Exam #2- Review quiz 3

Year Real GDP 2017 $8,700 2018 8,875 2019 9,000 2020 9,280 Using the table above, what is the approximate average annual growth rate from 2017 to 2020

2%

Year Earnings CPI (1982-1984=100 1965 $2.65 32 2010 $22.50 219 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. The real average hourly earnings for 1965 in 2010 dollars equal

$18.14

Year Earnings CPI (1982-1984=100 1965 $2.65 32 2010 $22.50 219 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. The real average hourly earnings for 1965 in 1982-1984 dollars equal

$8.28

Total population= 20,000 Working age population= 15,000 Employment= 1,000 Unemployment= 100 The labor force participation rate for this simple economy equals

(1,100/15,000) × 100

Total population= 20,000 Working age population= 15,000 Employment= 1,000 Unemployment= 100 The unemployment rate for this simple economy equals

(100/1,100) × 100

According to the "Rule of 70," how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%

14 years

If the growth rate of real GDP rises from 3% to 4% per year, then the number of years required to double real GDP will decrease from

23.3 years to 17.5 years

Year Earnings CPI (1982-1984=100 1965 $2.65 32 2010 $22.50 219 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. The percentage change in real average earnings from 1965 to 2010 equals

24.6%

Year Real GDP 2017 $8,700 2018 8,875 2019 9,000 2020 9,280 Using the table above, what is the approximate growth rate of real GDP from 2019 to 2020

3%

Year CPI 2019 207 2020 215 Consider the following values of the consumer price index for 2019 and 2020. The inflation rate for 2020 was equal to

3.9%

If real GDP per capita doubles between 2007 and 2022, what is the average annual growth rate of real GDP per capita

4.7%

GDP is not a perfect measure of well-being because GDP is not adjusted for pollution. the value of leisure is included in GDP. GDP is adjusted for changes in crime rates. GDP is adjusted for increases in drug addiction

GDP is not adjusted for pollution

Which of the following policies would reduce structural unemployment implementing an unemployment insurance policy an increase in the minimum wage building an online job database that helps workers find jobs a job retraining program

a job retraining program

Structural unemployment is the result of

a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs

Which of the following describes a situation in which the person is hurt by inflation

a person paid in a fixed income during an inflationary period

Cyclical unemployment is the result of

a slowdown in the economy

Suppose that in 2020, all prices in the economy double and that all wages and salaries also double. In 2020 you are better off than you were in 2019 as your salary is higher than it was in 2019 and you can now buy more goods and services. are no better off or worse off than you were in 2019 as the purchasing power of your salary has remained the same. are worse off than you were in 2019 as you can no longer afford to buy as many goods and services. cannot determine whether you are better off or worse off than you were in 2019, because the purchasing power of your salary cannot be determined.

are no better off or worse off than you were in 2019 as the purchasing power of your salary has remained the same

The GDP deflator is a measure of the otal production of the economy unadjusted for inflation. average level of prices of final goods and services in the economy. total production of the economy adjusted for inflation. average level of prices of intermediate goods and services in the economy.

average level of prices of final goods and services in the economy.

When actual inflation is less than expected inflation

borrowers and lenders gain

Investment, as defined by economists, would include the purchase of a government bond share of stock in ExxonMobil computer by an accounting firm corporate bond

computer by an accounting firm

Which of the following price indices comes closest to measuring the cost of living of the typical household

consumer price index

The size of the underground economy would tend to decrease if the government of a country increased business taxes. decreased government regulations on businesses. increased income tax rates. made over-the-counter drugs illegal

decreased government regulations on businesses

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness people employed in the underground economy unemployed persons falsely report themselves to be actively looking for a job discouraged workers inflation

discouraged workers

The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill

employed

The labor force equals the number of people

employed plus unemployed

The natural rate of unemployment is the amount of unemployment that exists when the economy is in an expansion. equal to frictional plus structural unemployment. associated with the business cycle. that exists when the economy goes into recession.

equal to frictional plus structural unemployment

Gross domestic product understates the total production of final goods and services because of the omission of inflation household production intermediate goods exports

household production

Nominal GDP will increase if either the price level or the quantity of goods and services produced rises. only if the price level falls. only if the quantity of final goods and services produced rises. only if the price level rises

if either the price level or the quantity of goods and services produced rises.

An increase in unemployment insurance payments would, in effect, ________ the amount of time spent searching for a job, which would increase ________ unemployment

increase; frictional

The size of the underground economy would tend to increase if the government of a country legalized prostitution. legalized marijuana. increased income tax rates. decreased government regulations on businesses.

increased income tax rates

The percent increase in the CPI from one year to the next is a measure of the

inflation rate

The stated interest rate on a loan is the

nominal interest rate

Real GDP will increase only if the quantity of final goods and services produced rises. if either the price level rises or the quantity of final goods and services produced rises. only if the price level rises. only if the price level falls

only if the quantity of final goods and services produced rises.

The Bureau of Labor Statistics would categorize a retiree who is notworking as

out of the labor force

Full employment is not considered to be zero unemployment, because

people do not find jobs instantaneously

The nominal interest rate equals the real interest rate __________ the inflation rate

plus

The GDP deflator is ratio of nominal GDP to real GDP multiplied by 100. ratio of real GDP to nominal GDP multiplied by 100. difference between nominal GDP and real GDP divided by 100. difference between real GDP and nominal GDP multiplied by 100

ratio of nominal GDP to real GDP multiplied by 100

The broadest measure of the price level that includes all final goods and services is

the GDP deflator

The most widely used measure of inflation is based on which of the following price indices

the consumer price index

The average price of goods and services in the economy is also known as

the price level

Which of the following could cause nominal GDP to decrease next year, but real GDP to increase The price level falls and the quantity of final goods and services produced falls. The price level falls and the quantity of final goods and services produced rises. The price level rises and the quantity of final goods and services produced falls. The price level rises and the quantity of final goods and services produced rises.

the price level falls and the quantity of final goods and services produced rises

If we want to use a measure of inflation that foreshadows price changes before they affect prices at the retail level, we would base our measure of inflation on

the producer price index

Frictional unemployment is the result of the process of matching workers with jobs. a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. the ups and downs in inflation. a slowdown in the economy

the search process of matching workers with jobs

Gross domestic product is calculated by summing up the total quantity of goods and services produced in the economy during a period of time. the total quantity of goods and services in the economy. the total market value of goods and services in the economy. the total market value of final goods and services produced in the economy during a period of time.

the total market value of final goods and services produced in the economy during a period of time

Gross domestic product understates the total production of final goods and services because of the omission of the underground economy. inflation. exports. intermediate goods

the underground economy

According to the text, economists consider full employment to occur when the unemployment rate consists of only frictional and structural unemployment. frictional unemployment equals zero. everyone who wants a job has a job. the sum of frictional unemployment and structural unemployment equals zero.

the unemployment rate consists of only frictional and structural unemployment

If inflation is positive and is perfectly anticipated

those that hold paper money lose

Nominal GDP is GDP in a given year adjusted for anticipated inflation. valued in the prices of that year. valued in the prices of the base year. adjusted for inflation.

valued in the prices of that year

Real GDP is GDP in a given year valued in the prices of the base year. adjusted only for unanticipated inflation. valued in the prices of that year. adjusted only for anticipated inflation.

valued in the prices of the base year

If an economy experiences deflation, the real interest rate

will be greater than the nominal interest rate