macroecon ch 7 test 1

WHAT CAUSES INFLATION?

1. DEMAND FACTORS: consumer confidence, income, wealth. 2. SUPPLY SHOCKS: price fluctuations on items such as food and oil. 3. GOVERNMENT POLICY: its ability to borrow and print money.

Which of the following is not considered capital? Aa tractor produced by John Deere B a factory a company builds to produce other output C 10,000 U.S. dollars D the knowledge an individual acquires through education

10,000 US Dollars

CPI in base year should be

100

People are counted as unemployed if they do not have a job but are available for work and have been actively seeking work for the previous _____ weeks.

4

Frictional unemployment

A type of unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs.

Which price index calculates the prices for urban consumers paid on fixed basket of goods and services?

CPI

_____ unemployment is the result of changes in the business cycle.

Cyclical

Which of the following is a type of unemployment that is due to business cycles? This type of unemployment rises during economic recessions and falls during economic expansions.

Cyclical unemployment

FULL-TIME STUDENTS WITHOUT A JOB ARE NEITHER EMPLOYED NOR UNEMPLOYED.

THEY ARE NOT IN THE LABOR FORCE.

A 16 years old or older person is counted as employed if any of the following applies:

Who works for pay, either for someone else or in his/her own business for 1 or more hours per week. Who works without pay for 15 or more hours per week in a family enterprise. Who has a job but has been temporarily absent with or without pay.

What is a person's classification if he or she has given up actively looking for work?

a discouraged worker/discouraged job seeker

NOT IN THE LABOR FORCE

a person who is not looking for work because he or she does not want a job or has given up looking Full-time students Retirees Individuals in institutions Stay at home persons to take care of children Discouraged job seekers

Consumer price index (CPI):

a price index computed using a bundle that is meant to represent the "market basket" purchased monthly by the typical urban consumer.

in the CPI market basket, the category which has the largest weight is

housing

Other things equal, if a recession gets worse, the number of discouraged workers _____, and the number of those in the labor force _____.

increases; decreases

Producer price indexes (PPIs)

measures of prices that producers receive for products at all stages in the production process

GDP deflator

measures the average price of all items in GDP.

real interest rate formula

real interest rate = nominal interest rate - inflation rate

The difference between the interest rate on a loan and the inflation rate is the

real interest rate.

All of the following explain the growth in output per worker hour during the 20th century except

the worker-capital ratio decreased during that period.

An unemployed is a person 16 years old or older

who is not working, is available for work, and has made specific efforts to find work during the previous 4 weeks.

If 1 million is discouraged workers;Unemployed=5million-1million=4millionLabor force=75million-1million=74million

Unemployment rate= 4million/74million=5.4%

Structural unemployment

is caused by changes in structure of economy, consumer demand or technology (usually lasts longer) and results in a significant loss of jobs in certain industries.

Cyclical unemployment

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

A FULL-TIME STUDENT WHO WORKS PART-TIME AS A DRIVER

is employed

A paragraph from the report discussed in the UN Department of Economic and Social Affairs states that "With the rapid technological advancement of recent years, computers are increasingly encroaching on domains that were previously considered exclusively human. The astonishing progress in such areas as artificial intelligence (AI), robotics, 3D printing and genetics has enabled computers to perform the tasks of architects, medical doctors, music Dutch master of painting. Nearly every day brings news of remarkable feats achieved by computers or robots, and with them a gnawing question: Will machines edge us out of brain jobs?" What type of unemployment is discussed in the UN report?

structural