Macroeconomics- Exam 3
Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard?
$20
In the economy of Talikastan in 2015, consumption was $800, GDP was $2000, government purchases were $400, and investment was $600. What were Talikastan's net exports in 2015?
$200
Measuring Unemployment
The unemployment rate is the % of the labor force without a job (measures those actively seeking work, discouraged workers, marginally attached workers, those who are working part-time due to economic reasons
In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?
The value of the consumer price index is always 100 in the base year.
Upland has a population of 15,000, of whom 9,000 work 8 hours a day to produce real output of $342,000. Lowland has a population of 8,000, of whom 7,000 work 7 hours a day to produce real output of $171,500.
Upland has higher productivity and higher real GDP per person than Lowland.
tate whether the following transactions will be included or not included in GDP for the United States Coca-Cola builds a new bottling plant in the United States
included
Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself. Which of the following is correct? The value of changing the oil is
included in GDP if Susan pays Speedy Lube to change it but not if she changes it herself.
labor force participation rate
labor force/ eligible population
CPI (Consumer Price Index)
measure of the average of the prices paid by urban consumers for a fixed market basket of consumer goods and services
In the calculation of the CPI, books are given greater weight than magazines if
more books are bought than magazines
Josh is a full-time college student who is not working or looking for a job. The Bureau of Labor Statistics counts Josh as
neither in the labor force nor unemployed.
Included or not Included in GDP of the U.S.- Ms. Moneybag buys an existing share of Disney stock
not included
Included or not included in the GDP of the United States: A deposit in your savings account as a result of a judgment in a law suit.
not included
State whether the following transaction will be included or not included in the GDP of the United States: An American buys a bottle of French perfume in Paris
not included
tate whether the following transaction will be included or not included in the GDP of the United States: Delta sells one of its existing airplanes to Korean Air
not included
The inflation rate is calculated
past CPI date divided by current divide by past multiplied by 100
efficiency wages
pay higher wages from collective bargaining
calculating price index
price index = basket price/basket price in base year x 100
Who is unemployed?
prior week the person... 1. no employment 2. was available for work 3. and either had made specific efforts to find employment or was waiting to be recalled to a job in which he or or she
in calculating the CPI, a fixed basket of goods and services is used. The quantities of the goods and services in the fixed basket are determined by
surveying consumers
Which of the following agencies calculates the CPI?
the Bureau of Labor Statistics
For any given year, the CPI is the price of the basket of goods and services in the
the given year divided by the price of the basket in the base year multiplied by 100
Real GDP
the production of goods and services valued at constant prices
Nominal GDP
the production of goods and services valued at current prices
labor force
the total number of workers, including both the employed and the unemployed
People who report being not in the labor force but who, in fact, want to work but have given up trying to find a job after an unsuccessful search cause the reported unemployment rate to be lower than it would otherwise be.
true
Refer to Table 28-11. The labor force of Tajnia in 2015 is 12,250.
true
Some degree of unemployment is inevitable in a complex economy.
true
Someone who has a job but is absent from work because she is on vacation is counted as "employed."
true
The Bureau of Labor Statistics computes unemployment rates for the entire adult population and for groups based on age, gender, and race.
true
The labor-force participation rate equals the percentage of the total adult population that is in the labor force.
true
The natural rate of unemployment is the desirable rate of unemployment for an economy.
true
When a country keeps its workers as fully employed as possible, it achieves a higher level of GDP than if many of its workers were idle.
true
Sheila is on a temporary layoff from her automobile factory job but has not looked for work in the last four weeks. The Bureau of Labor Statistics counts Sheila as
unemployed and in the labor force
structural employment
unemployment due to changes in the structure of the economy
frictional unemployment
unemployment. due to the normal working of the labor market, searching, and waiting to take job soon
GDP is defined as the
value of all final goods and services produced within a country in a given period of time.
labor Unions
higher wages from collective bargaining
In the CPI, goods and services are weighted according to
how much consumers buy of each good
who is employed
-worked at least one day in the last four weeks -family works more that 15 hours a week -have to be 18 or older to file for umemployment
uppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year. In 2012, the basket's cost was $80.00; in 2013, the basket's cost was $84; and in 2014, the basket's cost was $87.60. The value of the CPI was
110
refer to Scenario 28-1. What is the total labor force?
28 million
The price index was 136 in one year and 142 in the next year. What was the inflation rate between the two years?
4.41
In 2015 the Japanese adult non-institutionalized population was 110.7 million, the labor force was 66 million, and the number of people employed was 63.7 million. According to these numbers, the Japanese labor-force participation rate and unemployment rate were about
59.6% and 3.5%
The price index was 120 in 2012 and 126 in 2013. What was the inflation rate?
