macro exam 3

what do changes in nominal GDP reflect?

both changes in prices and in the amounts being produced

president bigego is running for re-election against senator pander. bigego proclaims that more people are working now than when he took office. pander says that the unemployment rate is higher now than when bigego took office. you conclude that...

both of them could be telling the truth if the labor force grew faster than employment

evidence from research studies by economists shows that increased unemployment benefits do what?

decrease the job search efforts of the unemployed

the primary purpose of measuring the overall level of prices in the economy is to allow for the comparison of what?

dollar figures from different points in time

define frictionally unemployed

people who are unemployed because of job search

one of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI...

fails to account for the introduction of new goods

cyclical unemployment refers to...

short-run fluctuations around the natural rate of unemployment

when the consumer price index rises, the typical family has to...

spend more dollars to maintain the same standard of living

list the steps involved in calculating the consumer price index and the inflation rate, in order:

1. fix the basket 2. find the prices 3. compute the basket's cost 4. choose a base year and compute the index 5. compute the inflation rate

caroline is the owner of a hair-styling salon and spa. she decides to raise the wages of her workers even though she faces an excess supply of labor. list the possible results of her decision.

1. might increase profits if it attracts a better pool of workers to apply for jobs at her salon 2. will increase the excess supply of labor 3. may increase the quality of her work force

suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. in 2012, the basket's cost was $50; in 2014, the basket's cost was $51; and in 2016, the basket's cost was $52. the value of the CPI in 2014 was...

102.0

if the consumer price index was 100 in the base year and 106 in the following year, then what was the inflation rate?

6 percent

when a union bargains successfully with employers, in that industry, the quantity of labor demanded...

increases and the quantity of labor supplied decreases

consider a small economy in which consumers buy only two goods: pretzels and cookies. in order to compute the consumer price index for this economy for two or more consecutive years, we assume what?

neither the number of pretzels nor the number of cookies bought by the typical consumer changes from year to year

with respect to the consumer price index, the substitution bias arises because...

prices of goods and services do not change in the same proportion from year to year

suppose that an anti-smoking campaign in moscow, russia, is successful so that muscovites smoke less and chew gum more. tobacco companies lay off workers, while chewing gum manufacturers employ more workers. this is an example of...

structural unemployment created by efficiency wages

if a union raises the wage in its industry above equilibrium, then there is an increase in...

structural unemployment which is part of the natural rate of unemployment

tatiana is waiting to be recalled to a job from which she was laid off. ivan was fired but has not looked for work during the last two months. who does the bureau of labor statistics count as "unemployed"?

tatiana but not ivan

in a particular economy, the price index was 120 in 2012 and 130 in 2013. what did the economy experience?

the economy experienced a rising price level between 2012 and 2013

eric was laid off two months ago. he has not searched for other work because he is expecting to be recalled. what does the bureau of labor statistics count eric as?

unemployed and in the labor force

derrick loses his job, but does not look for work. what is a consequence of this change in derrick's status?

unemployment is unchanged and the labor force falls

what is an example of when the "bureau of labor statistics" can place people in the "employed" category?

work without pay in a family member's business

to be counted as "employed" in the U.S. labor force statistics, a person does not have to be...

working for pay if they are working for a family business and does not have to be working full time

can the CPI be used to compare dollar figures from different points in time?

yes