macecon
by not taking into account the possibility of consumer substitution, the CPI
overstates the cost of living
changes in the producer price index are often thought to be useful in predicting changes in
the consumer price index
an increase in minimum wage would
decrease the quantity of labor demanded while increasing the quantity supplied
the primary purpose of measuring the overall level of prices in the economy is to
allow for the comparison of dollar figures from different points in time
the behavior of market prices over time show that natural resources
are not a limit to economic growth
the producer price index measures the cost of a basket of goods and services
bought by firms
unions
cause wages of non unionized workers to fall
the labor force
equals the number of people employed and unemployed
productivity
explains most of the differences in the standard of living across countries
true or false. according to the theory of efficiency wages, firms operate more efficiently if they can pay wages that are below the equilibrium level
false
true or false. full time students, retirees, and unpaid stay at home fathers are counted as unemployed
false
true or false. someone who is without work but is not looking for work would be counted as unemployed by the BLS.
false
true or false. Government policy can do nothing about the natural rate of unemployment
false.
the natural unemployment rate includes
frictional and structural unemployment
unemployment that exists because it takes time for workers to search for the job that suits them best is
frictional unemployment which partly accounts for the natural rate of unemployment
the CPI and GDP deflator
generally move together
the theory of efficiency wages explains why
it may be in the best interest of firms to offer wages that are above equilibrium level
a nations standard of living is determined by
its productivity
the consumer price index is used to
monitor changes in the cost of living
cyclical unemployment is closely associated with
short- run ups and downs of the economy
providing training for unemployed individuals is primarily intended to reduce
structural unemployment
economists use the term inflation to describe a situation in which
the economy's overall price level is rising
unemployment data is collected
through a regular survey of about 60,000 households
true or false substitution bias in computing CPI tends to make the CPI overstate the true increase in the cost of living.
true
true or false. Suppose the CPI today is 120 and five years ago it was 80. Then in today's prices something that costs $1 five years ago now costs $1.50
true
true or false. frictional unemployment is different from unemployment arising from minimum wage laws, unions, and efficiency wages because in the former, workers are searching for the jobs that best suit them, while in latter, workers are waiting for jobs to open up.
true
true or false. when some dollar amount is automatically corrected for inflation by law or contract, the amount is said to be indexed for inflation
true
when a union bargains successfully with an employer, in that industry
unemployment and wages increase