Monday Quiz 2-5

Which of the following best illustrates the difference between GDP and GNP?

GDP measures the output produced within the borders of a country, while GNP measures output produced by the citizens of a country.

The consumer price index is

a comparison of the cost of buying a typical bundle of goods during a given period with the cost of buying the same bundle during an earlier base period.

Unemployment caused by people voluntarily quitting work in order to seek more attractive employment is called

frictional unemployment

The natural rate of unemployment

is the rate of unemployment present when the economy is operating at full employment.

Government purchases include spending on goods and services by

local, state and federal governments.

Each month, the Bureau of Labor Statistics calculates unemployment by

surveying a random sample of households.

What basket of goods is used to construct the CPI?

the goods and services that are typically bought by consumers as determined by government surveys

The consumer price index (CPI) is designed to measure

the impact of price changes on the cost of the typical bundle of goods purchased by households.

Economists define full employment as the level of employment that results when

the rate of unemployment is normal, considering both frictional and structural factors.

The unemployment rate is defined as the number of

unemployed individuals divided by the number of individuals employed plus the number of unemployed.