econ macro

A new technology is discovered which results in all new cars producing 50 percent less pollution. Which of the following is true?

GDP will increase if there is an increase in the production cost and price of the car.

Investment includes

GM's purchase of robotic machinery.

If we look at the nominal versus real wage rates paid to Presidents over time, we find that

George Washington was paid a higher real wage rate than Bill Clinton.

During a recession, cyclical unemployment ________ and real GDP ________.

Increases; decreases

The Fair Labor Standards Act originally set the minimum wage at

$0.25 in 1938.

Mark has a two-year wage contract with his employer. Mark's wage contract specifies a $50,000 salary for the first year, and specifies a salary increase equal to the percentage increase in the CPI during the second year. The percentage increase in the CPI during the year was 4.0 percentage points. If the CPI overstates inflation by 1.0 percentage point, at the end of the first year Mark's salary increased by ________ more than it would have without the upward bias.

$500

Total expenditure equals

C + I + G + NX.

Which of the following is classified as a final good or service?

Your purchase of online access to the wall Street journal

Structural unemployment usually lasts ________ period of time ________ unemployment

a longer; than frictional

Vicki would be classified as

a voluntary part-time worker.

To measure the CPI, the BLS economic assistants check the prices of

about 80,000 goods and services every month.

During the recessions of 2001 and 2008-09

all measures of the unemployment rate (U-1 through U-6) increased.

The labor force includes people who

are actively seeking a job but do not have a job

Because the CPI overstates inflation,

as time passes, government outlays are increased by more than necessary to compensate for inflation.

If New Zealand is operating at potential GDP, which of the following is true?

New zealand only has frictional and structural unemployment.

Which of the following creates job rationing?

The real wage rate is above the equilibrium level.

Over the last 50 years, the U.S. labor force participation rate of men has ________ by ________ the labor force participation of women has ________. As a result, the overall U.S. labor force participation has ________.

decreased; less than; increased; increased

A country's potential GDP is determined, in part, by

demand and supply in the labor market.

The production function displays

diminishing returns.

Everything else the same, if government expenditure increases by $400 billion and imports increase by $400 billion, then GDP

does not change

To maximize profits, firms hire labor as long as

each additional hour hired produces more additional output than the real wage rate.

Real GDP is the value of final goods and services produced in a year

expressed in the prices of a base year.

Real GDP is the value of final goods and services produced in a year

expressed in the prices of a base year. minus the value of all the intermediate goods produced.

The following are all final goods EXCEPT

flour used by the baker to make cupcakes.

The ongoing normal creation and destruction of jobs creates

frictional unemployment.

A measure of a country's production is its

gross domestic product.

The real minimum wage rate

has generally decreased during the 1970s and 1980s and has fluctuated around a $6.50 per hour average since the mid-1980s.

As demonstrated by the labor supply schedule, the quantity of labor supplied depends on

the real wage.

To compare the real price of gas in 1975 to the real price in 2013, we need to know

the two prices in both years and the CPI in both years.

The underground economy

includes production that uses illegal workers who are paid less than minimum wage.

The category of "rent" in the income approach to GDP

includes the money paid to use land and other rented inputs. Answers: includes the money paid to rent apartments only. includes the money paid to rent machinery only.

The production function shows that as employment increases, real GDP

increases at a decreasing rate.

The bias in the CPI affects government outlays because the overstatement of inflation

increases government outlays by more than what is justified

Which of the following is NOT part of the business cycle?

inflation trough expansion

People who are working up to 34 hours per week but would like to work more are considered

involuntary part-time workers.

If the nominal wage is $30 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984 dollars

is $14.85.

The Bubby Gum factory produces bubble gum. Joanne is one of the employees, and she produces 10 packs of bubble gum per hour. Joanne's money wage rate is $12 per hour. If a packet of bubble gum sells for $1.00, then Joanne ________ because ________.

is creating a $2.00 per hour loss for the firm; her real wage rate is more than her output per hour

When the labor market is in equilibrium, real GDP ________ potential GDP.

is equal to

The more money an average household spends on one specific type of good or service per month, the

larger the relative importance of that item in the CPI market basket.

