Macro chap 7
the number of unemployed workers declines by 50,000; the size of the labor force falls by 50,000; unemployment rate falls.
Suppose that in one month the number of discouraged workers as classified by the Bureau of Labor Statistics increases by 50,000. As a result,
measures the cost of an unchanging basket of goods and services
The consumer price index __________.
rising productivity
The defining characteristic of long-run economic growth is:
9.3%. 4.5% + 4.8% = 9.3%
A labor union wants the union members' real wages to go up by 4.5%. for the coming year. How much of an increase in wages should the union ask for, given that the inflation rate is expected to be 4.8% for the coming year?
producer price index
A price index for products at all stages in the production process is the
inflation may not have negative impacts on people's purchasing power, but it will still have harmful effects on the economy by increasing administrative costs and inefficiencies.
If all wages, salaries, welfare benefits, and other sources of income were indexed to inflation,
it costs less to society than if unanticipated
If inflation is anticipated, __________.
three times as high as 1979
If the consumer price index was 73 in 1979 and 225 in 2011, then prices in 2011 were on average:
frictionally unemployed
Lex graduated from college two months ago with an undergraduate degree in Finance. He is now looking for a job in the financial sector. He is currently classified as
overstates
Many economists believe the CPI __________ inflation because it fails to consider quality improvements in products.
Smaller than
Per capita output is _________ output per worker or productivity.
real GDP declines for at least two consecutive quarters
Recession is a period during which
seasonally unemployed
Ron works in a driveway paving company in Buffalo, New York. Since paving cannot be done in cold weather, he is laid off from his paving job between November and April. During these winter months, Ron is
COLAs (cost of livings adjustments)
Since inflation erodes the purchasing power of those persons on fixed incomes, the government makes an annual inflation adjustment to Social Security. These types of adjustments are known as __________.
he number of unemployed workers declines by 50,000; the size of the labor force falls by 50,000; unemployment rate falls.
Suppose that in one month the number of discouraged workers as classified by the Bureau of Labor Statistics increases by 50,000. As a result,
the purchasing power is redistributed from wage earners to producers-sellers
Suppose that the economy consists of two groups of individuals: 1.) Producers-sellers who produce and sell goods and services 2.) Wage earners who work for wages and buy goods and services. If there is an inflation rate of 7% and nominal wages increase by 4%,
overestimate the extent of inflation because it uses fixed weights and ignores substitution of lower priced items for higher priced items.
The CPI tends to
the sum of the frictional rate and structural rate.
The unemployment rate that is consistent with "full employment" and the "natural rate of unemployment" is
frictional unemployment
The unemployment that occurs with the normal workings of the economy, such as workers taking time to search for suitable jobs and firms taking time to search for qualified employees, is called:
Unemployment Rate= ( (labor force - employment)/ labor force ) x 100
Unemployment Rate
structural unemployment
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and job requirements is called __________.
The basket used by the producer price index
Which market basket specifically targets intermediate goods?
loss of output that could be produced
he most important economic cost of recession is
structurally unemployed
John's grandfather was a coal miner in Pennsylvania. After the mines shut down in the 1940's he could not find a job. He was
11.00%
Suppose, you are lending money to your friend Julia and you want a real rate of return of 7.00%. Furthermore, you expect the inflation rate to be 4.00%.
consumer price index
A price index that is computed each month by the BLS using a bundle of goods and services that represents the "market basket" is the
known as deflation
A sustained decrease in the general level of prices and wages in the economy is:
cyclical unemployment is zero
At full employment, __________.
Increases
During a recession, the duration of unemployment
1.8% Natural rate of unemployment = Structural unemploy. + frictional unemployed 7.8% - 6.0% = 1.8%
If the natural rate of unemployment is 6.0% and the economy has a 7.8% rate of unemployment, then what is the cyclical rate of unemployment?
Inflation rate =((CPI in the year 2010 -CPI in the year 2009)/CPI in the year 2009)*100
In the Republic of Priceland, in 2009 the consumer price index was 283.00. In 2010 the index increased to 304.23.
1st blank-> unemployment falls and or the rate of capacity utilization increases 2nd blank-> there is a technological improvement leading to higher labor and or capital productivity
In the country of Wholand: The stock of capital and labor force are both increasing at the annual rate of 3%. Output is growing at the annual rate of 5%. This is possible in the short run if _____________, and in the long run if_______
4% in March 3% in April 100 - 96 = 4 4 - 1.0 = 3
In March, 2006 the labor department of the country of Jobland determined that the size of the labor force was 100 million out of which 96 million were employed. In May 2006, the labor department determined that 1.0 million people became "discouraged workers" in April. Assuming that no new jobs were created between March and April, calculate the unemployment rate for March and April. Jobland unemployment rate in March = ____ percent. (Enter your response rounded to one decimal place.) Jobland unemployment rate in April = ____percent. (Enter your response rounded to one decimal place.)
