MACRO FINAL

Why are real measures of GDP useful?

They allow for relatively accurate comparisons in output from year to year.

for the US economy, which of the following is bigger?

US national debt

Government spending on _____ is considered a contribution to physical capital

airline systems

what is compounding?

allows small rates of growth to turn into substantial increases in income over time, U.S. Growth rate is 3%

Which of the following groups had the highest unemployment rate in 2012?

blacks

what is a recession?

chain reaction from peak, companies laying off workers, unemployment was 10% people less willing to buy luxury items such as cars, housing bubble, continue until trough (June 2009)

which shows how every dollar spent in an economy is earned as income by someone else?

circular flow diagram

demand factors of inflation:

consumer confidence, income, wealth (strong economy, when times are good, inflation goes up)

when inflationary pressures rise in an economy, which type of policy would be most effective to reduce it?

contractionary fiscal policy

The unemployment rate typically _____ during business expansions

decreases

_____ is a decline in overall prices throughout the economy

deflation

When calculating national income, you have to take into consideration that there is

deprecation, which is factories wearing down (consumer or fixed capital and statistical discrepancy)

The classical form of the production function:

determines output as a function of labor and capital

what does GDP measure?

determining how rich a country is, the market value (sales value) what you actually pay for something, Total market value of all final goods and services produced by resources in the U.S. in a given year (raw materials do NOT count as the GDP)

what does net exports consist of?

exports minus imports (In most years, imports exceed exports; net exports are a negative percentage of GDP)

what is GDP?

gross domestic product

GDP does NOT measure:

informal or nonmarket activities, such as tutoring other students for cash, babysitting, etc

what does the Bureau of Labor Statistics do?

issues updates on inflation

CPI is a cost-of-goods index:

it compares the cost of a fixed bundle of goods and services from one period to the next

which type of economist would likely support a government stimulus package during a recession?

keynesian

Depositing $1,000 at a 5% annual return compared to a 10% annual return makes a big difference over 35 years

o 5% = $5,516 o 10% = $28,102

what are the cons of GDP?

o GDP is not completely accurate o GDP does not take into account income inequality (doesn't take into account children in a household), population, environmental quality, or informal market activities

long run growth:

occurs when an economy finds new resources or finds ways to use existing resources better

short run growth:

occurs when an economy makes use of existing but underutilized resources. It is common during recovery from a recession

what does the NBER do?

officially dates the U.S. business cycle, It looks for turning points at which the economy switches from positive growth to negative growth

which of the following tools does the fed use most frequently?

open market operations

The four phases of the business cycle include

peak, recession, trough, recovery

what is PPI?

producer price index

what is real GDP per capita?

real GDP divided by population

economic growth is typically measured by

real GDP growth

Real GDP per capita is _____ GDP divided by _____.

real; population

Moving from a point beneath the production possibilities frontier to a point along the PPF illustrates _____ growth.

short run

what is production function?

shows the output that is produced using different combinations of imputs combined with existing technology

consumption is considered to be what?

smooth, you will make day to day purchases

In they keynesian model, prices and wages are

sticky

The natural rate of unemployment is the rate at which all unemployment is either frictional or _____.

structural

_____ unemployment is associated with extended periods of unemployment.

structural

Government spending on _____ is considered a contribution to physical capital.

telecommunications networks

Government spending on _____ is considered a contribution to human capital

the G.I. bill

what is labor productivity?

the ratio of the output of goods and services to the labor hours used to produce that output

what is the total labor force comprised of?

the total number of those employed and unemployed

what is real GDP?

total output in a year measured in constant year prices

the official U.S. unemployment rate does not account for:

underemployed workers, discouraged workers, and marginally attached workers

Tara hasn't worked in two months because of a temporary illness, during which time she has not looked for another job. The Bureau of Labor Statistics would classify her as:

unemployed

investment is considered to be what?

volatile (if economy is bad, you will be less willing to invest in a house or car)

government spending includes

wages (federal, state, and local), purchases of goods and services from private businesses, and purchases of new structure

who is unaffected by inflation?

workers whose wages have escalators clauses. Social Security recipients; benefits are adjusted with inflation, banks that properly anticipate inflation.

