Macro Ch 14-15 Review
cyclical unemployment
the fluctuating unemployment over the business cycle that increases during a recession and decreases during an expansion. EX. during the recession of 2008-2009, many workers were laid off as business activity declined.
Net exports of goods and services are defined as the
value of exports minus the value of imports
The income approach to measuring GDP is based on summing
wages, interest, rent, and profits.
Consumption goods and services include
washing machines and tickets to football games
If half of all unemployed individuals suddenly gave up looking for work, the unemployment rate would ________ and the labor force participation rate would ________.
decrease, decrease
Rick lost his job as a logistics and distribution coordinator nearly three years ago. After a long and failed search, Rick finally gives up and stops looking for a new job. Rick's decision to suspend his job search causes the unemployment rate to ________ and the labor force participation rate to ________.
decrease, decrease
Which of the following is classified as an intermediate good? i) the purchase of a Big Mac by a college student ii) McDonald's purchase of pickles iii) a McDonald's restaurant owner's interest payment for the loan on her building.
ii only
Which of the following is classified as a final good or service? i. tires bought by GM to put on new Tahoes ii. mustard bought by Subway to put on its sub sandwiches iii. your purchase of online access to the Wall Street Journal
iii only
If we use GDP to measure our standard of living, then our procedure is
inaccurate because our standard of living does not depend only on goods and services.
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
During 2009, General Motors announced that it would close its Saturn facilities in the United States because of the foreign competition it faced. This corporate move
increased structural unemployment
During a recession, the percentage workers who are part time for economic reasons
increases more rapidly than the percentage of partminustime workers.
The business cycle is defined as
irregular ups and downs in production and jobs
frictional unemployment
is the unemployment that arises from normal labor turnover—from people entering and leaving the labor force and from the ongoing creation and destruction of jobs. EX. a graduate interviewing for his first job
When the unemployment rate is greater than the natural unemployment rate, real GDP is
less than potential GDP
GDP is equal to the ________ value of all the final goods and services produced within a country in a given period of time.
market
Gross Domestic Product measures the
market value of the final goods and services produced in a given year within a country.
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
If Jose is 22minusyears old, is available to work but does not have a job and made no specific efforts to find a job for the previous month, Jose is classified in the Current Population Survey as
not in the labor force
When calculating GDP, purchases of used goods are
not included.
In order to be classified as a recession, a contraction of general economic activity must last at least
six months
In part, the increase in the labor force participation rate in the United States over the last 50 years can be attributed to
technological change in the home increasing the time available for paid employment.
At full employment there still exists some unemployment because
the U.S. economy is constantly creating and destroying jobs
The unemployment rate equals
(number of people unemployed divided by labor force) x 100.
The base year is 2012. A country only produces Blu-ray players. The price of a Blu-ray player in 2012 was $100. The price of a Blu-ray player was $90 in 2013. The quantity of Blu-ray players produced in 2012 was 10,000 units and in 2013 was 10,500 units. Real GDP in 2012 equals
1,000,000
Assume the U.S. population is 300 million. If 200 million people are of working age, 125 million are employed, and 15 million are unemployed, what is the size of the labor force?
140
During last year, a country produced 20,000 pizzas and 10,000 hamburgers and nothing else. The pizzas sold for $10.00 each and the hamburgers for $3.00 each. Nominal GDP was
230,000
The highest unemployment rate in U.S. history was about
25 percent in 1933
Last year in Candamica, consumption expenditure was $20 billion, interest, rent, and profit were $2.5 billion, government expenditure on goods and services was $7 billion, net exports of goods and services was $5 billion, and investment was $2 billion. Hence total expenditure was
34 billion
The average U.S. unemployment rate from 1948 has been about
5.8%
____is most likely to contribute to an improvement in our living standard.
An increase in real GDP
National differences in women's labor force participation rates are explained by
Cultural differences, the percentage of women with a college degree (A & B)
Statistical discrepancy is calculated as
GDP expenditure totalminusGDP income total.
This year a firm produces $100 million worth of cars this year and sells $102 million worth of cars. Which of the following is true?
GDP for this year will increase by $100 million
Investment includes
GM's purchase of robotic machinery
A marginally attached worker i) does not have a job and has not looked for one in the last month. ii) is available and willing to work. iii) must work at least 1 hour per week.
I,II
Discouraged workers are included in the calculation of the i. unemployment rate. ii. labor force participation rate. iii. workingminusage population.
III
Difference between real and nominal GDP
Real GDP is the value of the final goods and services produced in a given year expressed in the prices of the base year. Nominal GDP is the value of the final goods and services produced in a given year expressed in the prices of that same year. The method of calculating real GDP changed in recent years. Here we describe the essence of the calculation. The appendix gives the technical details.
Which of the following people would be classified as employed in the Current Population Survey?