A mortgage company scheduled to receive fixed interest rate mortgage payments.
Suppose that the inflation rate is higher than expected, which of the following groups is most likely to be adversely affected by this unexpected inflation?
a discouraged worker
Suppose you are available for work but have not looked for a job for at least the last four weeks because you believe that no jobs are available. You would then be counted as __________.
by the size of its labor force, its capital stock, and productivity of labor and capital.
The capacity for long-run economic growth for an economy is determined
unemployment rate that results when the economy produces the potential level of real GDP
The natural rate of unemployment is the __________.
The number of people employed plus the number of unemployed
The total labor force in an economy is
Unanticipated inflation creates arbitrary redistributions of income.
What is the impact of unanticipated inflation?
A technological change
Which of these factors will cause the quantity of goods and services that can be produced by one worker, or in one hour of work, to increase?
The unemployed
Which of these groups is included in the labor force?
If there is zero inflation, the nominal interest rate is equal to the real interest rate.
Which of these statements about interest rates and inflation is true?
Human capital
Which of these terms refers to the accumulated knowledge and skills workers acquire from education and training, or with life experiences?
Sally, who has given up looking for a job because she could not find one.
Who among the following will not be included as part of the labor force?
A. productivity growth. B. All of the above (more of the capacity is utilized, more of the existing capital stock is used, more of the labor force becomes employed.)
An article in the Gotham Times states that the stock of capital and the workforce in Gotham are both increasing at an annual rate of 2 percent. The same article states that real output is growing by 4 percent. A. This is possible in the long run because the economy is experiencing an increase in ____________. B. This is possible in the short run because ____________.
100 - 7.0 = 93 -> .93 62.1 -> .621 .621/.93 = .6677 * 100= 66.77. Answer. -> 66.8 %
In the economy of Macroland 62.1 percent of the population is employed, while the unemployment rate is 7.0 percent. Calculate the labor force. participation rate. Labor Force Participation Rate = ________percent. (Enter your response rounded to one decimal place.)
Total Unemployment rate= (# of unemployed/ #in the labor force) x100 Total Unemployment Rate = Structural Unemployment + Frictional Unemployment + Cyclical unemployment 9.0= 1.6 + 3.6 +cyclical unemployment 9.0- 1.6- 3.6 = 3.8
In the economy of Cycladia, the total unemployment rate is equal to 9.0 percent, the structural unemployment rate is 1.6 percent, and the frictional unemployment rate is 3.6 percent. The cyclical unemployment rate equals _______percent. (Enter your response rounded to one decimal place.)
cyclically unemployed
Tamara lost her job as a cashier in the retail store when the store went out of business due to a downturn in general business conditions. Tamara was
Coast of Market Basket 2013 = (amt. X * price 2013) + (amt. Y * price 2013) + (amt. Z * price 2013) Coast of Market Basket 2014 = (amt. X * price 2014) + (amt. Y * price 2014) + (amt. Z * price 2014) Coast of Market Basket 2015 = (amt. X * price 2015) + (amt. Y * price 2015) + (amt. Z * price 2015) CPI in year N = [Cost of basket, year N / Cost of basket, base year (2003)] x 100 inflation between 2013 - 2014 = (CPI 2014 - CPI. 2013) / CPI 2013 * 100 inflation between 2014 - 2015 = (CPI 2015 - CPI. 2014) / CPI 2014 * 100
The consumer price index (CPI) is a fixed-weight index. It compares the price of a fixed bundle of goods in one year with the price of the same bundle of goods in some base year.
fixed basket of goods used by the typical consumer
The consumer price index is an index computed using prices of a:
increasing production faster than population growth
The only way that the standard of living of the average person in a country can increase is by:
inflation rate
The percentage rate of change in the price level is the definition of the:
as a leading indicator of future prices
The producer price index is used
all stages of production
The producer price index tracks the prices firms receive for goods and services at:
labor force participation rate
The ratio of the labor force to the adult population is known as the:
frictional unemployment
The short-term unemployment that arises from workers, in the process of changing jobs, is called __________.
A non-working individual who has looked for a job in the past week
Which of these persons is officially unemployed?
It does not matter whether the indexed or the non-indexed bonds are chosen, since they pay the same real rate of interest.
Suppose, you are planning to put away $50,000 of your savings for one year. You have the following options: 1.) Buy an indexed savings bond that earns 5.75% interest rate for the next year or, 2.) Buy a non-indexed savings bond that earns 8.75% interest rate for the next year. The inflation rate for the next year is expected to be 3.00%. Which option will you choose for the next year?