Each month, the BLS reports:

Size of the labor force Number of people employed Number of people unemployed

what percent does GDP make up of the US economy?

68%

If there are 3,000 in the population, 1,000 in the labor force, and 930 classified as being employed, what is the unemployment rate?

7%

describe entering a recession

Entering recession with economy still doing well, hitting the bottom of the trough is the worst of recession

The natural rate of unemployment is equal to

Frictional unemployment + structural unemployment

what is the equation for GDP summing expenditures?

GDP = C + I + G + (X - M)

what is GDPI?

Gross Private Domestic Investment

Why is the consumer price index a conditional cost-of-goods index?

It measures only private goods and services.

the unemployment rate is equal to

Number of people unemployed/Labor force

factors of production include

Compensation of employees (wages) (54.3% of economy) Proprietor's income (owning a small business, tutoring service) (7.8% of economy) Corporate profits (big company profits) (9.2% of economy) Rental income (apartment, renting your home to others) (3.7% of economy) Net interest (bank savings) (3.8% of economy) Misc. adjustments (under the table working such as babysitting, making tips at work, tutoring for cash) (6.6% of economy) Adjustments to national income is 14.6% of economy

factors of total factor productivity?

Natural disasters New discoveries or innovations Changes in a country's institutions

what is/isn't considered actively seeking a job?

Online job searching is not actively seeking Making a resume and physically looking is seeking a job

Factors resulting from economic growth that contributes to the standard of living

Reduced poverty rates Improved health and longer life expectancy Greater investment in education and technology

what are weekly job reports?

Released by the Department of Labor each Thursday Provides an estimate of the number of persons filing for unemployment for the first time Good indication of the employment rate

Calculate GDP using the following data: • Corporate profit: $50 billion • Investment: $100 billion • Gov't purchases: $80 billion • Net exports: -$10 billion • Consumption: $150 billion • Net interest: $20 billion

To solve this, use the spending approach, and cross out the unnecessary information (cross out corporate profit and net interest and add together the remaining 4 in the equation Y = C + I + G + NX) Total: 320 billion

Why isn't deflation good?

When you owe money to people, you're paying it back with money that is worth more It makes it more expensive to pay back debt It hurts people that have loans because the money they are paying back is worth more Biggest debt is government, deflation makes paying debt back and interest more expensive

If exports for a country are $2 billion and imports are $3 billion, what are net exports?

-1 billion

what percent does net exports make up of the US economy?

-2.9% (importing more than exporting)

If nominal GDP increases by 7.5% in one year, and inflation as measured by the GDP deflator grows by 7.5%, how much has real output increased?

0%

The U.S. economy shrank about 0.025% from the third quarter of 2012 to the fourth quarter of 2012. What is the annualized percent change in real GDP?

0.1%

india's economy has doubled in size over the last 10 years. at what average rate is it growing each year?

7%

Suppose the price level is 100 in the year 2014, 130 in the year 2015, and 150 in the year 2016. In 2016 this economy is undergoing:

DISINFLATION

Calculating CPI and Inflation

Define a base year and find the cost in that year o Find the current cost and use the following formula to compare costs: CPI (cost in current period divided by cost in base period) x 100 % change in price [(CPI in current year divided by CPI in original year) x 100}- 100 CPI is always = 100

describe the circular flow diagram

Household spending > Income for businesses > Business spending in resource market > Income to household (ALWAYS GOING TO BE EQUAL)

Which of the following is a macroeconomic topic?

