mf econ

Underemployment means that you have a job in which it may be "beneath" your skill set but you take to pay the bills

True

When calculating GDP, real GDP is when inflation is taken into consideration

True

When calculating Real GDP, you use each new year quantity by a base year price.

True

You know that the GDP Deflator for a year is 200 and Nominal GDP for that year is $1000. Real GDP would be equal to $500.

True

In 1987 the CPI was 150. In 1997 the CPI was 200. This means that the price level increased by 50% during this period.

False; (200-150)/150 = 0.33 x 100 = 33%

The CPI for 2021 was 200. The CPI for 2022 was 220. This means that the inflation rate was 20%

False; (220-200)/200 = 0.1 x 100 = 10%

Suppose Nominal GDP for a year is $1000 and Real GDP equal to $500. The GDP Deflator would equal 500.

False; 1000/500 = 2 x 100 = 200

Suppose the CPI in 1987 is 150 and in 2020 it is 300. Something that cost $50 in 2020 should have cost $100 in 1987.

False; 150/300 = .5 x 50 = 25

Suppose a market basket of goods cost $2000 in 2012, and then $4000 in 2022. If 2012 is the base year, the CPI for 2012 would be 200.

False; 2000/4000 = 0.5 x 100 = 50

I buy a house that was made this year. This would be under the "C" category

False; housing is considered investment

Inflation is good if you are a creditor (a bank)

False; inflation is good if you are a debtor

When calculating GDP, nominal GDP is when inflation is taken into consideration

False; inflation is taken into consideration with real GDP, not nominal

A discouraged worker is someone who is unhappy with their current job status.

False; it is a worker who has given up looking for a job because of lack of success is not included in labor force

Double counting means a more expensive good counts twice as much as a cheaper one...

False; it is an error that occurs when a total is obtained by summing gross amounts instead of net amounts. For example, finding the total product of an economy by adding up the gross sales of each enterprise, without subtracting purchases of inputs from other enterprises, involves double counting.

GDP is counted for at the time a product is sold, not made....

False; it is counted at the time a product was made

A final good is an input that is used to produce an intermediate good.

False; it is goods and services sold to the "end user" and doesn't include intermediate goods

An American factory overseas production would be counted in the US GDP

False; it is not included

It is impossible to have a negative real interest rate if computing the effect of inflation on a loan.

False; it is possible

The natural rate of unemployment is when there is cyclical unemployment - but no frictional, structural, or seasonal unemployment

False; it is when there is frictional, structural, and seasonal unemployment but no cyclical unemployment

The only way that nominal GDP can change from one year to the next is if the quantity produced changes.

False; the 2 ways nominal changes year to year is if the price changes or if the quantity changes

Transfer payments such as welfare and unemployment are included in GDP figures

False; they are not included

Suppose I am a basket weaver and a machine can do what I do both cheaper and more effectively. I would be considered frictionally unemployed.

False; this would be considered structural unemployment (i think)

You see that GDP is 7%, unemployment at 2%, and prices at 7%. This would be the expansion phase of a business cycle.

False; this would be the peak phase of a business cycle

During the expansion phase of a business cycle - unemployment is rising, GDP falling, and prices are falling

False; unemployment is decreasing, GDP is rising, and prices are slightly going up (inflation)

The three types of inflation we covered were structural, frictional, and cyclical.

False; we covered structural, frictional, cyclical, and seasonal

The shoe laces put on a new pair of shoes would be considered a final good

False; would be considered an intermediate good (i think)

When calculating Real GDP, you use each new year prices by each new year quantities.

False; you use the base year price and multiply it by each new year quantities

To be technically considered unemployed you have to be part of the labor force AND currently looking for work

True

To take a percentage change of anything you take the difference between two numbers and divide it by the original number (then multiply that answer by 100)

True

A business has to raise their prices due to increased costs of running their business. This would be an example of cost push inflation.

True

A debtor is somebody who "owes" money, such as someone who takes out a loan from a bank

True

An example of being structurally unemployed would be having a skill set that is considered obsolete.

True

CPI figures are published by the Bureau of Labor and Statistics every month and every year.

True

Cyclical unemployment is unemployment caused by recessions in a business cycle, and what economists are mostly concerned about.

True

During a contraction phase of a business cycle - unemployment is increasing, prices decreasing, and GDP decreasing

True

During a trough phase of a business cycle - unemployment is at its highest, prices at their lowest, and GDP at its lowest

True

If I am currently taking a while looking for my first job to make sure I find the right one (and I am part of the labor force) I would be considered frictionally unemployed.

True

If I paid a landscaping company to mow my grass instead of doing it myself this would increase GDP

True

If I sell a used car or my home that was built years ago it does not count in GDP figures for the year I sell it.

True

If goods that are on the CPI become better in quality over time, this tends to understate the relevance of CPI and the price increase.

True

If we are where we want to be as an economy for a given year - prices would be up around 3%, RGDP up around 3%, and unemployment around 5%.

True

Intermediate goods are not counted in GDP figures for that year.

True

It is possible to have a contraction before a trough in logical and sequential order of a business cycle.

True

My broker makes a commission off of buying and selling stocks. This is included in GDP figures

True

Net Exports is when you take what a country exports minus what it imports

True

Substitution bias of the CPI Index overstates the price increase of a good or service on the CPI because if it goes up in price, you can always choose similar but cheaper option.

True

Suppose a market basket of goods cost $2000 in 2012, and then $4000 in 2022. If 2012 is the base year, the CPI for 2012 would be 100.

True

Suppose the CPI in 1987 is 150 and in 2020 it is 300. Something that cost $50 in 1987 should cost $100 in 2020.

True

The Labor Force is those who are both working AND looking for work (if they meet the criteria).

True

The base year when calculating CPI or the GDP deflator is always equal to 100

True

The formula for computing a real interest rate with the effect of inflation is: Real Interest = Nominal Interest - the expected or anticipated rate of inflation

True

The four types of unemployment we studied are frictional, structural, seasonal, and cyclical.

True

The government printing up money recklessly during a recession causing inflation would be an example of the "quantity" theory of inflation.

True

The historical rate of GDP growth the last 50-60 years has been around 3% each year.

True

The largest category of spending in the CPI is housing.

True

The largest component of GDP spending is the Consumption category.

True

The most commonly used measure of inflation used by the Bureau of Labor and Statistics is the CPI

True

The most critical of the components of GDP spending is the investment category.

True

The stereo put in a new car produced this year would be considered an intermediate good.

True

The unemployment rate is those who are unemployed divided by the labor force (x 100)

True