econ test 5

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Which year had the greatest number of involuntary part-time workers as a percentage of the population

2010

Suppose the CPI market basket cost $800 during the base period and $1,800 today. What is the CPI for today

225

An example of a durable good would be

a used car

in September, 2015, Chrysler produced a $40,000 Chrysler 300 car that was delivered to the Chrysler Dealership in Glendale in October 2015. This auto was purchased in February of 2016. This auto would be counted as

investment in 2015 and consumption in 2016

The base year[where nominal and real GDP=100] used in determining the price indexes for the economy below

is 1992

The expenditure approach to measuring GDP sums

consumption, gross private domestic investment, government expenditures, and net exports

In a typical business cycle, what stage immediately follows a peak

contraction

If someone loses his or her job during a recession, what type of unemployment is that

cyclical

If the unemployment rate is 9% & the natural rate of unemployment is 6%, then the:

cyclical unemployment rate is 3%

Which of the following is included in GDP

purchase an iPod Video at the Apple Store

To the economist, which is not considered to be investment(Ig)

purchase of 10,000 shares of Nokia stock

When short-term interest rates creep higher than long-term interest rates the yield curve is said to be inverted and is viewed as a leading indicator of

recession

Suppose there are 8 million part-time workers & 90 million full-time workers. 4 million of the part-time workers switch to full-time work. We can conclude that

the official unemployment rate will remain unchanged

The top of the business cycle is called

the peak

The "market basket" that is used by the Bureau of Labor Statistics to calculate prices is made up of which of the following

typical goods and services for an urban household

Working at a job for which one is over-qualified, or working part-time when full-time work is desired is called

underemployment

How is the Consumer Price Index calculated

updated cost divided by base-period cost and then multiplied by 100

Which of the following is a final good or service

a haircut

A medical school graduate searching for a job as a brain surgeon would best be classified as

a part of frictional unemployment

Which of the following is another reason producers might raise prices that could lead to a wage-price spiral

a poor tomato crop

What is likely to have caused the unemployment rate to rise between 2008 and 2010

a recession

Which of the following is most likely to be worried about high inflation

a retired couple on a fixed income

Which of the following factors does not affect inflation

a stable money supply

What will most likely still occur when the economy has achieved full employment

frictional, seasonal, and structural unemployment

After graduating from college, Kim is interviewing school districts for a job teaching economics. Kim presently is

frictionally unemployed

When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at large urban university, she is

frictionally unemployed

The term "final goods and services" refers to

goods and services purchased by the ultimate users, as opposed to resale or further processing.

If a person's real income has risen during an inflationary period, then

her nominal income has risen more rapidly than prices

Nominal GDP during a particular year is $280 and the GDP price deflator is 175. Therefore real GDP is

$160

Nominal GDP during one year is $300 and the price index is 120. Real GDP is

$250

One year nominal GDP was $286 billion & the price index was 88. Then Real GDP was

$325 billion

The CPI was 140.3 in 2004 and 144.5 in 2005. Therefore, the rate of inflation in 2005 was about

3%

When the economy is working properly, what is the unemployment rate

4 to 6 percent

if Reid's annual real income rises by 8% each year, his annual real income will double in about

9 years

Identify a circumstance outside the economy that can cause unemployment

A hurricane damages the Gulf Coast

How do we figure out the unemployment rate

Divide the number of people who are unemployed by the total labor force, and then multiply by 100

Which diagram indicates declining productive capacity (negative net investment)

Economy B

Which diagram indicates an economy that is growing most rapidly

Economy C

The term "real GDP" refers to

GDP data which have been adjusted for changes in the price level[measures output]

Which best describes a wage-price spiral

Increase wages lead increased prices, which lead to a demand higher wages

What is offshoring and why is it a cause of structural unemployment in the United States

It is when companies relocate facilities to countries where costs are lower which means relocating jobs

How does inflation influence purchasing power

It reduces it.

