Economics

An economics professor is discussing a measure of inflation over time based on a basket of goods comprised of all the components of GDP. Which measure is it?

GDP Deflator

Which of the following statements is true?

GDP includes spending on recreation and travel, but it does not cover leisure time.

Some recent economic research has suggested that African countries' economic growth may have been limited by __________________.

Geography and climate

Final goods or services used to compute GDP refer to:

Goods and services purchased by the ultimate users

In the long run, the most important source of increase in a nation's standard of living is a ____

High rate of economic growth

Which of the government policies below is most unlikely to encourage per capita economic growth?

High taxes on companies that spend a lot on capital formation

Consumption is the purchase of goods and services by_____

Households

In the early 1900s, extremely high inflation rates of 2500% were common in Russia. During that time, we can say that as a result of those inflation rates, Russia was experiencing ____________

Hyperinflation

Which of the following did not result in economic growth?

Many citizens emigrating from Zimbabwe when a politically repressive regime took office

The unemployment rate may underestimate the true extent of unemployment if ____________

Many part-time employees would like to work full time, but are unable to get the additional work

The unemployment rate may underestimate the true extent of unemployment if __________

Many people become discouraged and cease looking for work

____ is calculated by taking ____ and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year

NNP; GNP

Increased investment alone will guarantee economic growth.

This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology

Insofar as government public policy is concerned, the best way to battle unemployment would be __________________.

To minimize recessions

The gap between exports and imports in a nation's economy is called the ____

Trade balance

Gomer loses his job as a road construction worker and cannot find another position with equivalent pay and benefits. As a result, he is still checking the want ads and reporting to the unemployment office on a weekly basis. He is considered to be:

Unemployed

The labor force consists of:

all adults who are working or actively seeking work.

Cyclical unemployment arises when:

business activity in the macroeconomy declines.

The effects of inflation are seen in:

goods, services, wages and income levels

A nation can achieve higher economic growth if:

it devotes more resources to research and development.

Investment (I) includes:

the amount spent on new factories and machinery.

The unemployment rate measures ____________

unemployed workers as a percentage of the labor force

Frictional unemployment is __________

unemployment that is due to normal turnover in the labor market

Which of the following is included in the calculated Gross Domestic Product?

A local icecream store sells $17 K worth of cones and sundaes on July 1

A welder who quits his job and moves to Pittsburgh to Madison to try to get a better welding job is said to be:

Frictionally unemployed

If the imports exceed exports, as in recent years, then ____ exists

A trade deficit

In order to avoid double counting, statisticians just count the ____

Final goods and services

What distinguishes the real value of a statistic from the nominal value of a statistic?

Adjusting for inflation

When society has a higher level of capital per person, it is called ______________.

Capital deepening

The basket of goods in the Consumer Price Index consists of about ____________ products; that is several hundred specific products in over ___________ broad-item categories

80,000 ; 200

Once every ____, the Census Bureau does a comprehensive survey of housing and residential finance

10 years

If the unemployment rate is 8 percent, this means:

8 percent of the labor force is unemployed.

The ____________ argument points out that if an employer reacts to poor business conditions by reducing pay for all workers, then the best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives are more likely to stay

Adverse selection of wage cuts

In macroeconomics, the connection from inputs to outputs for the entire economy is called____

An aggregate production function

To compare the GDP of two different countries with different currencies, it is necessary to use ____

An exchange rate

Which of the following factors contribute to economic growth?

An increase in the proportion of the population that is college educated

Which of the following are most likely classified by economists as consumer durable goods?

Automobiles, furniture, CD players

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely related to the __________

Business cycle

In the 1970's and 1980's, labor unions commonly negotiated wage contracts that had ____________ which guaranteed that their wages would keep up with inflation

Cost of living adjustments

The type of unemployment that occurs because of a recession is called:

Cyclical unemployment

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

Cyclically unemployed

Another term used to describe negative inflation is:

Deflation

The situation where the buying power of money in terms of goods and services increases is called ____________

Deflation

____ , which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country

Economic growth

____________ argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate

Efficiency wage theory

The definition of market equilibrium states that at the ____________ , the quantity of labor demanded by employers will equal the quantity supplied

Equilibrium wage

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are:

Expansion, peak, recession, trough

Which of the following is most likely to contribute to economic growth as measured by GDP per capita?

Increased capital formation

Which of the following is correct?

Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital.

Which of the following best describes the relationship between economic growth and literacy?

Increased literacy stimulates economic growth by raising labor productivity, and as the economy grows, people consume more education

Inflation implies that the level of all prices _____________________.

Increases

When a price, wage, or interest rate is adjusted automatically with inflation, it is said to be __________.

Indexed

____ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800's

Industrial Revolution

The percentage change in the price level from one time period to the next, whether the price level is measured in terms of money or as price index, will be the ____________

Inflation rate

____________ implies that pressure for price increases reaches across ____________ markets, not just one

Inflation; most

Karen chooses to go to university fulltime rather than to work. Karen:

Is not part of the labor force

While one occasionally sees references to inflation over short time periods, the term typically implies a(n)_____________ in prices.

Ongoing rise

Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered:

Out of the labor force

An economy's rate of productivity growth is closely linked to the growth of its __________, although the two aren't identical

Per capita GDP

The Producer Price Index is based on prices paid for supplies and inputs by

Producers of goods and services

The value of what businesses provide to other businesses is captured in the final products at the end of the ____ chain

Production

Over the long run, ____________ per hour is the most important determinant of the average wage level in any economy.

Productivity

The value of what is produced per worker, or per hour worked, is called ____

Productivity

To achieve a high standard of living, a nation should:

Promote economic growth

The difference between nominal GDP and real GDP is ____

Real GDP adjusts for inflation

Economists typically measure economic growth by tracking:

Real GDP per capita

The ________ is the nominal interest rate minus the rate of inflation

Real interest rate

The nominal value of any economist statistic refers to the number that is actually announced at that time, while the ____ refers to the statistic after it has been adjusted for inflation

Real value

Which of the following is an example of one of the major categories in the overall CPI?

Recreation

Two factors that complicate the calculation of the inflation rate are:

Substitution and quality/new product bias

One of the reasons that a rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer's true cost of living is:

Substitution bias

Since the late 1950s, economists have performed "growth accounting" studies in the United States. These have determined that ________________ is typically the most important contributor to U.S. economic growth.

Technology

Inflation can be calculated in terms of how the overall cost of ____________ changes over time

The basket of goods

The most commonly cited measure of inflation in the United States is:

The consumer price index (CPI)

Which of the following is true?

The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude

Which of the following is unlikely to affect the rate of economic growth?

The level of government spending

If a nation's labor force receives significant influx of young workers:

The natural rate of unemployment is likely to increase

The most significant real economic cost of high unemployment is:

The potential goods and services that might have been produced but weren't

Which of the following is included in GDP calculations?

The university tuition paid to enroll in a course

GDP is____

The value of all final goods and services produced domestically