macro final ch 12 and 13
Canoes-R-Us makes canoes. it buys the shell of the canoe from another firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. the retail canoe store then sells them to a consumer for $1,200. The value of the canoe in GDP equals
$1,200
Assume the average annual CPI values for 2015 and 2016 were 207.3 and 215.3, respectively. what was the percent increase in the CPI between these two years
3.86
the number employed is 190 million, the working-age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is
5%
to examine how the total production of an economy has changed over time, it would be better to examine
Real GDP
Which of the following headlines would be more closely related to what macroeconomists study than what macroeconomists study?
Real GDP grows by 2.3% in the second quarter
sarah is a full-time student who is not looking for work. What kind of unemployment is Sarah experiencing?
Sarah is not experiencing unemployment of any kind, because she is not currently part of the labor force
Which of the following could cause nominal GDP to increase but real GDP to decrease?
The price level rises and the quantity of final goods and services produced falls.
you earned $30,000 in 2007 and your salary rose to $80,000in 2016. If the CPI rose from 82 to 202 between 2007 and 2016 which of the following is true?
The purchasing power of your salary increased between 2007 and 2016
Which of the following is included in both the US GDP and the US GNP?
The value of all cars produced by general motors in the US
the equilibrium wage in a local labor market is $10 per hour. If a minimum wage of $15 per hour is imposed, which of the following will occur?
There will be an increase in unemployment.
which of the following transactions represents the purchase of a final good
Your father buys a new John Deere riding lawn mower.
Which of the following goods is directly counted in GDP
a 12 inch Subway sandwich purchased by a student
which f the following policies would reduce structural unemployment?
a job retraining program
Which of the following describes situations in which the person is hurt by inflation?
a person paid a fixed income during an inflationary period
an example of a transfer payment is
a welfare payment
minimum wage laws cause unemployment because the legal minimum wage is set
above the market wage, causing labor demand to be less than labor supply
Investment, as defined by economists, would not include which of the following? Ford
buys U.S. government bonds
Investment, as defined by economists, would include the purchase of a
computer by an accounting firm
which of the following would be the best measure of the cost of living
consumer price index
The purchase of a new automobile is included in
consumption expenditures on durable goods
To calculate GDP by the expenditure method one must add
consumption spending, investment spending, government spending, and net exports
Which of the following cause the unemployment rate as measured by the Bureau of labor statistics to understand the true extent of joblessness
discouraged workers
The best measure of the income households actually have available to spend is
disposable personal income
Which of the following statements is true about the US economy
each year, many new jobs are created and many existing jobs are destroyed
The underground economy can be described as
economic activity that is hidden from the government to avoid taxes or because the activity is illegal
the labor force equals the number of people
employed plus unemployed
in the circular flow model, the value of total income for an economy ______ the value of total production
equals
The output of US citizens who work in Canada would be included in the
gross domestic product of Canada
Gross domestic product understates the total production of final goods and services because of the omission of
household production
Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would
increase the measured labor force participation rate
The size of the underground economy would tend to increase if the government of a country
increased income tax rates
The percent increase in the CPI from one year to the next is a measure of the
inflation rate
If the quantity of goods and services produced in the economy decreases
it may be possible for nominal GDP to increase
the real interest rate equals the nominal interest rate _____________ the inflation rate
minus
Disposable personal income equals personal income
minus personal tax payments
The purchase by a foreign government of an airplane produced in the united states is included in the US
net exports
the stated interest rate on a loan is the
nominal interest rate
someone who is available for work but has not actively looked for work in the previous four weeks would be classified as
not in the labor force
The Bureau of Labor Statistics would categorize a retiree who is not working as
out of the labor force
Gross national product, GNP, of the Unites States is the market value of all final goods and services
produced by residents of the United States anywhere in the world
________ is/are the payment for the factor of production _______
profit; entrepreneurship
if your nominal wage rises faster than the price level, we can say your real wage has __________ and the purchasing power of your income has __________
risen; risen
The advice to "retrain" would be most appropriate for which of the following types of unemployment?
structural unemployment
in 2015, JP Morgan Chase announced that it was laying off 5,000 employee. the laid-off employees who were not able to find jobs at another bank due to a permanent decline in demand in the banking industry would be
structurally unemployment
when the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact the CPI does not fully account for such changes in consumer behavior is called
substitution bias
the unemployment rate is an important t economic statistic that can tell us about the health of the economy, if the unemployment rate turns out to be high or higher than anticipated, we would expect
that stock prices are more likely to fall
if cyclical unemployment is eliminated in the economy, then
the economy is considered to be at full employment
the unemployment rate is
the percentage of labor force that is unemployed
The average price of goods and services in the economy is generally also known as
the price level
Total income in an economy is equal to
the sum of wages, interest, rent, and profit
According to the text, economists consider full employment to occur when
the unemployment rate consists of only frictional and structural unemployment
Suppose, in 2016, you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2016?
the value of the services of the real estate agent
When consumers are less confident about their jobs or incomes
they are more likely to reduce purchases on durable goods rather than nondurable goods.
Why might firms pay wages that are above the equilibrium wage in a market
to increase the productivity of their workers
Real GDP is GDP in a given year
valued in the prices of the base year
In calculating GDP, the bureau of economic analysis uses the sumo the market value of final goods and services produced. This means that the BEA
values goods and services at their market prices, multiplies them by the quantity produced, then adds them up
Which of the following equations correctly measures GDP in an economy
GDP= C + I + G + NX
The value of what a US owned McDonald's produces in South Korea is included in the US ______ and the South korean _____.
GNP; GDP
Suppose your grandfather earned a salary of $12,000 in 1964. if the CPI is 31 in 1964 and 219 in 2016, then the value of your grandfather's salary in 2016 dollars is approximately
$84,775
Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full time employment; 20 have part time employment. 20 do not have employment but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the US Bureau of Labor would equal
20/100 x 100
imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflation rate was 7%, what was the real interest rate you paid
3 percent
if the nominal rate of interest is 6.5% and the inflation rate is 3.0% what is the real rate of interest?
3.5%
What is the largest component of spending in the US
Consumption spending
the advice to "keep searching, there are plenty of jobs around here for which you are qualified," would most appropriate for which of the following types of unemployment?
Frictional unemployment
an increase in unemployment insurance payments would, in effect, __________ the amount of time spent searching for a job, which wold increase __________ unemployment.
Increase; frictional
During a business cycle expansion, total production ____ and total employment ____.
Increases; increases
If GDP calculations included measurements of pollution and environmental damage, GDP values would most likely be
Less than their values without these measurements