How does low unemployment lead to higher inflation

Low unemployment leads to an increase in wages

You are given a suitcase full of $100 bills from the sale of smuggled drugs

No, Illegal

Ford buys a ton of sheet metal used in making car doors

No, Intermediate Goods

A woman's husband does all her cooking and cleaning, working for her 16 hours per day

No, Non-market Transaction

You and your family paint your house

No, Non-market Transaction

You and your friend volunteer at Habitat for Humanity building houses for low income earners

No, Non-market Transaction

You volunteer 10 hours a week of your time to work for senior citizens

No, Non-market Transaction

Your dad bakes you home-baked cookies

No, Non-market Transaction

Your mother is teaching your little brother to read

No, Non-market Transaction

Nike produces $10 million worth of Nike Air Jordan's in Vietnam

No, Overseas

You buy 100 shares of Microsoft

No, Purely Financial Transaction

Today, Bob buys a 1965 Ford Mustang convertible which is in mint condition

No, Second Hand Sales

Dr. Payne does $1000 worth of dental work but reports only $500 of it

No, Unreported Income

You are paid to babysit your neighbor's son, but don't report the income on your tax return

No, Unreported Income

Which of the following is a possible effect of inflation

Reduced value of savings

Why does an increase in the price of tomato products lead people to demand higher pay

The rising price of tomatoes affects prices of many foods that families buy

Why is the core inflation rate calculated separately from the inflation rate

To better show long term effects on inflation

What is full employment

When there is no cyclical unemployment

The salesman gets a commission for selling that 1965 Ford Mustang

Yes, Consumption

You buy a hover board from Amazon

Yes, Consumption

You buy a loaf of bread from the bakery

Yes, Consumption

You buy a new "iPod Video" from the Apple store

Yes, Consumption

You send in a $90 check to your dentist for cleaning your teeth

Yes, Consumption

40 additional teachers are hired by Chaffey Unified School District

Yes, Government

The U.S. government purchases another 5 B-2 Bombers for $2 Billion each

Yes, Government

Ford produces 25,000 new F150s which are not sold by the end of the year

Yes, Gross Private Domestic Investment

GM invest in $500 million worth of robots to assemble their cars

Yes, Gross Private Domestic Investment

Your family buys a brand new house from Lewis Group in Rancho Cucamonga

Yes, Gross Private Domestic Investment

Russia buys 300 new Dell computers to improve work stations at the Kremlin

Yes, Net Exports

The phase of the business cycle where real domestic output(GDP) is decreasing and unemployment is rising at a minimum is called

a contraction

The U.S.'s economy is considered to be at "full employment" when

about 4-6% of the labor force is unemployed

Which scenario gives the saver the greatest purchasing power

an interest rate of 4 percent and an inflation rate of 1 percent

During a serious recession we would expect output to fall the most in

auto industry

Why does purchasing power change over time

because the prices of goods and services change

The presence of discouraged workers

causes the official unemployment rate to understate the amount of unemployment

Suppose there are 7 million unemployed workers seeking jobs. Over time, 2 million of them become discouraged and quit looking for work. As a result, the official unemployment rate would

decline

If the CPI falls from 120 to 114 in a particular year, the economy has experienced

deflation of 5%

If the CPI falls from 150 to 137, the economy has experienced

deflation of 8.7%

If CPI falls from 150 to 100 during a particular period

deflation of about 33% has occurred

The amount of money a person has left of his or her income after taxes is called

disposable personal income

The production of durable goods is more variable than the production of non-durable goods because

durable goods purchases are postponable and producers of durables are competitive

Devin's family decided to see a movie at the discount cinema on a Tuesday rather than at the larger cinema on a Friday. Their decision might have been the result of which effect of inflation

effects on purchasing power

The labor force includes

employed workers and persons who are officially unemployed["looking for a job"]

If in a given year Ig was $120 billion and In was a positive $65 billion, then in that year the country's capital stock["national factory"]

increased by $65 billion

A nation's Gross Domestic Product(GDP)

is the dollar value of the total output produced within the borders of the nation.

If depreciation exceeds gross private domestic investment, then

net investment is negative

Econnie Nomics works in her own home as a full time homemaker. Officially, Econnie is

not in the labor force

National income accounts can avoid double counting by

only counting final goods

The largest component of GDP is

personal consumption

In 2015, Randy's nominal income rose by 8% and the price level (inflation) rose by 5%. We can conclude that Randy's real income

rose by 3%

A knitting factory worker who loses her job because the company has relocated the plant to another country is an example of

structural unemployment

Unemployment that occurs when workers' skills do not match the jobs that are available is called

structural unemployment

A person who manages a shoe store may be out of a job as more customers order shoes online instead of shopping in stores. The manager would then be an example of

structural unemployment.

Consumption of fixed capital [depreciation] can be determined by

subtracting In from Ig.

The bottom of a business cycle is called

trough


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