Macro Econ 117 - Exam 1 (Chpt 3 4 5)
Limitations of Real GDP (Some factors that influence the standard of living that are not a part of GDP)
1. Household production (taking care of things in your house like cleaning) 2. Underground economic activity (illegal activities like buying/selling drugs) 3. Leisure time 4. Environmental quality
unemployment population ratio formula is
= Employment / Working Age Population *100
Labor force participation formula is
= Labor Force / Working Age Population *100
Unemployment Rate Formula is
= Unemployed Population / Labor Force * 100
The labor force is the number of people employed plus the _____. A. number unemployed B. working-age population C. working-age population D. number of women unemployed
A (number employed)
.The working-age population is the total number of _____ aged _____ years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces. A people; 16 B. workers; 18 C. people; 15 D. graduates; 20
A (people; 16)
Which of the following statements illustrates frictional unemployment? A. Robin is quitting his current job to find another that has better prospects. B. Dave lost his job as he did not possess the technical skills required to do his duty. C. Many bank tellers lost their jobs due to the installation of ATM machines. D. Thousands of employees were laid off during the 2008-09recession.
A. Robin is quitting his current job to find another that has better prospects.
A person is in the labor force if that person is _______. A. either employed or unemployed B. waiting to start a new job within the next 3 months Your answer is not correct. C. neither working nor looking for work but has indicated that he or she wants and is available for a job and looked for work sometime in the recent past D. aged 16 and over and not in jail,hospital, or some other form of institutional care
A. either employed or unemployed
Unemployment arises when ______. A. people leave their jobs and spend time searching for another job that better suits their abilities B. firms close, people lose their jobs, and they become discouraged workers C. people leave the labor force Your answer is not correct. D. students decide to take time to travel following graduation
A. people leave their jobs and spend time searching for another job that better suits their abilities
CPI = ______. A. (Cost of CPI basket at current-periodprices divided by Cost of CPI basket atbase-period prices) times 100 B. [(Cost of CPI basket at base-periodpricesminus Cost of CPI basket atcurrent-period prices) divided by Cost of CPI basket atcurrent-period prices] times 100 C. [(Cost of CPI basket at current-periodpricesminus Cost of CPI basket atbase-period prices) divided by Cost of CPI basket atcurrent-period prices] times 100 D. (Cost of CPI basket at base-periodprices divided by Cost of CPI basket atcurrent-period prices) times 100
A. (Cost of CPI basket at current-period prices / Cost of CPI basket a tbase-period prices) * 100
The core inflation rate is the annual percentage change in the _____ price index _____ the prices of food and energy. A. PCE; excluding B. GDP; excluding C. GDP; including D. PCE; including
A. PCE; excluding
The labor force participation rate is the percentage of the _____ who are members of the labor force. A. working-age population B. number unemployed C. part-time workers D. number of women
A. working-age population
The inflation rate is calculated as _________. A. [(CPI in the base yearminus CPI last year) divided by CPI this year] times 100 B. [(CPI this yearminus CPI last year) divided by CPI this year] times 100 C. [(CPI this yearminus CPI last year) divided by CPI last year] times 100 D. [(CPI this yearminus CPI in the base year) divided by CPI in the base year] times 100
(CPI this year - CPI last year) / by CPI last year * 100
Choose the correct statement. A. A wage contract linked to the CPI gives the workers less real income than the firm intended. B. The bias in the CPI distorts private contracts C. The bias in the CPI decreases government outlays. D. The bias in the CPI eliminates the need for people to shop in discount stores.
B. The bias in the CPI distorts private contracts
Choose the correct statement. A. Changes in relative prices lead consumers to change the items theybuy, and the CPI reflects this substitution. B. When the quality of a good improves over time and as a result the price rises comma the CPI counts the entire price rise as inflation and so overstates inflation C. When the quality of a good improves over time, the CPI does not include the portion of the price rise attributable to the higher quality in its calculation. D. The CPI calculation assumes that everyone shops at discount stores and no one shops at convenience stores.
B. When the quality of a good improves over time and as a result the price rises comma the CPI counts the entire price rise as inflation and so overstates inflation
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _____ and decreases during _____. A. an expansion; a recession B. a recession; an expansion C. technological stagnation; technological advancements D. imports; exports
B. a recession; an expansion
The chained CPI ______. A. does not overcome the source of bias in the CPI B. overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities C. overcomes the sources of bias in the CPI by eliminating measures of the goods and services with the most volatile prices D. overcomes the sources of bias in the CPI by giving extra weight to the measures of the goods and services with the most volatile prices
B. overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities
The four main ways in which the CPI is an upward-biased measure of the price level are through _______. A. differences in wholesale and retail prices, differences in domestic and international prices, differences among various supply chaincosts, and differences among wage rates in different states B. the new goods bias, the quality change bias, the commodity substitution bias, and the outlet substitution bias C. the intermediate goods bias, the bricks-and-mortar bias, the onlinebias, and the quality change bias D. sales taxes, subsidies, quotas, and vouchers
B. the new goods bias, the quality change bias, the commodity substitution bias, and the outlet substitution bias
An unemployed person ______. A. is not in the labor force B. wants work, has made specific efforts to find a job within the previous fourweeks, or is waiting to be called back to a job from which he or she has been laid off, or is waiting to start a new job within 30 days C. may be a person who is employed at a job that does not use the skills they have accumulated at college or on previous jobs D. can hold a part-time job and be searching for a full-time job
B. wants work, has made specific efforts to find a job within the previous fourweeks, or is waiting to be called back to a job from which he or she has been laid off, or is waiting to start a new job within 30 days
A marginally attached worker is a person who does not have a job, is _____ and _____ to work, has _____ specific efforts to find a job within the previous _____ weeks, but has looked for work sometime in the recent past. A. available; willing; not made; six B. available; willing; not made; four C. not available; not willing; not made;four D. available; willing; made; six
B. available; willing; not made; four
Describe the trends and fluctuations in the U.S. unemployment rate from 1980 to 2017. Choose the correct statement. Question content area bottom A. The unemployment rate shows an upward trend before 2000 and then a downward trend. B. The average unemployment rate from 1980 to 2017 was 5.5 percent. C. Each peak unemployment rate in the recessions of 1982, 1990-1991, and 2001 was lower than the previous one. D. The unemployment rate decreases in a recession and increases in an expansion.
