Macroeconomics Ch. 5-6

When Mr. Wilson worked full time, he paid a cleaning service to have his house cleaned twice a month. Now that he is retired, Mr. Wilson does his own cleaning. What is the effect on GDP?

GDP falls as a result of this change

Arlina got a 5% raise while the rate of inflation was 6%. Arlina's standard of living

fell by about 1%

Jennifer did not work during college. She just obtained a bachelor's degree in marketing, and she is now looking for a marketing job in the retail industry. Jennifer is considered

frictionally unemployed

Nominal GDP in the first quarter of 2010 was $14,592.3 billion. The GDP deflator was 110.2 in the first quarter of 2010. Real GDP for the first quarter of 2010 was equal to

$13,241.7 billion= 14,592.3 x (100/110.2)

If your salary was $50,000 last year and this year you receive a cost-of-living increase tied to the consumer price index (CPI), what will your salary be, assuming the CPI has risen from 110 to 114?

$51,818 % change in price=[(current CPI/original CPI) x100] -100

Which of the following statements is TRUE about the National Activity Index?

Negative values mean the economy is growing more slowly than its long-term trend.

The economy is probably heading into a recession when the National Activity Index equals:

a number less than -0.70

Measuring changes in a fixed basket of goods to assess changes in price is a ______ method

cost-of-goods index

Which of the following values is an example of a nonmarket transaction NOT included in the national income and product accounts?

mowing your own lawn

Which of the following is included in gross private domestic investment?

an increase in business inventories

Everything else the same, if investment expenditures rise by $300 billion and imports increase by $300 billion, then GDP

does not change

Other things equal, if a recession gets worse, the number of discouraged workers __________, and the number of those in the labor force _____________.

increases; decreases

Which of the following items is NOT included in gross private domestic investment?

purchases of common stock

U.S. steelworkers who have lost their job to workers receiving lower wages overseas are part of ____________ unemployment.

structural