unit 2
Which of the following unemployed individuals represents frictional unemployment?
Janet, an accounting graduate who is interviewing with a number of accounting firms.
In 2017 Sabrina earned an annual salary of $100,000 as an engineer. In 2018, her income rose to $105,000. The inflation rate in 2018 was 2%. How did Sabrina's nominal income and real income change in 2018 compared to 2017?
Nominal income increased and real income increased.
The unemployment rate measures the percentage of
people in the labor force who do not have jobs
The consumer price index (CPI) measures the
prices of a specific group of goods and services purchased by consumers
An industry historically used employees with specific skills. If this industry experiences technological advances that require new skills, there will most likely be
structural unemployment
If unemployed workers become discouraged and give up trying to find work, the number of workers employed and the unemployment rate would change in which of the following ways?
Number of workers employed (No change) unemployment rate (increases)
Which of the following individuals is considered officially unemployed?
Pat, who recently left a job to look for a different job in another town
Which of the following describes a typical business cycle in the correct sequence?
Peak, recession, trough, and expansion
In the circular flow diagram of a market economy, which of the following supplies the factors of production?
The household sector
The natural rate of unemployment can be defined as the
economy's long-run equilibrium rate of unemployment
As a measure of economic welfare, gross domestic product underestimates a country's production of goods and services when there is an increase in
household production
Which of the following represents a leakage from the circular flow in an economy?
imports
If purchases of education and medical care were counted as investment rather than consumption, gross domestic product would
not change, because there is no change in total expenditures
Which of the following groups of people would benefit from unanticipated inflation? Savers Borrowers Lenders
2
The value of which of the following is counted in the United States gross domestic product?
A car produced in the United States and sold in Europe
The value of which of the following would be included in the United States gross domestic product?
A movie ticket purchased at a local theater
Which of the following will happen if the actual inflation rate is greater than the expected inflation rate?
Borrowers of fixed interest rate loans will be better off.
Gross private domestic investment includes which of the following?
Changes in business inventories
Which of the following is true according to the circular flow model?
Households are demanders in the product markets and suppliers in the factor markets.
A short-run increase in national income could be caused by a decrease in which of the following?
Imports
Which of the following would be true if the actual rate of inflation were less than the expected rate of inflation?
People who borrowed funds at the nominal interest rate during this time period would lose.
Which of the following best explains why transfer payments are not included in the calculation of gross domestic product?
Recipients of transfer payments have not produced or supplied goods and services in exchange for these payments.
Which of the following situations will benefit lenders of fixed interest rate loans?
The actual inflation rate is less than the expected inflation rate.
If a nation's actual real GDP is less than potential real GDP, which of the following must be true?
The actual rate of unemployment exceeds the natural rate of unemployment.
GDP does NOT account for which of the following?
The depletion of natural resources
Which of the following is true if the economy is producing at the full-employment level of output?
There is frictional unemployment.
Which of the following transactions will be included in the calculation of Country X's Gross Domestic Product (GDP) in 2020?
The purchase of new construction equipment
The circular flow model illustrates the equality of which of the following?
Total expenditure and total income
Which of the following statements exemplifies the concept of structural unemployment?
Workers are fired because their skills are no longer in demand.
Suppose that the consumer price index rises from 100 to 200. From this information we may conclude that
the prices in an average consumer's market basket are doubled