Review Quiz 3

GDP is not a perfect measure of well-being because

GDP is not adjusted for pollution.

Which of the following describes a situation in which the person is hurt by inflation?

a person paid a fixed income during an inflationary period

Cyclical unemployment is the result of

a slowdown in the economy.

Nominal GDP is GDP in a given year

valued in the prices of that year.

Using the table above, what is the approximate average annual growth rate from 2017 to 2020?

2%

Which of the following could cause nominal GDP to decrease next year, but real GDP to increase?

The price level falls and the quantity of final goods and services produced rises.

Refer to Table 13-14. The real average hourly earnings for 1965 in 2010 dollars equal

$18.14.

The real average hourly earnings for 1965 in 1982-1984 dollars equal

$8.28.

The labor force participation rate for this simple economy equals

(1,100/15,000) * 100.

The unemployment rate for this simple economy equals

(100/1,100) * 100.

If the growth rate of real GDP rises from 3% to 4% per year, then the number of years required to double real GDP will decrease from

23.3 years to 17.5 years.

The percentage change in real average earnings from 1965 to 2010 equals

24.6 percent.

Using the table above, what is the approximate growth rate of real GDP from 2019 to 2020?

3%

Consider the following values of the consumer price index for 2019 and 2020. The inflation rate for 2020 was equal to

3.9 percent

If real GDP per capita doubles between 2007 and 2022, what is the average annual growth rate of real GDP per capita?

4.70%

Which of the following policies would reduce structural unemployment?

a job retraining program

Structural unemployment is the result of

a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.

Suppose that in 2020, all prices in the economy double and that all wages and salaries also double. In 2020 you

are no better off or worse off than you were in 2019 as the purchasing power of your salary has remained the same.

The GDP deflator is a measure of the

average level of prices of final goods and services in the economy.

When actual inflation is less than expected inflation

borrowers lose and lenders gain.

Investment, as defined by economists, would include the purchase of a

computer by an accounting firm.

Which of the following price indices comes closest to measuring the cost of living of the typical household?

consumer price index

The size of the underground economy would tend to decrease if the government of a country

decreased government regulations on businesses.

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?

discouraged workers

The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill.

employed

The labor force equals the number of people

employed plus unemployed.

The natural rate of unemployment is the amount of unemployment

equal to frictional plus structural unemployment.

Gross domestic product understates the total production of final goods and services because of the omission of

household production.

According to the Rule of 70

how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%? 14 years

Nominal GDP will increase

if either the price level or the quantity of goods and services produced rises.

An increase in unemployment insurance payments would, in effect, ________ the amount of time spent searching for a job, which would increase ________ unemployment.

increase; frictional

The size of the underground economy would tend to increase if the government of a country

increased income tax rates.

The percent increase in the CPI from one year to the next is a measure of the

inflation rate.

If inflation is positive and is perfectly anticipated

those that hold paper money lose.

The stated interest rate on a loan is the

nominal interest rate.

Real GDP will increase

only if the quantity of final goods and services produced rises.

The Bureau of Labor Statistics would categorize a retiree who is not working as

out of the labor force.

Full employment is not considered to be zero unemployment, because

people do not find jobs instantaneously.

The nominal interest rate equals the real interest rate ________ the inflation rate.

plus

The GDP deflator is the

ratio of nominal GDP to real GDP multiplied by 100.

The broadest measure of the price level that includes all final goods and services is

the GDP deflator.

The most widely used measure of inflation is based on which of the following price indices?

the consumer price index

The average price of goods and services in the economy is also known as

the price level.

Frictional unemployment is the result of

the process of matching workers with jobs.

If we want to use a measure of inflation that foreshadows price changes before they affect prices at the retail level, we would base our measure of inflation on

the producer price index.

Gross domestic product is calculated by summing up

the total market value of final goods and services produced in the economy during a period of time.

Gross domestic product understates the total production of final goods and services because of the omission of

the underground economy.

According to the text, economists consider full employment to occur when

the unemployment rate consists of only frictional and structural unemployment.

Real GDP is GDP in a given year

valued in the prices of the base year.

If an economy experiences deflation, the real interest rate

will be greater than the nominal interest rate.