Eco Review Chapters 18 & 5-8

If the CPI decreases from one year to the next, then the inflation rate is

negative

In recent years, which of the following has been negative?

net exports of goods and services

The above figure shows the U.S. market for flip-flops. With no international trade, the price in the United States for flip-flops is ________. With international trade, the price in the United States for flip-flops is ________.

$14; $12

The table gives data for a nation. What is the amount of the country's GDP?

$6,200 billion

A country's CPI was 84.5 last year and 100.0 this year. The inflation rate was

18.3 percent

The reference base period that the BLS uses to measure the CPI is

1982-1984

In the years after 1998, the most severe recession occurred during

2008-2009

The highest unemployment rate in U.S. history was about

25 percent in 1933

The above figure shows the U.S. market for flip-flops. With international trade, the United States imports ________ flip-flops.

400,000

You borrow at a nominal interest rate of 10 percent. If the inflation rate is 4 percent, then the real interest rate is

6 percent

If the cost of the CPI market basket at current period prices is $275 and the cost of the CPI market basket at base period prices is $350, the CPI is

79

If 160 million people are employed, 15 million people are unemployed, and the population is 280 million people, the unemployment rate is

8.6 percent

When protection is encouraged to protect a growing domestic industry; which of the following is being used?

Infant-industry argument

Because of the circular flows of expenditure and income in the economy, total ________ equals total ________ equals total ________.

expenditure; income; value of production

One of the major reasons why the United States exports jet airplanes is because Boeing faces ________ opportunity cost than firms in other nations in the production of such aircraft.

a lower

A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is

an intermediate good

When the unemployment rate is ________ the natural unemployment rate, real GDP is ________ potential GDP.

below; above

The fundamental force that drives trade between nations is

comparative advantage

The CPI stands for

consumer price index

The largest expenditure category in the United States is

consumption expenditure

If the United States imports purses, then the quantity of purses produced in the United States will ________ and the quantity of purses purchased by consumers in the United States will ________.

decrease; increase

People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called

discouraged workers

In the Current Population Survey, a person is considered unemployed if the person

does not have a job and is actively looking for a job

The purpose of the Current Population Survey is to determine the

employment status of the population

The United States imports t-shirts because

foreign nations have a lower opportunity cost of production

The ongoing normal creation and destruction of jobs creates

frictional unemployment

According to the CPI basket, the largest item in the households' budgets is

housing

The labor force includes people who i. are less than 16 years of age. ii. are in institutions. iii. are actively seeking a job but do not have a job.

iii only

Which of the following is NOT a source of bias in the CPI? i. quality change bias ii. new goods bias iii. quantity change bias

iii only

Goods and services that the United States buys from other nations are called

imports

The underground economy

includes production that uses illegal workers who are paid less than minimum wage

Since 1960, the labor force participation rate in the United States has

increased for women and decreased for men

If you get an 8 percent increase in your nominal income, your real income

increases only if the inflation rate is less than 8 percent

The unemployment rate generally ________ during recessions and generally ________ during expansions.

increases; decreases

If the nominal wage is $30 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984 dollars

is $14.85

The CPI overstates inflation because the average consumer buys

less of those goods whose relative price has risen

If a quota is imposed on imports of shrimp into the United States, U.S. consumers ________ and U.S. producers ________.

lose; gain

Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using ________, Wobet has GDP equal to ________.

market value; $120

After graduating from college, Yunis, age 22, started working for his parents' real estate business as an unpaid assistant. He works 25 hours a week helping manage rental units. In the Current Population Survey, Yunis is considered

part of the labor force and employed

A nation will import a good if its no-trade, domestic

price is greater than the world price

Although imperfect, which of the following is used as a measure of the standard of living?

real GDP divided by population

If the inflation rate is greater than the nominal interest rate, then the

real interest rate will be negative

To compare the price of a loaf of bread produced in 1993 with the price of a loaf produced in this year, you should compare the value of the bread in

real prices

What is a major reason international trade is restricted?

rent seeking

After a tariff is imposed on a good, the price of the good

rises

Which type of unemployment arises when changes in technology or international competition change the skills needed to perform jobs or change the location of jobs?

structural

Looking at the average tariff rate in the United States since 1930, we see that

tariffs have trended downward for most of the period

A business cycle has two turning points, which are the

trough and peak

In order to measure gross domestic product, we can follow

two approaches: the expenditure approach and the income approach

Where are the final goods and services produced that are included in Germany's GDP?

within Germany