ECON CH 6
f the current year's consumer price index is 214 and last year's consumer price index was 209, then the rate of inflation is:
2.4%
If your salary was $50,000 last year, and this year you receive a cost-of-living increase tied to the consumer price index (CPI), what will your salary be this year assuming the CPI has risen from 110 to 114?
51,818
Arlina got a 5% raise while the rate of inflation was 6%. Arlina's standard of living
Fell by 1%
If actual unemployment is at its natural rate
Inflation is very low
Core inflation is found by removing _____ from the consumer price index.
food and energy
Which one of the following would NOT lead to higher prices?
increase in the supply of food
discouraged workers
individuals who would like to work but have given up looking for a job
he twin perils of the modern macro economy are said to be:
inflation and unemployment.
frictional unemployment
unemployment that occurs when people ARE IN BETWEEN JOBS **TEMPORARY
structural unemployment
unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one
cyclical unemployment
unemployment that rises during economic downturns and falls when the economy improves
Which of the following items is NOT included in the GDP deflator?
Imported mangoes
The GDP deflator is an index that includes prices of all of the following EXCEPT
Imports
Okun's Law
-GDP GAP 1 percent more unemployment results in 2 percent less output
f nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is:
125
unemployment
Measures the number of people who are able to work, but do not have a job during a period of time.
underemployed workers
WORK UNDERNEATH THEIR CAPABILITY
cost-push inflation
When prices rise due to an increase in the cost of production. -MONOPOPLIES CONTRIL INFLATION, BIG UNIONS CONTROL PRICES/WAGES IN MARKET DOMINENCE
lost output
actual output-potential output
Suppose that anticipated inflation is 4% for the coming year, with loan contracts set at 7% with the expectation of a 3% return after inflation. If the actual inflation rate at the end of the year is 2%:
creditors gain at the expense of debtors
If the cost of a typical market basket in 2019 is 400 and the cost of a typical market basket in 2020 is 390, then during this period the economy is undergoing:
deflation
Workers who want to work but have been frustrated by the inability to find work and have stopped searching are known as:
discouraged workers
Calculate unemployment rate
unemployed/labor force x 100
demand pull
relating to or denoting inflation caused by an excess of demand over supply
If a product becomes obsolete and the workers who produced that product will need additional training to find new jobs, then they are experiencing:
structural unemployment
full employment output
the level of output that results when the labor market is in equilibrium and the economy is producing at full employment
labor force
the total number of workers, including both the employed and the unemployed
_____ is a reduction in the rate of inflation
Disinflation