test 2
If real GDP is $1,000,000, exports are $200,000, imports are $300,000, and aggregate labor hours are 100,000, labor productivity is _____.
$10 per hour
CPI=
(Cost of CPI basket at current-period prices divided by Cost of CPI basket at base-period prices) times 100
People are more likely to accept a real wage cut that arises from an increase in the price level than a cut in their nominal wage rate because ______.
inflation decreases the real wage rate gradually and a cut in the nominal wage decreases the real wage rate suddenly
The CPI is a _______.
measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services
When the economy goes into recession, the output gap is _______.
negative
The chained CPI ______.
overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities
According to new growth theory, the growth of real GDP per person _______.
persists indefinitely
Once the preconditions for growth are in place, the influences on the pace of labour productivity growth are ___
physical capital growth, human capital growth, and technological advances
The inflation rate is the percentage change in the _____ from one year to the next. Deflation is a situation in which the _____ is _____ and the inflation rate is _____.
price level; price level; falling; negative
The demand for labor is the relationship between the quantity of labor demanded and the ______. The supply of labor is the relationship between the quantity of labor supplied and the ______.
real wage rate; real wage rate
According to neoclassical growth theory, the growth of real GDP per person stops when _______.
technology stops advancing
The aggregate production function is a relationship that tells us how _____ changes as the quantity of _____ changes when all other influences on production remain the same.
real GDP; labor
The factors that might make the natural unemployment rate change include _______.
the age distribution of the population, the scale of structural change, the real wage rate, and unemployment benefits
Economic growth is _______.
the expansion of production possibilities
The four main ways in which the CPI is an upward-biased measure of the price level are through _______.
the new goods bias, the quality change bias, the commodity substitution bias, and the outlet substitution bias
The two broad sources of potential GDP growth are growth of ______ and growth of ______
the supply of labor; labor productivity
The unemployment rate is never zero, even at full employment because _______.
there are always new workers entering the labor market to search for work, workers leaving one job to search for another job, and workers who have been laid off and are searching for another job
Potential GDP is determined by ______.
the full-employment quantity of labor
The IMF projects that China's real GDP per person will be 57,163 yuan in 2017 and 60,334 yuan in 2018 and that India's real GDP per person will be 98,028 rupees in 2017 and 104,191 rupees in 2018. By maintaining their current growth rates, which country will be first to double its standard of living and when will that happen? By maintaining their current growth rates, _______ will be the first to double its standard of living, and that will occur in _______.
India; 11.1 years
The core inflation rate is the annual percentage change in the _____ price index _____ the prices of food and energy.
PCE; excluding
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.
average; urban
Real GDP growth rate = [(Real GDP in ______ yearminusReal GDP in ______ year) divided by Real GDP in ______ year ] times 100.
current; previous; previous
The Rule of 70 is the number of years it takes for the level of any variable to double. It is approximately 70 _____ by the annual percentage _____.
divided; growth rate of the variable
The labor force is the number of people employed plus the _____.
B. number unemployed
The labor force participation rate is the percentage of the _____ who are members of the labor force.
B. working-age population
Hyperinflation is an inflation rate of _____ or higher that grinds the economy to a halt and causes a society to collapse.
50 percent a month
The real wage rate is $_____ when the money wage rate is $2,000 and the price level is $25.
80
A. Most technologies are embodied in physical capital. Your answer is correct.B. Growth in average hours per work increase labor productivity. C. The fundamental source of labor productivity growth is physical capital. D. The largest contribution to labor productivity growth comes from human capital.
A
Choose the correct statement. A. If there is a shortage of labor, the real wage rate rises to eliminate the shortage. Your answer is correct.B. The real wage rate is the money wage rate multiplied by the price level. C. The demand for labor is the relationship between the quantity of labor demanded and the money wage rate. D. The real wage rate is the number of dollars that an hour of labor earns
A
Real GDP per person is real GDP _____.
A. divided by the population
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; four
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
Real GDP growth rate = [(Real GDP in ______ yearminusReal GDP in ______ year) divided by Real GDP in ______ year ] times 100.
C. current; previous; previous
Americans work longer hours than those in most other rich nations. Americans also produce more per person during the year, but only part of the U.S. productivity growth can be explained by the longer hours Americans work. Americans also create more wealth per hour of work. U.S. employees worked an average of 1,804 hours in 2006, compared to 1,564.4 for the French, but far less than the 2,200 hours that Asians worked. But the Asian countries the average labor productivity is lower.
