deflator
Suppose that you are available for work but have not looked for a job for at least the last four weeks because you believe that no jobs are available. You would then be counted as
a discouraged worker
Unemployment caused by a business cycle recession
cyclical unemployment
At full employment, what happens?
cyclical unemployment is zero
A decline in the price level
deflation
People who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them.
discouraged workers
The unemployment rate rises when
during a recession
When does the unemployment rate drop?
during expansion
A higher than market wage that a firm pays to increase worker productivity
efficiency wage
The labor force is the sum of the
employed and unemployed
Who is part of the labor force
employed and unemployed
When the economy is at full employment, which types of unemployment remain?
frictional and structural
Short term unemployment that arises from the process of matching workers with jobs
frictional unemployment
The short-term unemployment that arises from the process of matching workers with jobs is called
frictional unemployment
The percentage increase in the price level from one year to the next
inflation rate
The sum of employed and unemployed workers in the economy
labor force
The percentage of the working age population in the labor force
labor force participation rate
In the U.S economy today, how long does the typical unemployed person stay unemployed?
less than 5 weeks
The normal rate of unemployment, consisting of frictional unemployment plus structural unemployment
natural rate of unemployment
Are home makers, retirees, full time students, and the military in the labor force?
no
Are people who are available for work but not currently working a part of the labor force?
no
If you are available for work and have looked for a job at some point during the previous twelve months, but have not actively looked during the previous four weeks, you are considered
not in the labor force
A measure of the average prices of goods and services in the economy
price level
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called
structural unemployment
Unemployment that arises from a persistent mismatch between the skills and attributes of workers and the requirements of jobs
structural unemployment
The normal underlying level of unemployment in the economy is the sum of
structural unemployment and frictional unemployment
Which market basket targets intermediate goods?
the basket used by the producer price index
How would employment statistics be affected if they included people in the military?
the unemployment rate would decrease
What would be the impact of counting as unemployed both discouraged workers and those who work part-time but would prefer to work full time?
the unemployment rate would increase
What is the formula for calculating the unemployment rate?
unemployed/labor force x 100
The percentage of the labor force that is unemployed
unemployment rate
Are unemployed people included in the labor force?
yes