ECON-002

When measuring changes in the cost of living for the typical consumer, which statistic is most appropriate?

Consumer Price Index

Which equation represents the relationship between GDP and the expenditure​ components?

Y = C + I + G + NX

What are the four types of unemployment?

frictional, structural, seasonal and cyclical unemploment.

The price of a Toyota Prius Hybrid decreases. This will cause

quantity demanded of Prius' to increase.

You are told that the economy is at full employment. This means that the unemployment rate is

the natural rate of unemployment

Economics is

the study of how choices are made when scarcity exists

The Bureau of Labor Statistics (BLS) does not count discouraged workers or people who work part-time but would prefer to work full-time. If the BLS considered those individuals, the

unemployment rate would increase

Explain the difference between a change in supply and a change in the quantity supplied.

A change in supply is caused by a variables other than price and a change in quantity supplied is caused by a change in price.

Which of the following will cause the supply curve to shift?

A change in the cost of inputs.

Inflation makes nominal GDP a poor measure of the increase in total production from one year to the​ next. Why?

Changes in nominal GDP can occur because there are changes in prices or changes in quantities.

SSuppose that the economy enters into a recession and​ an individual loses his job as delivery packages for FedEx and cannot find a new job. When the economy​ recovers, the individual gets his job back at FedEx. What is the best classification for his time as an unemployed truck​ mechanic?

Cyclically unemployed

At a party this weekend, you and your friends are discussing the consumer price index. A friend who has not taken economics says, "You are telling me that the CPI in 2017 was 248. That isn't possible. There is no way the inflation rate was 148 percent in 2017!" The most appropriate response to this comment is:

I disagree. The inflation rate is the percentage increase in the CPI from year-to-year, not the base year.

A house is built and sold in 2002. The house is resold in 2018. Is the sale price of the house in 2018 included in the GDP for 2018?

No, GDP for 2018 includes only production that occurs during 2018.

Consider the following statements about inflation and the general level of prices.Which statement is NOT correct?

Prices tend to rise by the same amount every year.

Suppose that an individual recently lost her job at a grocery store after the store installed self-check-out lines. She discovers that the only jobs currently available in the grocery industry are for programmers and that there are no openings for checkers because they are less needed. The individual decides to return to school to earn a computer science degree. What is the best classification of her unemployment​ status?

Structurally unemployed

Choose the best definition of the law of demand.

The law stating that when changes in the price of a good and will lead to an opposite change in the quantity demanded, all else held constant.

In the past 5 years, the cost of producing 4K televisions has decreased. At the same time, many consumers are opting to watch television programs on their smartphones, tablets or laptops. Considering these two facts, assess the following claim: "The price of 4K TVs are decreasing, but it is not clear whether the quantity of 4K televisions bought and sold have increased or decreased."

The statement is correct because when there is an increase in supply and a decrease in demand, the new equilibrium price is known, but the new quantity is unknown.

The definition of scarcity is

There are unlimited wants, but the available resources to satisfy those wants are limited.

You just learned that the CPI in the United States reached 251 in August, 2018, the highest value ever recorded. A press release by the BLS stated that the inflation rate in August, 2018 was a relatively stable, 2.2%. Is it possible for inflation to be stable but prices to be higher than they have ever been?

Yes, the CPI and inflation is measuring changes in the general level of prices, not the overall price level.

Would the services of a real estate agent who helped in the purchase of the used home in question 3 be included in the GDP for 2018?

Yes. The GDP for 2018 includes final services, such as real estate services.

The price of a Toyota Prius Hybrid decreases. Assuming new Prius consumers used to have gas-guzzling trucks, this will cause

a decrease in the demand for gasoline.

Real GDP is able to deal with problem inflation creates when using nominal GDP. How? a Base year prices are applied to the value of goods and services in all years when calculating real GDP. b Real GDP calculations keep prices constant, so any change in real GDP is from a change in the quantity of production. c Price changes are separated from quantity changes when calculating real GDP. d All of the above.

all of the above

When you were watching the news, an anchor said, "the amount of production increased, which in turn increases demand." In the last part of the statement, the news anchor must be referring to

an increase in quantity demanded

The type of unemployment that leads to widespread hardship for all unemployed individuals is

cyclical because people have to wait for a recession to end.

At a recent dinner with friends, they were stating that, "when housing prices rise, demand decreases and fewer homes are bought." This statement is

false, decreasing the price of a good leads to an increase in quantity demanded, not demand.

When economists assume that people are rational, they mean

given the information that is available, the action taken is perceived to be the best possible choice.

Which of the following descriptions is the standard definition of the unemployment rate?

number of unemployed divided by the labor force x 100

A definition of economics is: the ___________________ that studies the choices that people, firms and countries makes given scarcity. It also explores the ___________________________________ that influence and reconcile our choices. Possible answers: theory, social science, graph, field, money, factor, incentives, limits

social science; incentives

The best definition of Gross Domestic Product (GDP) is

the total value of all final goods and services produced for the marketplace during a given period, within a nation's borders