6%
f the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was
6%
In 2014, the Italian adult non-institutionalized population was 38.8 million, the labor force was 25.4 million, and the number of people employed was 22 million. According to these numbers, the Italian labor-force participation rate and unemployment rate were about
65.5% and 13.4%
GDP Expenditure Approach
Add up all the amount speeded on all final goods during a given period (Personal Consumption + Investment + Government Purchases + Net Exports)
Income Approach
Add up the income received by all factors of production in producing final goods (Compensation to employees + corporate profits + proprietors income + interests + rental income
Country A had a population of 2,000, of whom 1,300 worked an average of 8 hours a day and had a productivity of 5. Country B had a population of 2,500, of whom 1,700 worked 8 hours a day and had productivity of 4. Country
B had the higher level of real GDP and Country A had the higher level of real GDP per person.
Calculating Inflation Rate
CPI this year - CPI last year / CPI last year x 100
Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?
Ellen's but not Sam's.
Personal Consumption
Expenditures by consumers p goods and services includes durable and non-durable goods and services (major component of GDP)
GDP measures
Final Goods and Services produced for the market place over a period of time w/in a domestic board
U.S. GDP and U.S. GNP are related as follows:
GNP = GDP + Income earned by foreigners in the U.S. - Income earned by U.S. citizens abroad.
net vs gross investment
Gross income is the pre-tax net sales minus cost of sales. Also called Gross Profit. Net income is what remains after subtracting all the costs (namely, business, depreciation, interest, and taxes) from a company's revenues. It is sometimes called the bottom line. Also called earnings or net profit.
disposable income
Income remaining for a person to spend or save after all taxes have been paid
Not included in GDP
Intermediate goods, nonproduction transactions, non-market and illegal activities, imports,
Gross Investment
New housing capital purchases and inventory
Calculating GDP Deflator
Nominal GDP/Real GDP x 100
Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his back yard. Regarding these two practices, which of the following statements is correct?
Only Joe's and Jim's grocery store purchases are included in GDP.
GDP deflator
a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100
The CPI is a measure of the overall cost of the goods and services bought by
a typical consumer
Cyclical unemployment
all of the above are correct
Which of the following is a determinant of productivity?
all of the above are correct
Which of the following is an example of a durable good?
all of the above are correct
The natural rate of unemployment is the
amount of unemployment that the economy normally experiences.
discouraged workers
are people who want to to work but cannot find jobs grow discouraged and stop looking
Part-time workers
are those who usually work less than 35 hours per week
full time workers
are those who usually work more than 35 hrs per week
Seasonal unemployment
arises because of seasonal weather patterns
Olga owns her own business. Sven is an unpaid worker in his family's business. Who is included in the Bureau of Labor Statistics' "employed" category?
both
A book publisher produces too many copies of a new book; the books don't sell this year, so the publisher adds the surplus books to inventories
included
Which of the following is not included in GDP?
carrots grown in your garden and eaten by your family
Household spending on education is included in
consumption, although it might be argued that it would fit better in investment.
The deviation of unemployment from its natural rate is called
cyclical unemployment
Included or not Included in GDP of the U.S.- A California winery produces a bottle of Chardonnay and sells it to a customer in Montreal, Canada.
included
Included or not included in the GDP of the United States? The purchase of a new aircraft carrier by he Navy
included
Cyclical Unemployment
due to the recession phase of the business cycle. as overall demands for goods and services decreases employment drops and unemployment rises
Gwen is an unpaid worker in her family's restaurant. The Bureau of Labor Statistics counts Gwen as
employed and in there labor force
Government purchases
expenditures by federal, and state, and local governments on bombs, pencils, military, and school teachers salaries (welfare is not included because no exchange)
net exports
exports minus imports
Every adult who was not employed during the previous four weeks is included in the Bureau of Labor Statistics' "unemployed" category.
false
Most people rely primarily on income other than their labor earnings to maintain their standard of living.
false
Only paid workers are included in the Bureau of Labor Statistics' "employed" category.
false
Someone who is without work but is not looking for work is included in the Bureau of Labor Statistics' "unemployed" category.
false
The labor-force participation rate equals the percentage of the labor force that is either employed or unemployed.
false
The natural rate of unemployment is impervious to economic policy.
false
efer to Table 28-11. The labor-force participation rate of Tajnia in 2015 is about 33.3 percent.
false
Government Policies
generous unemployment mismatches between employees and employers
intermediate goods
goods used in the production of final goods
n the long run the unemployment rate equals
he natural rate of unemployment.
