Lecture 1 Clicker Questions
Ruritania has a labor force of 50 million people. Currently 48.2 million are employed. What is the Ruritanian unemployment rate?
50-48.2 = 1.8 1.8/50 =.036 Percent 3.6
When comparing economic performance in different years, economists:
adjust for changes in prices.
The inflation rate measures how fast:
prices are rising.
The GDP deflator enables economists to make adjustments for changes in:
prices.
The national income identity is expressed as:
Y = C + I + G + NX
The prices of capital goods are:
not included in the CPI but are included in the GDP deflator.
How do economists define 'gross national product?'
Total expenditure on an economy's output of final goods and services plus net foreign earning
What is the most important measure of overall economic performance?
Gross domestic product
4. Which best describes the path of U.S. inflation over time?
Inflation in recent decades has been less volatile.
Which statement is TRUE about economists' models?
Macroeconomists employ a variety of models, each focused on a specific problem or set of problems.
Why are models useful when studying economics?
Models can help us dispense with irrelevant details and focus on underlying connections.
In a supply-and demand model, which variables are exogenous and which are endogenous?
Price and quantity are endogenous, income and the cost of materials are exogenous.
Which is most likely TRUE about how prices behave?
Prices are sticky in the short run and flexible in the long run.
Which best describes changes in U.S. GDP over time?
Real GDP rises over time, but its growth is not steady.
What does the annual percentage change in the GDP deflator tell us?
The inflation rate
Which is usually implicit in macroeconomic models?
The optimizing behavior of households and firms
How do economists define 'investment?'
The purchase of newly created goods and services to add to the capital stock
What does real GDP measure?
The total income of everyone in the economy in a given time period adjusted for price changes
Which best describes the path of U.S. unemployment over time?
There is no discernible long-term trend in unemployment.
The market basket used to measure price changes is:
fixed in the CPI but changing in the GDP deflator.