How best to foster economic growth, what makes prices increase

Inflation goes up due to the economy doing good because

businesses feel that since they are getting constant customers, they don't have to offer discounts or lower prices

what is Year-over-year rate?

compares GDP at the current quarter with the previous year; provides trend in growth for the entire year, 4th quarter usually the highest, 1st quarter usually the lowest

GDP also can be calculated as the

compensation to the factors of production

North Face is a popular U.S. brand of adventure equipment, clothing, and accessories. Most of its apparel is made in China. In which category would the value of these items appear?

IN U.S. GNP because it is a U.S. product made somewhere else

who benefits from inflation?

debtors (borrowers) benefit from unanticipated inflation because the real value of their fixed payments fall over time as their wages rise with inflation. The money you owe never changes unless you don't make payments

One limitation of the unemployment rate as a measure of labor market health is that it does not include:

discouraged workers

Which of the following was NOT among the benefits of growth in the United States between 1980 and 2012?

Inflation fell and remained constant at approximately 3%.

The _____ economy can include illegal transactions or those not reported to the IRS for tax collection

Informal

Which of the following is classified as labor?

mental and physical talents of people

Labor productivity is the ratio of _____ to the _____ devoted to the production of that output.

output of goods; labor hours

When ownership of property is only informally recognized:

owners cannot use their property to secure loans for entrepreneurial purposes.

unemployment is described as:

person not working but able to work and actively seeking a job, An unemployed person does not have a job but is actively (but unsuccessfully) seeking working in the past 4 weeks

what makes up disposable personal income?

personal income minus taxes (can be spent or saved)

The _____ excludes excise taxes but does include changes in sales promotion programs such as rebate programs and zero-interest loans.

producer price index

In 2010, the U.S. economy was in poor shape. Unemployment was very high but falling, and growth was barely positive. Which phase of the business cycle does this best describe?

recovery

what is frictional unemployment?

results from workers who voluntarily quit to search for a better position

How would an innovation that speeds processing time and makes workers more productive be illustrated on the production possibilities frontier

the PPF would shift to the right

The Producer Price Index (PPI) measures what?

the average change in the prices received by domestic producers for their output

The consumer price index overstates inflation because it measures:

the cost of a fixed basket of goods and services.

If there are 1,500 in the population, 900 are employed, and 100 are unemployed, what is the unemployment rate?

10%

when did the last double dip recession occur?

1980-1982

if a village has 8 employed persons, 2 unemployed persons, and 2 persons not in the labor force, what is the unemployemt rate?

20%

If the price index is 200, how much did a $4 Big Mac (today) cost in the base year?

200 = $4 divided by unknown x 100 = $2

people who are not in the labor force

Children Retired people People in jail Informal jobs such as babysitting, tutoring, etc

if you have $100,000 in a 401K growing 10% per year on average, how much will this be worth in 35 years when you retire?

$3,200,000

segways are produced in NH using $2000 in supplies and sold for $6000. each segway sold contributes ________ to US GDP

$6000

What does a consumer price index of 130 mean?

Prices have increased by 30% from the base year to the current year.

equation for real value?

Real value = nominal value x (base year index / current year index)

As reported recently in the news, economists have been saying that business investments have begun to decline. In which phase of the business cycle does this occur?

Recession

Hiring unemployed workers to increase production is likely to produce _____ growth.

Short run

what are efficiency wages?

wages are kept above market equilibrium to reduce turnover and to improve productivity. You are working well at your job and your boss is paying you higher than what your position actually makes

When does short-run growth occur?

when an economy makes use of existing but underutilized resources

When is short-run growth common?

when obstacles preventing resources from being fully used are removed

what is the recovery?

when the economy begins to recover from its recession

Using the Rule of 70, how long does it take for a value to double if the growth rate is 8%?

about 8.75 years

_____ is a reduction in the rate of inflation.

disinflation

what is personal consumption broken down into?

durable and nondurable goods

After graduating from college, you work 10 hours per week at Mcdonalds while actively looking for a permanent job. You are classified as:

employed

the interest rate at which banks lend money overnight to other banks is called the

federal funds rate

Physical capital, a factor of production, includes:

manufactured products that are used to produce other goods and services.

