Econ Ch 2

what is the labor force participation rate

(labor force/population) x 100

how is the consumer price index calculated

(market basket in year y/market basket in base year) x 100

what is the unemployment rate

(unemployed/labor force) x 100

Why are capital goods and inventories treated differently from intermediate goods in the production approach to measuring GDP?

Capital goods and inventories represent economic activity that is not counted elsewhere

How is GDP defined in the expenditure approach to measuring economic activity?

Y=C+I+G+NX

Identify the four major expenditure components in the national

consumption, investment, government spending, and net exports

what is the difference between ex ante and ex post real interest rates

ex ante real rates are calculated using expected inflation, while ex post rates use actual inflation

the major subcategories of investment are

fixed investment (tools, machinery, equipment), residential investment (structures, factory, warehouses, office space), and inventory investment (increase in inventory. products that are unused. finished but not sold products)

Is GDP a flow or stock measure

flow measure

As a borrower, would you benefit more from a higher or lower actual inflation rate

higher

which category is a farmer's purchase of a new tractor to work his or her field included in

investment category

Does a household purchase of a home built in 1985 count toward GDP

No, it would have been counted in the year it was built

what is the difference between intermediate goods and final goods

Intermediate goods are completely used up in production. Final goods are final products

Which category is a household purchase of a newly built dishwasher included in

consumption category

the production of intermediate goods and services...

are included in the value of final market goods

the production of goods and services that are not sold in markets (both legal and illegal)...

are not included in GDP

the purchase of used goods and imported goods and services...

are not included in GDP

The consumer price index is a measure of

average prices of consumer goods and services

Flow variables represent...

changes in levels

the major subcategories of consumption are

consumer durables (long lived, car, fridge, microwave), nondurable goods (food, clothing), and services (doctor, haircut)

Which category is the US department of defense buying 10 helicopters just built in brazil included in

it is counted as government spending and subtracted as imports

does a disabled individual's receiving a transfer from the US government count towards GDP

no

the difference between nominal and real interest rates

real rate: amount of extra purchasing power a lender must be paid for the rental of their money. the ex ante and ex post real rates may be different. nominal rate: does not change on a fixed rate loan, includes the rate of inflation the real rate does not

If the price of a new good is higher that the current iphone, how will CPI measure the change in cost of living

the CPI will overstate the change in the cost of living because the new Iphone is an improved product

Stock variables measure...

the accumulation of values over time

consumer price index is collected by

the bureau of labor statistics

what is the definition of GDP by production approach?

the current market value of all final goods and services newly produced in the economy during a fixed period

What is the formula for labor force

unemployed + employed