C. Each peak unemployment rate in the recessions of 1982, 1990-1991, and 2001 was lower than the previous one.
Which of the following statements illustrates structural unemployment? A. Jen quit her current job and found another one with a better pay scale. B. Dell laid off many employees when the company's profits dropped during the recession. C. Outsourcing resulted in many job losses in the mid 2000s. D. Many women quit jobs to raise their kids.
C. Outsourcing resulted in many job losses in the mid 2000s.
The four price indexes that are alternatives to the CPI are ______. A. CPI deflator, personal consumption expenditure deflator, core GDPdeflator, and core PCE B. CPI deflator, chained personal consumption expenditure deflator,GDP deflator, and core PCE C. chained CPI, personal consumption expenditure deflator, GDPdeflator, and core PCE D. chained CPI, personal consumption expenditure deflator, core GDP deflator, and CPI deflator
C. chained CPI, personal consumption expenditure deflator, GDPdeflator, and core PCE
A person is not in the labor force if they are ______. A. between the ages of 16 and 19 B. over 65 years of age C. in the working-age population but neither employed nor unemployed D. unemployed
C. in the working-age population but neither employed nor unemployed
The CPI is a _______. A. measure of inflation B. measure of the price level of all goods and services that are counted as part of GDP C. measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services D. list of the items that an average urban household buys and the percentage weight of total expenditure given to each item
C. measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services
When the CPI _______. A. rises slowly, the inflation rate is negative B. is constant, the inflation rate is negative C. rises slowly, the inflation rate is low D. falls, the inflation rate is positive and low
C. rises slowly, the inflation rate is low
The factors that might make the natural unemployment rate change include _______. A. the actual unemployment rate, the scale of structural change, the nominal wage rate, and unemployment benefits B. the scale of structural change, the Z-Pop ratio, the output gap, and unemployment benefits C. the age distribution of the population, the scale of structuralchange, the real wage rate, and unemployment benefits D. the age distribution of the population, the output gap, the actual unemployment rate, and the real wage rate
C. the age distribution of the population, the scale of structuralchange, the real wage rate, and unemployment benefits
The unemployment rate is the percentage of the people in the _____ who are unemployed. A. age group of 20 - 60 B. number of disabled C. number of women and children D. labor force
D (labor force)
Hyperinflation is an inflation rate of _____ or higher that grinds the economy to a halt and causes a society to collapse. A. 50 percent a year B. 20 percent a month C. 20 percent a year D. 50 percent a month
D. 50 percent a month
The natural unemployment rate is the unemployment rate when the economy is _____. A. not at full employment B. facing high interest rates C. facing high inflation D. at full employment
D. at full employment
The natural unemployment rate _______. A. changes with the business cycle B. constantly increases as technology moves jobs from labor to capital C. does not change. It remains constant until recalculated by the Congressional Budget Office D. changes as frictions and structural change occur in the economy
D. changes as frictions and structural change occur in the economy
Some unemployment is unavoidable because ______. A. many people in the working-agepopulation attend school and are unemployed B. often people become discouraged workers C. many part-timeworkers would like to have full-time work D. people are making transitions
D. people are making transitions
The output gap is real GDP minus _____ expressed as a percentage of _____. A. investment; potential GDP B. potential GDP; real GDP C. interest rate; interest rate D. potential GDP; potential GDP
D. potential GDP; potential GDP
The price level is ______. A. the average level of prices paid by urban consumers B. equal to the inflation rate C. the average level of prices paid by urban consumers for all goods excluding food and energy D. the average level of prices
D. the average level of prices
The Consumer Price Index is a measure of the _____ of the prices paid by _____ consumers for a fixed market basket of consumption goods and services. A. sum; urban B. average; rich C. sum; rural D. average; urban
D. average; urban
Full employment is when there is no _____ unemployment or, equivalently, when all the unemployment is _____ or _____. A. cyclical; structural; natural B. frictional; structural; cyclical C. structural; frictional; natural D. cyclical; frictional; structural
D. cyclical; frictional; structural
In August 2021 the U.S. unemployment rate was 5.2 percent. In August 2022 the unemployment rate was 3.7 percent. Assuming that the labor force remained constant between August 2021 and August 2022 then unemployment _______. A. either increased or decreased but we can't predict which B.didn't change C.increased D.decreased
D.decreased
GDP
Gross Domestic Product- the total market value of all final goods and services produced annually in an economy (income of a whole country)
Deflation.
Prices decrease, wages remain the same Coke goes from $2 to $1, benefits the people, money worth more
Inflation (redistributes wealth)
Prices increase, wages remain the same Coke goes from $2.00 to $2.50, benefits the firms
real wage rate
the money wage rate divided by the price level (how much your money is worth)