What is a person's classification if he or she is available for work and has actively looked for work in the past year but not in the past four weeks?

marginally attached

Inflation is measured against a

market basket. Some prices rise and some prices fall, but overall, the price level increases

what is the leading economy index?

measures 10 important leading indicators. Recession likely if index falls three months in a row

The catch-up effect tends to slow over time unless

new technologies are developed to keep the growth rate high.

what is NAIRU?

nonaccelerating inflation rate of unemployment

who is harmed from inflation?

people living off of fixed incomes see their purchasing power decline with inflation. Creditors (lenders) see the real value of their loan repayments fall.

The ____ is a measure of the average change in prices, focusing on consumer expenditures in GDP accounts.

personal consumption expenditures index

when prices are constantly increasing over time, rise in prices causes your purchasing power to:

reduce

Business cycles are officially dated by

the National Bureau of Economic Research

Which variables constitute the largest portions of GDP using the expenditure and income approaches, respectively?

CONSUMPTION; LABOR WAGES

the largest portion of the US externally held debt is owed to

China

What will prevent the catch-up effect from slowing over time?

New technologies are developed to keep the growth rate high.

what is the NBER?

National Bureau of Economic Research

what are marginally attached workers?

those who actively looked for work in the past 12 months but not in the past 4 weeks

what are discouraged workers?

those who haven't looked for work in the past 4 weeks, looking for a job in a specific geographic location

Which of the following groups had the highest unemployment rate in 2012?

those with less than a high school diploma

what are underemployed workers?

those working part time or seeking a new job

If consumption is $2 billion, taxes are $500 million, and savings are $300 million, what is personal income?

$2.8 billion

The annualized percent change in real GDP is 4.4%. What is the quarter-to-quarter percent change in real GDP upon which this annualized rate was calculated?

1.1%

If personal income is $2 billion and taxes on that income are $500 million, what is disposable personal income?

1.5 billion

If nominal GDP is $14 billion and the GDP deflator is 125, what is real GDP?

11.2 billion

If a set basket of goods costs $6,000 in the current year and $5,000 in the base year, what is the consumer price index ?

120

Gerald can produce 128 toothpicks in an eight-hour workday. What is Gerald's labor productivity?

16 toothpicks per hour

what percent does GDPI make up of the US economy?

17%

what percent does gov't spending make up of the US economy?

17%

If a set basket of goods costs $19,000 in the current year and $16,000 in the base year, how much have prices risen since the base year?

18.75%

Which of the following was NOT among the benefits of growth in the United States between 1980 and 2012?

The natural rate of unemployment fell to about 5%

Government spending on _____ is considered a contribution to human capital.

The pell grant program

Which of the following is among the benefits of growth in the United States between 1980 and 2012?

There was a 39% increase in the number of degree-granting colleges and universities.

In April 2010, the New York Times reported on an analysis of census data showing that more immigrants to the United States were high-skilled workers working in white-collar jobs than were low-skilled workers working in low-wage jobs. Which of the following statements best describes the likely impact of this on U.S. economic growth?

This is good for economic growth because not only are there more workers, but these workers will also be more productive.

what are the variables for the expenditures approach?

C = Personal consumption expenditures (day to day spending) I = Gross Private Domestic Investment (GDPI) (business and residential housing) G = Government spending (building a bridge, i95) NX = Net exports

what are monthly employment surveys?

Household survey: a BLS canvass of 60,000 households Payroll survey: covers 400,000 companies and government agencies • Asking about employees

A person is counted as employed if any of the following applies

Works full or part time Works at a temporary job Has a job but is on vacation, ill, on maternity leave, on strike, etc Is an unpaid family worker working at least 15 hours per week

Assume the initial value of an investment is $1,000 and the growth rate is 7%. Using the Rule of 70, how many years will it take for the initial value to double?

