Econ Ch 9-12 Study Guide

You purchase a certificate of deposit and expect an inflation rate of 1.25% over the next year. Your nominal rate of interest is 2.1%. What is your expected real rate of return?

0.85%

The table shows consumer price index data for the United Kingdom. Based on this information, what is the rate of inflation in 2016?

1%

during the great recession, the united states congress increased the length of time that unemployement benefits could be received from 52 weeks to 99 weeks. this change caused:

an increase in the costs for the government

the tablw shows consumer price index for the united states. based on this information, what is the rate of inflation in 1991?

4.22%

Phases of the business cycle

peak, recession, trough, expansion

real interest rate formula

nominal interest rate - inflation rate

The real interest rate is the:

nominal interest rate minus the rate of inflation

Negative output gap

occurs when GDP falls below potential

Inflation Rate Formula

(Current year CPI ) - (Earlier Year CPI) / (Earlier Year CPI) x100

You purchase a certificate of deposit that earns an advertised rate of 1.75% interest per year. What is your real rate of return if the actual inflation rate is 1.9%?

-0.15%

You purchase a certificate of deposit and expect an inflation rate of 1.5% over the next year. Your nominal rate of interest is 2.25%. What is your expected real rate of return?

0.75%

the table shows statisitics for three Canadian cities at several different points in time. what was the unemployment rate in montreal in january 2019.

6.2%

business cycle

Short term fluctuations in economic activity

the equilibrium unemployement rate is also known as the ___ unemployment rate

long-run

in may 2019, there were appeoximately 68,980,000 people in japan's labor force. about 1,650,000 people were unemployed. What was the unemployment rate?

2.4%

Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. What is the inflation rate between last year and this year?

10.13%

what is sri lanka's GDP deflator if its nominal GDP is $88.9 billion (in current US$) and the real GDP is $59.34 billion?

149.8

The table shows consumer price index data for the United States. Based on this information, what is the rate of inflation in 2006?

3.22%

Okun's rule of thumb

For every percentage point that actual output falls below potential output, the unemployment rate increases around half a percentage point

If an economy has a positive output gap of 3% this means

GDP is 3% above potential GDP

According to okun's rule of thumb, for every 1% in the actual output below potential output, the unemployment rate

Rises by .5%

Business confidence

Tells you what managers are planning, when it starts to fall, a recession might be on the horizon

Economy potential output level is

The output that is possible when all resources are fully employed at their sustainable levels

nonfarm payrolls

Track how many jobs are created each month

lagging indicators

Variables that follow the business cycle with a delay

leading indicators

Variables that tend to predict the future path of the economy

consumer confidence

What consumers are thinking, rises when they are upbeat about the economy

Positive output gap

When actual GDP is above the potential of the economy and it is in boom.

Hyperinflation is:

extremely high rates of inflation

consider the graph of labor market shown here. if the government mandates a minimum wage of $25, there is a labor:

surplus of 6,000 workers

output gap equation

Output Gap = ((actual output - potential output) / potential output) x 100

Unemployment rises substantially in a

Recession

in order to be considered unemployed, a person must

-be part of the working-age population -be actively looking for work -must be non-institutionalized

suppose a labor market is described by the demand equation, Qd=60-2w, and the

15,000,000

the table shows statisitics for three canadian cities at several different points in time. what was the number of unemployed people (in thousands) in montreal in january 2009?

181.6

the table shows statisitics for three candian cities at several different points in time. what was the number of people (in thousands) in Montreal's labor force in january 2005.

2,003.1

the table shows statisitics for three canadian cities at several different points in time. what was the number of unemployed people (in thousands) in Toronto in january 2019?

234.2

in may 2019, texas reported acivilan labor force of 14,012,711. the number of employed people was 13,516,387. what was the unemployment rate?

3.5%

refer to the following table that shows monthly data for japan. what was the unemployment rate in january 2014

3.7%

Seasonally Adjusted Data

Data stripped of predictable seasonal patterns

GDP price deflator formula

Nominal GDP/Real GDP x 100

What is the broadest measure of economic activity

Real GDP

Long-run economic growth

Reflects growth in an economy potential output

Annualized rates

data converted to the rate that would occur if the same growth rate had occurred throughout the year

consider the labor market shown here. if an efficiency wage of $14 is instiuted in this market, the number of workers willing to work will

increase by 2,000

Menu costs are the:

marginal costs of adjusting prices

Money illusion is the:

tendency to focus on nominal values instead of inflation-adjusted values

output gap

the difference between actual output and potential output

Which of the following lists the functions of money?

medium of exchange, store of value, and unit of account

what is uganda's real GDP if its nominal GDP is $27.5 billion (in current US$) and the GDP deflator is 163.4?

$16.8 billion

In 1995, when the consumer price index was 152.38, women earned a median income of $12,130 per year. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars?

$18,865

In 1971, the cost of a four-year college degree from a public university was about $1,410. The consumer price index was 40.48 in January 1971. If the current consumer price index is 251.1, what is the approximate cost of the four-year degree in current dollars?

$8,746

output gap formula

((actual aggregate output - potential output)/potential output) X 100

Which of the following shows the medium of exchange function of money?

Daniela goes to the store and purchases roses with U.S dollars

henry ford's $5 per day wage is an example of

an efficency wage

a minimum wage that is above the equilibrium wage is

an example of a price floor

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

find out what people typically uy, 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

consider these four graphs of the labor market, showing four different minimum wage levels. level where there is no unemployment

graph B

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

higher the structural unemployement rate

you have four friends. which of your friends can be described as "cyclically unemployed"

keele, who lost her job after her company lost a lot of customers during an econonmic downturn

If you see that the consumer price index this year is lower than the consumer price index last year, this means that:

on average, prices went down across the economy

if you see that inflation between last year and this year is 3%, this means that:

on average, prices went up across the economy by 3%

the GDP deflator is an index that tracks the:

price of all goods and services produced domestically

The producer price index is an index that tracks the

price that businesses pay over time for the inputs used in the production process

if the frictional rate of unemployment is 1.45%, the structural rate of unemployement is 2.3% and the total unemployment rate is 6%, then we can conclude that

the equilibrium rate of unemployment is 3.75%

potential output

the level of output that occurs when all resources are fully employed

an underemployed person is one who is

working but whose skills are not fully utilized