Rich, who is working 20 hours a week but wants a full-time job
Production by Honda, a Japanese firm, in the United States is included in ________ GDP and production by Nike Corporation, a U.S. firm, in Vietnam is included in ________ GDP.
U.S.; Vietnamese
A country with a real GDP per person similar to real GDP per person in the United States but with limited political freedom is generally considered to have ________.
a lower standard of living than the United States
If you mow the lawn yourself, the lawn mowing is considered household production. If you pay Larry's Lawn Service to mow your lawn, the lawn mowing is considered
a service, that will be counted as part of GDP
Harry works at the video rental store for 20 hours per week. He's asked his boss to allow him to work 40 hours per week, but has been told that business is too slow. Harry is considered
an involuntary part- time worker
To be counted as employed by the BLS, in the week before the survey the person must have worked for pay ________.
at least 1 hour
In calculating GDP, economists
can measure either total expenditure or total income
According to the expenditure approach to measuring GDP, in the United States , the largest component of GDP is
consumption expenditure
The expenditure approach to measuring GDP is done by using data on only
consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services.
John has been laid off from his job because of a general downturn in the economy. John's unemployment is best classified as
cyclical
At full employment there is no
cyclical unemployment
The type of unemployment that arises from a decrease in real GDP is called
cyclical unemployment
A weakness that could be noted about the unemployment rate is that it
does not account for the underutilization of workers
Household production, such as baking bread at home, is not included in GDP because it
does not involve a market transaction
Jane is a 25 year old, fullminustime student. She works part time in her school library and is paid $7 an hour. She is considered to be
employed
The purpose of the Current Population Survey is to determine the
employment status of the population
The calculation of GDP using the income approach EXCLUDES
environment quality
The U.S. economy is experiencing rising output, rising employment, rising incomes and falling unemployment. These conditions best describe a business cycle ________.
expansion
Real GDP is the value of final goods and services produced in a year
expressed in the prices of a base year
Which type of unemployment is a permanent and healthy phenomenon in a dynamic economy?
frictional
As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences
frictional unemployment
The Three types of unemployment
frictional, structural, cyclical
Jordan recently quit her job as a marketing consultant in Washington, D.C. and is looking for a betterminuspaying job with an advertising agency in New York. Jordan is considered to be
frictionally unemployed
The labor force is the
number of employed people plus the number of unemployed people
When the unemployment rate equals the natural unemployment rate, most likely the economy is producing
on the production possibilities frontier
Which of the following is NOT directly included in U.S. GDP?
popcorn purchased by a movie theater chain in Georgia
Consider the following people: Chris quits his job as an automobile mechanic to pursue his college education full-time. Arrelo is temporarily laid off from her technical support job because of a strike by production workers. Schurita graduated from college in May and is currently looking for a job. Bo quit his job on September 1 and then, after looking for a new job, will begin his new job on October 1. Terri retired from his job on May 1. Vicki works partminustime at Bainen Press to help pay her college tuition. Bo's actions would
raise the September unemployment rate and lower the October unemployment rate.
The business cycle has two phases,
recession and expansion
During a recession the unemployment rate generally ________ and during an expansion the unemployment rate generally ________.
rises; falls
Consider the following people: times Chris quits his job as an automobile mechanic to pursue his college education full-time. Darrelo was laid off from her technical support job because of a strike by production workers and is currently looking for a new job. Rita graduated from college and is currently looking for a job. Armondo quit his old job and will begin his new job in four days. Thorton was fired from his job as a steel worker because of massive imports of steel and he is looking for a new job. Jung was laid off from his job as an appraiser because the firm's business declined because of a general downturn in the economy and he is currently looking for a new job as an appraiser. According to the scenario above, in which of the following groups are all the people frictionally unemployed?
rita and darrelo
The difference between nominal GDP and real GDP is
the prices used in their calculations.
Bobby was researching the economic growth of a country between 2006 and 2011. Using 2006 as the base year, he calculated a twelve percent increase for real GDP and a ten percent increase for nominal GDP. His results indicate that
the quantity of goods and services produced increased and prices decreased over the period.
structural unemployment
the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs. EX. when banks introduced the automatic teller machine in the 1970s, many bank teller jobs were destroyed
Which of the following is NOT included in measured U.S. GDP?
the value of leisure
The following are groups of individuals in the population: 1. Individuals who are under 16 2. Individuals in institutional care 3. Individual in the armed forces 4. Individuals working for pay at a fulltime job 5. Individuals who are employed 6. Individuals not employed but were available for work and were looking for work 7. Individuals not employed and looking for work Using the table above, the Current Population Survey classifies the group of individuals who are left after subtracting from the total population groups 1, 2, and 3 as
the working- age population
Which of the following is true?
to be classified as employed, you must work at least 1 hour per week at a paid job or 15 hours or more as unpaid workers in your family business
Full employment occurs when the
unemployment rate equals the natural unemployment rate.