Macroeconomics Exam #3

What is frictional unemployment?

People are changing jobs or entering the work force. This is a normal aspect of full employment. Example: A recent college graduate is looking for a job

The GDP deflator is an index that tracks the:

price of all goods and services produced domestically.

What is an efficiency wage?

A nominal wage rate offered only to CEOs of extremely profitable corporations. A wage rate established by the government. A wage rate mandated when the economy is in a recession. A real wage set above the full employment equilibrium wage rate.

What is structural unemployment?

A worker's job skills do not match those necessary to get a job so they need education or training Example: A construction worker wants to work in an office- so they quit their job and get computer training

Which of the following correctly shows the steps needed to calculate the inflation rate?

Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate

What is the GDP equation?

GDP = C + G + I + NX

What is a scaled number?

Government budget deficit as a percentage of GDP

The equilibrium unemployment rate is also known as the _____ unemployment rate.

Long-run

What is an example of transfer payments?

Unemployment benefits

Physical Capital

all human-made goods that are used to produce other goods and services; tools and buildings

The moral of the story of the Solow growth model is that:

capital accumulation alone cannot lead to sustainable economic growth.

What are property rights?

control over a tangible or intangible resource

The higher the minimum wage, as compared to the equilibrium wage, the:

higher the structural unemployment rate.

What is capital accumulation?

the growth of capital resources, including human capital

Human Capital

the knowledge and skills a worker gains through education and experience

What is labor?

the mental and physical capacity of workers to produce goods and services

What is the dependency ratio?

the number of people who are too young or too old to work, compared to the number of people in their productive years

Production Function

the relationship between quantity of inputs used to make a good and the quantity of output of that good

What is long-run unemployment rate?

the share of the labor force that has been unemployed for over six months

What is human capital?

the skills and knowledge gained by a worker through education and experience

What is cyclical unemployment?

unemployment caused by the lack of jobs during a recession