Changing the number of hours employed changes the level of productivity, but it does not change the growth of productivity.
Who in the following statements is a discouraged worker?
D. Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
The unemployment rate is the percentage of the people in the _____ who are unemployed.
D. labor force
The table provides some data on real GDP and the population of Iberia in 2016 and 2017. What was the growth rate of real GDP in Iberia in 2017? What was the growth rate of real GDP per person in Iberia in 2017?
The growth rate of real GDP in Iberia in 2017 is 4.03 percent. The growth rate of real GDP per person in Iberia in 2017 was 3.03 percent.
According to classical growth theory, the growth of real GDP per person stops when _______.
a population explosion eventually occurs and real GDP per person returns to the subsistence level
An increase in labor productivity results in ______.
an increase in the demand for labor
The growth rate is the _____ of a variable - the change in the level expressed as a percentage of the initial level
annual percentage change
The growth rate is the _____ of a variable - the change in the level expressed as a percentage of the initial level.
annual percentage change
Labor market equilibrium occurs _______.
at the real wage rate at which the quantity of labor demanded equals the quantity of labor supplied
The price level is the _____.
average level of prices
The four price indexes that are alternatives to the CPI are ______.
chained CPI, personal consumption expenditure deflator, GDP deflator, and core PCE
The natural unemployment rate _______.
changes as frictions and structural change occur in the economy
In new growth theory ______.
discoveries result from choices
Real GDP per person is real GDP _____
divided by the population
The Rule of 70 is the number of years it takes for the level of any variable to double. It is approximately 70 _____ by the annual percentage _____.
divided; growth rate of the variable
Economic growth is the _____.
expansion of production possibilities
According to new growth theory, ______.
growth can persist indefinitely
The quantity of labor demanded is the number of labor hours _______ during a given period. The quantity of labor supplied is the number of labor hours _______ during a given period.
hired by all the firms in the economy; that all the households in the economy plan to work
The aggregate production function is the relationship that tells us ______, when all other influences on production remain the same.
how real GDP changes as the quantity of labor changes
The fundamental source of labor productivity growth is ______.
human capital
The key proposition of new growth theory that makes growth persist is that ______ is not subject to diminishing returns.
knowledge capital
Americans work longer hours than those in most other rich nations. Americans also produce more per person during the year, but only part of the U.S. productivity growth can be explained by the longer hours Americans work. Americans also create more wealth per hour of work. U.S. employees worked an average of 1,804 hours in 2006, compared to 1,564.4 for the French, but far less than the 2,200 hours that Asians worked. But the Asian countries the average labor productivity is lower.
productivity depends on how much real GDP each hour of labor can produce
The output gap is the gap between _______.
real GDP and potential GDP
What do we measure to verify that the economy of Singapore has caught up to and surpassed the economy of the United States, but that the economy of Mexico has not? By measuring ______, we can see that the economy of Singapore has caught up to and surpassed the economy of the United States, but that the economy of Mexico has not.
real GDP per person
Neoclassical growth theory is the proposition that _____ grows because technological change induces saving and investment that make _____ grow.
real GDP per person; capital per hour of labor
Classical growth theory is the view that the growth of _____ is temporary and that when it rises above the subsistence level, a population explosion _____.
real GDP per person; eventually brings it back to the subsistence level
New growth theory holds that _____ grows because of the choices people make in the pursuit of profit and that growth will _____.
real GDP per person; persist indefinitely
How will the labor force participation rate change if Kevin starts creating football apps in his garage and they turn out to be very popular? The labor force participation will _____ if Kevin starts creating football apps in his garage and they turn out to be very popular.
rise
How will the unemployment rate change if Sarah quits and starts to search for a full-time job? The unemployment rate will _____ if Sarah quits and starts to search for a full-time job.
rise
The preconditions for labor productivity growth are ______.
firms, markets, property rights, and money
An increase in labor productivity _______ potential GDP and ______ potential GDP per hour of labor.
increases; increases
An increase in labor productivity ______ the real wage rate and ______ the equilibrium quantity of labor.
increases; increases;
Inflation ______ the real wage rate, everything else remaining the same because _______.
lowers; the real wage rate is calculated as (Nominal wage rate divided by CPI) times 100
When the unemployment rate is greater than the natural unemployment rate, the output gap is _______. When the unemployment rate is less than the natural unemployment rate, the output gap is _______.
negative; positive