10 years

which of the following would NOT be included in "investment" in the GDP calculation?

100 shares of a company stock

If there are 1,500 people in the population, 800 are employed, and 100 are unemployed, what is the unemployment rate?

11.1%

In which year was the unemployment rate the highest in the United States?

1935

In which year was the percentage change in the GDP deflator the highest?

1945

In which year did the most recent recession begin?

2007

Jill can produce 14 toothpicks in two hours. Georgina can produce six toothpicks in two hours. Wanda can produce 20 toothpicks in four hours. Sammy can produce 30 toothpicks in five hours. Who has the highest labor productivity?

Jill

what is the NIPA?

National Income and Products Accounts

output equation (Incorporating all of the factors of production into the production function)

Output = A x F (L,K,H,N) o According to this function, technology (A) enhances the productivity of all physical resources

equation for output

Output = F (L,K)

How would hiring unemployed workers to increase production be illustrated on the production possibilities frontier?

The economy would move from a point beneath the PPF to one on the PPF.

what is the equation for expenditures approach?

Y = C + I + G + NX

equation for disposable personal income:

Y = C + S

what is GDP per capita?

a country's GDP divided by the population?

what is deflation?

a decline in the price level. Prices on average fall

Jim has been out of work for more than a year and has given up trying to get a new job until the economy gets better. Jim is considered to be:

a discouraged worker

what is inflation?

a general rise in the price of good and services

What do increases in real GDP per capita generally translate into?

a higher standard of living for most of its residents

what is disinflation?

a reduction in the rate of inflation, prices rise at a decreasing pace, STILL IS INFLATION, prices going up by less than normal

A nation's infrastructure includes:

a stable and secure financial system.

what is the national activity index?

a weighted average of 85 indicators of economic activity. Recession likely if index falls below -0.7. A collection of various indicators such as how are wages going up, activity in commerce, etc.

Suppose that your family kept track of the changes in the amount of money spent on goods and services over the course of the year. You could then compare that to the data that the Bureau of Labor Statistics publishes in measuring the:

consumer price index

what is CPI?

consumer price index

the largest component of the US GDP is

consumption

which is a problem with using fiscal policy?

crowding-out effect

Which of the following is NOT a source of productivity growth?

cutting education spending

what is GNP?

gross national product

definition of productivity?

measures how effectively inputs are converted to outputs

what does the GDP income approach measure?

measures income to various factors of production

what is Capital to Labor Ratio

measures the amount of physical capital available per worker

CPI definition:

measures the average change in prices paid by urban consumers (CPI-U) and urban wage earners (CPI-W) for a market basket of consumer goods and services, If you live in a city and you have a job, you are both CPI-U and CPI-W

what is the GDP deflator?

measures the average price of all items in GDP, general measure of the entire economy

what is total factor productivity?

measures the portion of output that is not explained by the amount of inputs used. It captures the external effects influencing productivity of all inputs

what does the expenditures approach measure?

measures total spending, including consumption, investment, government spending, and net exports

when was the US' last recession

2007-2009

Assume the U.S. economy increased about 0.8% quarter to quarter. What is the annualized percent change in real GDP?

3.2

Assume the initial value of an investment is $1,000 and the growth rate is 20%. Using the Rule of 70, how many years will it take for the initial value to double?

3.5

Assume the U.S. economy increased about 1.1% quarter to quarter. What is the annualized percent change in real GDP?

4.4%

when the reserve requirement is 20%, what is the potential money multiplier?

5

The natural rate of unemployment has ranged from ______ to ______ percent in the past 50 years

5 to 6 percent

suppose you receive a stock tip that allows you to earn a 14% annual return. at this constant rate, about how long will it take to double your money?

5 years

Using the Rule of 70, how long does it take for a value to double if the growth rate is 12%?

5.8

Based on 2012 data, approximately what percentage of GDP is made up of compensation to employees?

