ECO 202 Exam 1

If real GDP per person in a country equals $40,000 and 50 percent of the population is employed, then the average labor productivity equals:

$80,000

If the natural rate of employment equals 5% and the actual rate of unemployment equals 6%, then cyclical unemployment equals

1%

The unemployment rate for younger workers is usually ______ the unemployment rate for older workers.

greater than

How would inflation rate from 2017-2019 compare to the rate from 2017-2018?

higher in 2019

Which of the following is thought to be the most important factor determining long-run economic growth?

improvements in technology

Countries with small amounts of capital per worker tend to have____ levels of real GDP per person and _____ levels of average labor productivity

low ; low

Gross Domestic Product (GDP) is the _________ in a given period of time.

market value of final goods and services produced

Full-time students and prisoners are

not in the labor force

The saving of government sector is called ____

public

A new 2010 Honda Civic produced in 2010 and purchased in 2011 is

part of GDP in 2010

Which of the following is NOT included in real GDP?

production that takes place in the underground economy

The excess of government spending over tax collection is:

the government budget deficit

Net exports is negative if

the value of imports exceeds the value of exports

Intermediate goods are excluded from GDP because

their inclusion would involve double counting

Full employment occurs when

there is no cyclical unemployment

Hyperinflation is defined as

very high inflation rates (15% or above)

The labor force is defined as people

who have a job or are looking for a job Labor force = unemployed + employed

An increase in the price level is defined as

Inflation

_____ saving equals _____saving ______ saving

National; private; plus public

Which of following situations best describes an individual who cyclically unemployed?

Nicholas was laid-off when orders for General Motors cars fell during the recession

How to find Nominal GDP for 2018?

Nominal = current quantities * current prices

How to find the GDP Deflator for 2018?

Nominal GDP 2018 / Real GDP 2018 *100

Of the following, which is correct?

Nominal GDP increases when the prices of goods and services increase

How to find Real GDP for 2018?

Real = current quantity * base year price

Suppose that over a period of years the country of Quasiland switch from being an agriculturally-based economy to a technologically-based economy. As a result, many people lost jobs because they lacked the correct skills. As they search for new jobs, these people are part of

Structural Unemployment

Frictional Unemployment is

Unemployment associated with the changing of jobs in a changing economy

Countries with high rates of economic growth tend to have

a labor force that is more productive

GAP, a U.S. corporation, produces apparel in India. This would ___

add to India's GDP but not to U.S. GDP

increases in living standards, as measured by real GDP per person, are primarily the result of increases in

average labor productivity

The largest component of planned aggregate expenditure is

consumption

The CPI basket contains 400 oranges and 800 pens. In the base year, the price of an orange was $1.00 and the price of a pen was $.75. This year, urban consumers each bought 300 oranges at $2.00 each and 850 pens at $1.00 each. The CPI this year is _____

160 base year CPI / current year CPI

In 2017, Bangladesh's nominal GDP was 250 billion and GDP deflator was 125. Find Bangladesh's real GDP

200 billion Nominal GDP / GDP Deflator *100 = Real GDP

Suppose the population of Tiny Town is 100 people and the labor force is made up of 75 people. If 5 of these people are unemployed, the unemployment rate is

5/75 * 100 Unemployment = unemployed / labor force

Let C represent consumption expenditure, S savings, I gross domestic investment, G government expenditure on goods and services. Then GDP equals

C + I + G + X -M X = exports, M = imports

How to find Inflation rate for 2018?

CPI 2 - CPI 1 / CPI 1 *100 or Nominal-real/real *100

Which of the following situations best describes an individual who is seasonally unemployed?

Catherine is a ski instructor who is not working because it is the summer.

Which type of unemployment increases during a recession?

Cyclical Unemployment

When the economy moves into and out of recessions and expansions, the unemployment rate fluctuates around the ______

Cyclical unemployment

The Consumer Price Index (CPI)

compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period

Real GDP can be criticized as a measure of economic welfare because it

does not include the value of products produced in the household does not take account of the degradation of environmental quality does not include leisure time available to society All of the above answers are correct

The Rule of 70 is used to

estimate how long it will take the level of any variable to double