To compare the price of a loaf of bread produced in 1993 with the price of a loaf produced in this year, you should compare the value of the bread in

real prices.

U.S. net exports include

sales of Hollywood movies to the rest of the world.

In a labor market without an efficiency wage, minimum wage, or union wage, when the real wage rate exceeds the equilibrium real wage rate, there is a ________ of labor and the real wage rate will ________.

surplus; fall

If we compare the Canadian natural unemployment rate to the U.S. natural unemployment rate, we find that for most years since 1980

the Canadian rate is higher, possibly the result of higher unemployment benefits in Canada for most of those years.

Job search is defined as

the activity of looking for an acceptable, vacant job.

The Consumer Price Index market basket contains

the goods and services purchased by an average urban household.

During a recession, the duration of unemployment ________ and the unemployment rate is ________ the natural rate of unemployment.

lengthens; greater than

The more generous the amount of unemployment benefits, the

lower the opportunity cost of job search.

Which of the following can result in job rationing?

minimum wage. union wage.

The prices of the goods and services in the CPI market basket are collected

monthly.

Frictional unemployment is the result of

normal labor market turnover.

Discouraged workers and marginally attached workers are

not part of the labor force.

The unemployment rate equals 100 multiplied by the

number of people unemployed divided by the labor force.

The Human Development Index was proposed because

of the limitations of real GDP as a measure comparing the standard of living in different nations.

A recession runs from the

peak of the business cycle to its trough. peak of the business cycle to a recovery. expansion of a business cycle to its peak. trough of a business cycle to its peak. trough of a business cycle to its expansion.

The inflation rate is the

percentage change in the CPI from one year to the next year.

Total expenditure equals total income

because firms pay out everything they receive as income to the factors of production. if firms earn zero profit. if firms do not save for future investment. only if firms sell all the goods they produce in a given time period. only if net taxes equals government expenditures on goods and services.

In 2011, U.S. GDP was

both $15 trillion using the expenditure approach and $15 trillion using the income approach are correct.

Which of the following is classified as an intermediate good?

purchase of pickles

When a good gets better from one year to the next, the CPI has a what is called

quality change bias.

Cyclical unemployment includes people who become unemployed from

changes in the business cycle.

Constructing the CPI involves which of the following stages?

conducting the monthly price survey. selecting the CPI to an international index

The type of unemployment that arises from a decrease in real GDP is called

cyclical unemployment.

When the economy is at full employment

there is no cyclical unemployment.

The Lucas Wedge is estimated to

total over $406,000 per person as a result of the slowdown in the growth rate of real GDP.

Full employment occurs when the

unemployment rate equals the natural unemployment rate.

Expenditures in GDP do not include

used goods or financial assets.

During a recession, the unemployment rate

usually increases but not necessarily to 10 percent or 25 percent.

Net exports of goods and services are defined as the

value of exports minus the value of imports. value of exports minus the income we receive from foreigners. value of exports plus the income we receive from foreigners.

When calculating the CPI, the Bureau of Labor Statistics

weights the price of goods and services in the basket relative to the importance of the average urban household budget.

During this year, nominal GDP in Syldavia was $720 billion and real GDP was $720 billion. The GDP price index in Syldavia in this year was

100.

Nominal GDP is $12.1 trillion and real GDP is $11.0 trillion. The GDP price index is

110.

In August of 2013, the number of employed persons in the United States was 144.2 million, the number of unemployed persons was 11.3 million, and the number of persons not in the labor force was 90.5 million. What was the labor force in August of 2013?

155.5 million

A country's CPI was 84.5 last year and 100.0 this year. The inflation rate was

18.3 percent.

In the United States since 1960, the average unemployment rate was highest during the decade of the

1980s

If the price index last year was 100 and today it is 167, what is the inflation rate over this period?

67 percent

Suppose the U.S. population is 275 million. If 210 million people are of working age, 135 million are employed, and 6 million are unemployed, what is the labor force participation rate?

67 percent

In January of 2001, the population of the United States was 276.8 million, the working-age population was 210.2 million, the total number of people employed was 140 million, and the total number of people unemployed was 5.0 million. What was the labor force participation rate?

69 percent