55%

how long does it take to determine whether an economy is in a recession?

6 months of negative growth

what is the overall labor force participation?

60%

if the government uses fiscal policy to speed up recovery, which curve is shifting?

AD

What are some industries that have faced structural unemployment in the past decade?

Blockbuster

Production workers in country A have $1,500 of capital invested per worker. Production workers in country B have $1,000 of capital invested per worker. Production workers in country C have $2,500 of capital invested per worker. Production workers in country D have $500 of capital invested per worker. Which of the following correctly lists the countries in order from lowest to highest labor productivity?

D, B, A, C

Which of the following is a macroeconomic topic?

How monetary policy affects interest rates

what are examples of GDPI?

Investment in structure, equipment, software, business inventory (stocking up n goods for a business, for example owning a store and filling it with product, end of the year that you don't sell is an investment, rolling it over to next year)

Which of the following would be protected by a patent?

an invention

what are nondurable goods?

are products that are consumed or are only useable for a short period of time because they wear out or become useless. An example of nondurable goods are fresh vegetables.

which is the regional federal reserve bank that services all banks in florida located?

atlanta

why are imports bad for an economy?

because instead of producing it in our own country we are having it produced somewhere else, exports are good because we are producing goods in our own country

what is the rule of 70?

can be used to estimate the number of years for a value to double o 10% annual gain o 70/10 = 7 years to double o $1000 (2016) o $2000 (2023) o $4000 (2030) o $8000 (2037)

When countries with small starting levels of capital reap larger benefits from increased capital, allowing these countries to grow faster than countries with abundant capital, which of the following has occurred?

catch up effect

_____, most economists agree, is the area in which policymakers can have the greatest impact.

cyclical unemployment

What are diminishing returns to capital?

each additional unit of capital providing a smaller increase in output than the previous unit of capital

what is the peak?

economy at its best state, strong growth, plenty of jobs, low unemployment, expanding businesses, a point where too many things are happening (ex. Prices going too high, causes a chain reaction of "bad news") (December 2007)

An employer who pays above market equilibrium wages to reduce turnover and improve morale is said to be paying _____wages.

efficiency

Which of the following is NOT a problem for the producer price index as a measure of inflation?

exclusions of changes in sales promotions

Which of the following plays the MOST significant role in economic growth?

faster wireless communication

Which of the following would NOT increase the quality of the labor force?

finding mineral deposits

_____ is natural for an economy and is seen as necessary and beneficial.

frictional unemployment

what are durable goods?

goods not for immediate consumption and able to be kept for a period of time, such as a TV or clothing

which of the following has a larger spending multiplier effect?

government spending

An increase in a country's real GDP per capita generally translates into a _____ standard of living for most of its residents.

higher

Suppose the PPI data showed strong increases. An economist might expect:

higher costs for producers to be translated into higher prices for consumers.

Which of the following topics is studied in macroeconomics?

how recessions occur

In September 2010, President Obama talked about a plan to spend more on U.S. infrastructure. Which of the following would be included in such a plan?

improving interstate highways

where does products have to be produced to count as GDP?

in the country's boarders

what are the two ways the economy can be measured?

income produced (business income, etc) and spending (consumer spending, business spending, gov't spending, MOST ACCURATE MEASURE) added up

price INCREASE is due to

inflation

the gov't slows the economy due to

inflation

what are the "twin evils" of macroeconomics?

inlfation and unemployment

what is hyperinflation?

is an extremely high rate of inflation (at least 100% per year)

what is structural unemployment?

is caused by changes in consumer demand or technology

what is cyclical unemployment?

is caused by fluctuations in the business cycle (e.g. recessions)

what is a double dip recession?

is hitting the trough and beginning to climb but then dropping again

what does GNP measure?

