Global Econ Chapter 13
Relative to the household survey, which of the following is a strength of the establishment survey?
The establishment survey is determined by actual payrolls, rather than by the unverified answers of the household survey.
The difference between a nominal variable and a real variable is that
nominal variables are calculated in current-year prices and the real variables are measured in dollars of the base year for the price index to correct the effects of inflation.
The millions of workers leaving the job market for the reasons given are
not counted as unemployed in the BLS data because they are no longer actively looking for work
The type of unemployment most likely to result in hardship for the people who are unemployed is
structural because this type of unemployment requires retraining to acquire new job skills.
Menu costs are The Internet has ______ the size of menu costs.
the costs to firms of changing prices. reduced
The difference between the nominal interest rate and the real interest rate is
the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.
correct formula for unemployment
(number of unemployed/ labor force)*100
If more companies make information on job openings easily available on Internet job sites, then the unemployment rate will
Decrease
Is it likely that the U.S. economy created only 11 million jobs during this time period?
No, the economy could have created more jobs, but some were also lost during that period.
A person who is in between jobs but actively engaged in a job search is considered to be Experts in hand-drawn animation who remain unemployed due to the film industry's switch to computer-generated animation are considered to be
frictionally structurally cyclically
The BLS surveys 30,000 households on their spending habits. The results are used to construct a market basket of goods and services purchased by the typical urban family of four. The chart on the right shows these goods and services grouped into eight broad categories for December 2014. The percentages represent the expenditure shares of the categories within the market basket. Which of the following categories make up about three-quarters of the market basket?
housing, transportation, and food
The chapter explains that it is impossible to know whether a particular nominal interest rate is "high" or "low" because
it all depends on the inflation rate.
The price index which is used to measure changes in the cost of living is the
Consumer Price Index (CPI).
Three types of unemployment
Frictional, structural, and cyclical
Which of the following can give an early warning of future increases in the price level?
Producer price index
Suppose you were borrowing money to buy a car. Consider the following situations. Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. Situation 1 will be ________ Situation 2 because the_________is lower. Now suppose you are JPMorgan Chase, and you are making car loans. Which situation above would you now prefer?
Real interest rate=Nominal interest rate-Inflation rate. 17-16=1 7-4=3 better than, real interest rate JP Morgan would prefer situation 2
Bob Wesley believes that structural unemployment should be eliminated in order for an economy to be healthy. In making this argument, which of the following relevant issues is he ignoring?
Structural unemployment will exist in an economy that is innovative.
Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there aren't any jobs available. You would be counted as
discouraged worker
Inflation can affect the distribution of income because
people with incomes rising faster than the rate of inflation enjoy an increasing purchasing power, while people with incomes rising more slowly than the rate of inflation are hurt by a decreasing purchasing power.
In 2015, an article on bloomberg.com noted that Walmart, Starbucks, TJ Maxx, IKEA, Gap, and several other big retailers had announced increases in the wages they were paying newly hired workers. The same article also noted that "[labor] turnover in the retail sector has been steadily rising and now stands at 5 percent a month." The term "labor turnover" used in the article means the
separation of an employee from an establishment.
What is the relationship between the unemployment rate and enacting or increasing a minimum wage? When a minimum wage is enacted or increased across a country, the unemployment rate
will increase some but the impacts will be much larger for some groups of workers.
A politician makes the following argument: "The economy would operate more efficiently if frictional unemployment were eliminated. Therefore, a goal of government policy should be to reduce the frictional rate of unemployment to the lowest possible level." Eliminating all frictional unemployment
will not be good for the economy since the presence of frictional unemployment increases economic efficiency.
CPI Inflation
(Expenditures(year)/Expenditures(base year))*100 (CPI2016-CPI2015/CPI2015)*100=n 100-n= inflation
In August 2013, the working-age population of the United States was 245.9 million. The working-age population is divided into those in the labor force (155.5 million) and those not in the labor force (90.4 million). The labor force is divided into the employed (144.2 million) and the unemployed (11.3 million). Those not in the labor force are divided into those not available for work (84.1 million) and those available for work (6.3 million). Finally, those available for work but not in the labor force are divided into discouraged workers (0.9 million) and those currently not working for other reasons (5.4 million). Use this data to help determine which one of the following statements is true:
Both A & B are true. A) The unemployment rate is (11.3 million/155.5 million) x 100 = 7.3% B) The labor force participation rate is (155.5million/ 245.9 million) x 100 = 63/2%
Even if they don't find a job right away, people entering the job market after graduating from high school or college will
be counted as part of the labor force by the BLS if they are actively looking for work.
The increase in labor turnover and the increases in entry-level wages being paid by large retailers are
connected because higher wages can encourage workers to stay longer, thereby lowering turnover rates.
The natural rate of unemployment is When the economy is at full employment, unemployment is equal to
the sum of structural unemployment and frictional unemployment. natural rate of unemployment
Suppose that the only good you purchase is hamburgers and that at the beginning of the year, the price of hamburgers is $2.00. Suppose you lend $1 comma 000 for one year at an interest rate of 13.8 percent. At the end of the year, hamburgers cost $2.09.
Inflation rate=((Final price of Hamburger-Initial price of Hamburger)/Initial price of Hamburger)*100 Real rate of interest=Nominal rate of interest-Inflation rate ((2.09-2)/2)*100=4.5 13.8-4.5=9.3
Which of the following best describes a current trend in the labor force participation rate?
It is decreasing for men and increasing for women.
Why do economists believe that setting a goal of zero percent unemployment is not feasible or desirable? Creating a goal of zero percent unemployment for an economy is not feasible nor is it desirable because
The economy needs some short-term unemployment in order to allow for better matching of jobs with workers that possess the proper skill sets.
The income you would have needed in 2012 to have had the same purchasing power that Fitzgerald's $36,000 had in 1924 is $
Value in 2008 dollars= value in 1924 dollars x( CPI in 2012/ CPI in 1924) 36,000x(230/17)= $487058.
Currently, the Bureau of Labor Statistics does not include homemakers in its employment and labor force totals. What would happen to the unemployment rate and the labor force participation rate if homemakers were included in these numbers?
The unemployment rate would decrease and the labor force participation rate would increase.
Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling."
True. If wages are increasing slower than the average price of goods and services, purchasing power falls.
If the CPI index was 229 in 2009, then the cost of tuition in 2009, as the result of inflation, would equal Relative to the expected cost computed above, the cost of tuition increased by _________ the amount of inflation.
Value in 2009 dollars= value in 1989 dollars x( CPI in 2009/ CPI in 1989) 1949*(229/111)=4021 more than
Calculate the missing values in the table below by using the provided data collected in the household survey for March 2018. Calculate the missing values in the table below by using the provided data collected in the household survey for March 2018.
We know that if the unemployment rate is 4.1%, the employment rate must be: 100.0-4.1 = 95.9% and that the number of employed (154021) is thus 95.9% of the labor force. The size of the labor force is: 155178/(95.9/100) = 161812 Knowing the size of the labor force, the number of unemployed can be calculated as: Labor Force = Number of employed + Number of unemployed 161812 = 155178 + 6634 The labor force participation rate (LFPR) is the percentage of the working age, non-institutionalized population in the labor force. Knowing the size of the labor force and this LFPR, we can calculate the size of the Working age population Labor force participation rate = 62.9%. 62.9% = (Labor force/ Working age population)*100 = 161812/Working age population Working age population = 161812/(62.9/100) = 257253