Macro- Homework 3

________ is the knowledge and skill that people have obtained from education and on-the-job training.

Human capital

Which of the following statements is CORRECT?

When the real wage increases, the labor supply curve shifts rightward. When the real wage increases, the labor supply curve shifts leftward. When the real wage decreases, the labor supply curve shifts leftward. Correct None of these statements are correct.

A recession causes a decrease in the demand for housing, resulting in substantial layoffs in the construction industry. The people laid off are considered

cyclically unemployment

All people in the working-age population can be divided into

employed, unemployed, or not in the labor force.

A recent accounting graduate from a major business school is searching for a place to begin his career as an accountant. This individual is best considered as

frictionally unemployed

Potential GDP per labor hour can increase due to

increases in labor productivity

Technological change

increases potential GDP

The biases in the CPI include the

new goods, quality change, and substitution biases.

The bias in the CPI typically

overstates inflation

If the CPI is 120, this means that

prices are 20 percent higher than in the reference base period.

The aggregate production function shows how ________ varies with ________.

real GDP; labor

People base their labor supply on the ________ because they care about ________.

real wage; what their earnings will buy

Ongoing economic growth in real GDP per person requires all of the following EXCEPT ________.

saving and investment in new capital population growth the discovery of new technologies investment in human capital

Which theory of economic growth concludes that growth can continue indefinitely?

the new theory

Real GDP grows when

the quantities of factors of production grows human capital grows persistent advances in technology make factors of production increasingly productive

An economy is at full employment when ________.

the unemployment rate equals the natural unemployment rate

At the end of last year, the CPI equaled 120. At the end of this year, the CPI equals 132. What is the inflation rate over this year?

10%

Based on the following data for the country of Tiny Town, the unemployment rate equals Population = 100 Labor force = 80 Number of employed persons = 70 Number of discouraged workers = 5

10/80 × 100.

Over the last 100 years, the average U.S. growth rate in real GDP per person was about

2% per year.

Based on the following data for the country of Tiny Town, the employment-to-population ratio equals ________ multiplied by 100. Population = 200 Working age population = 100 Labor Force = 90 Number of employed persons = 75

75/100.