Economics Exam 3

In an economy of, 42 million people are in the labor force, 38 million are employed and 47 million are of working age. How many people are not in the labor force?

5 Million

In an economy, 23 million people are employed and 2 million are unemployed, but 5 million part-time work. What is the unemployment rate?

8 Percent

The sale of government securities by the Fed leads to

A contradiction in bank lending

A loaf of bread purchased by one of your instructors would be best described as

A final good

Using the unofficial measure of unemployment, which of the following would NOT be counted as unemployed?

A person who performs traditional housework and does not work outside the home for pay

In the national income accounts, government expenditure on goods and services refer to those purchases made by

All levels of government

When the Fed lowers the federal funds rate, it can lead to

An increase in lending by banks

Structural unemployment is

Associated with changes in technology that change required job skills

Suppose an economy has some inflation. Then, after a base year, the value of real GDP will

Be less than nominal GDP

GDP equals

C+I+G+(X-M)

The money aggregate M1 consists of

Currency and checking deposits, including traveler's checks.

Which type of unemployment increases during a recession?

Cyclical unemployment

Full employment occurs when

Cyclical unemployment is zero

When a worker quits a job to look for a better job

Frictional unemployment increases

Nominal GDP is

GDP valued at prices of that year

Calculating GDP (formula)

GDP= Consumption + Investment + Government expenditure + Net exports

The Fed's purchase of government securities could

Increase loans made by banks

Inflation rate formula

Inflation rate (this year)= ((CPI (this year)- CPI (last year) / CPI (Last year)) *100

Gross domestic product

Measures the value of the aggregate production of goods and services in a country during a given time period

Aside from being a means of payment, the other functions of money are

Medium of exchange, unit of account, and store of value

Reserve requirements are the

Minimum percentages of deposits that banks must hold as reserves

Which of the following is NOT part of the expenditure approach to measuring GDP?

Net interest

Number of unemployed people equation

Number of unemployed people= Labor force - # of employed

The working-age population can be divided into two groups

People in the labor force and people who are not in the labor force

When the economy switches production toward services and away from manufacturing and workers in the manufacturing industry are permanently laid off

Structural unemployment increases

Barter is

The exchange of goods and services directly for other goods and services

Unemployment rate equation

Unemployment rate= (number of unemployed people/ labor force)* 100

Frictional unemployment increases when

Workers are replaced by machines and the unemployed workers do not have the skills to preform new jobs