it doesn't matter where the products are being made it matters who owns the resources, for ex. only focusing on companies operating in the U.S. such as Nike or Apple iPods (only counts as GDP is the physical Apple store on U.S. land) • Ex: Brooks running shoes (an American company) made in China count towards U.S. GNP but not GDP because it was not produced in the U.S., it is sold here • Ex: Toyota Avalon assembled in the U.S. counts towards U.S. GDP because it was assembled on U.S. land, but it is not GNP

Mental talents and physical talents of people are:

labor

the relationship between tax rates and tax revenues is shown on a

laffer curve

what are the factors of production?

land, labor, capital, ideas

A rightward shift of the production possibilities frontier illustrates _____ growth.

long run

Creating a new technology that makes production line workers more efficient is likely to produce _____ growth.

long run

When an economy finds ways to use existing resources better, that economy is likely to undergo:

long-run growth

which of the following is considered a bank liability?

money a bank customer has deposited into a savings account

Which of the following are NOT considered when measuring GDP per capita?

natural resources

Full time students without a job are

neither employed nor unemployed, they are not in the labor force

which of the following components is not used to measure GDP using the income approach?

net exports

Problems with CPI

o CPI only measures private goods, things consumers buy, doesn't measure public goods o Uses a fixed market basket, takes years to change the basket o Market surveys are 3-5 years old o It does not account for product substitution, quality improvements, or new products o Measures only consumers' out-of-pocket healthcare expenditures Does not measure the overall rise in healthcare costs o Not all consumer baskets reflect every age group

what is the catch up effect?

o Describes why developing countries may initially grow faster than developed countries o Developing countries can use existing technologies to make their inputs more productive while developed countries must innovate to increase growth o Subject to diminishing returns to capital

what does the NIPA do?

o Measures our nation's economic performance o Compares U.S. income and output to those of other nations o Track the economy's condition throughout the business cycle o Measuring economy only based on wages isn't accurate o Output is the strongest indicator o Who's getting prfit or income

Changes in the Labor Force Over Time

o Population growth: overall rise in the number of available workers o Demographic changes: average age of population, birth rates, immigration o Socioeconomic reasons: more women working, delayed retirement o Economic conditions: more discouraged workers, workers going back to school

Consequences of hyperinflation:

o Typically caused by excessive government spending over tax revenues and the printing of money to finance deficits o Workers are paid frequently and purchases are made immediately o Eventually the monetary system breaks down and barter is used. Foreign currencies become extremely valuable o Makes saving money impossible

national income includes:

o Wages o Salaries and benefits o Profits for sole proprietorships, partnerships, and corporations o Rental income o Net interest

what are supply shocks?

out of the control of most countries, price fluctuations such as food and oil

which of the following persons is considered part of the labor force?

paul, who is a senior in highschool and works part time on weekends at boomers

what is economic growth?

primary factor in explaining how well people live, their standard of living

what is government policy?

the ability to print and borrow money

Which of the following is (are) classified as entrepreneurial ability?

the ability to use resources in creative ways to produce goods and services

Which of the following is an example of the primary explanation for the extraordinary economic growth the United States has enjoyed over the past century?

the development of the Internet

Which of the following is used to determine the Index of Economic Freedom?

the protection of money as a store of value

what does the CPI measure?

the retail price level, most common, measures what consumers pay for a "basket of goods" most accurate of the three because the BLS hire real people to shop and find out prices

in the market for loanable funds, if the economy improves and people start saving less, the primary effect is

the supply of loanable funds decreases the supply of loanable funds increases

frictional unemployment is

the unemployment usually short term, associated with people who are switching jobs

June is a highly skilled surgeon who had to take a job as a lifeguard at a local pool because she was unable to find a job in the medical field during a recession. June is considered to be:

underemployed

What is a person's classification if he or she is available for work and has actively looked for work in the past four weeks?

unemployed

what is the trough?

when the recession ends

The natural rate of unemployment occurs:

when the unemployment rate is consistent with full employment.

what does PPI measure?

wholesale price, what producers pay