Unit 5 test
$12,261.58
In 1969, Fritz bought a Ford Mustang for $2,500. If the price index was 36.7 in 1969 and the price index was 180 in 2006, then what is the price of the Ford Mustang in 2006 dollars?
either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both
If total spending rises from one year to the next, then
the consumer price index increases.
A COLA automatically raises the wage when
U.S. investment and GDP increase, but German GDP is unaffected.
A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,
All of the above are correct.
A person who is counted as unemployed by the Bureau of Labor Statistics
$4 million
Al's Aluminum Company sells $1 million worth of aluminum to Shiny Foil Company, which uses the aluminum to make aluminum foil. Shiny Foil Company sells $4 million worth of aluminum foil to households. The transactions just described contribute how much to GDP?
in German GDP, but it is not included in U.S. GDP.
Anna, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included
$54,000
Consider two cars manufactured by Chevrolet in 2007. During 2007, Chevrolet sells one of the two cars to Sean for $24,000. Later in the same year, Sean sells the car to Kati for $19,000. The second automobile, with a market value of $30,000, is unsold at the end of 2007 and it remains in Chevrolet's inventory. The transactions just described contribute how much to GDP for 2007?
frictional unemployment created by sectoral shifts.
Consumers decide to buy more computers and fewer typewriters. As a result, computer companies expand production while typewriter companies lay-off workers. This is an example of
purchases of new houses.
Consumption consists of spending by households on goods and services, with the exception of
year-to-year fluctuations of unemployment around its natural rate.
Cyclical unemployment refers to
keep wages above the equilibrium level, causing a surplus of labor.
Efficiency wages, minimum-wage laws, and unions all
every dollar of spending by some buyer is a dollar of income for some seller.
For an economy as a whole, income must equal expenditure because
given year divided by the price of the basket in the base year, then multiplied by 100.
For any given year, the CPI is the price of the basket of goods and services in the
the market value of all final goods and services produced within a country in a given period of time.
GDP is defined as
C + I + G + NX. Y. the market value of all final goods and services produced within a country in a given period of time.
GDP is equal to
GDP excludes the value of volunteer work. GDP does not address the distribution of income. GDP does not address environmental quality.
GDP is not a perfect measure of well-being; for example,
federal, state, and local governments.
Government purchases include spending on goods and services by
125, and this indicates that the price level has increased by 25 percent since the base year.
If nominal GDP is $10 trillion and real GDP is $8 trillion, then the GDP deflator is
When 2013 is chosen as the base year, the inflation rate is 50 percent in 2013.
In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog cost $3 in 2012 and $5.40 in 2013. A hamburger cost $5 in 2012 and $6 in 2013. Which of the following statements is correct?
market prices reflect the values of goods and services.
In computing GDP, market prices are used to value final goods and services because
how much consumers buy of each good or service.
In the CPI, goods and services are weighted according to
$1750
In the economy of Wrexington in 2012, consumption was $1000, exports were $100, government purchases were $450, imports were $150, and investment was $350. What was Wrexington's GDP in 2012?
$4400
In the economy of Wrexington in 2013, consumption was $3000, exports were $200, GDP was $8000, government purchases were $1000, and imports were $600. What was Wrexington's investment in 2013?
$10 trillion
In the economy of Wrexington in 2014, real GDP was $5 trillion and the GDP deflator was 200. What was Wrexington's nominal GDP in 2014?
$66,500.00
Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelle's 1996 salary in 2006 dollars is
1600.
Labor Data for Wrexington Refer to Table 28-1. The labor force of Wrexington in 2010 was
56.25%.
Labor Data for Wrexington Refer to Table 28-1. The labor-force participation rate of Wrexington in 2012 was
31.6%
Labor Data for Wrexington Refer to Table 28-1. The unemployment rate of Wrexington in 2011 was
economy-wide phenomena.
Macroeconomists study
exports minus imports.
Net exports equal
increased measured GDP by the full value of the restaurant meals.
Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has
discouraged workers, and they are not classified by the Bureau of Labor Statistics as unemployed.
Some individuals would like to have a job, but they have given up looking for a job after an unsuccessful search. These individuals are called
104.0.
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $52; and in 2015, the basket's cost was $54.60. The value of the CPI in 2014 was
nominal GDP is $500, real GDP is $400, and the GDP deflator is 125.
Suppose an economy produces only eggs and ham. In 2005, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham are sold at $4 per pound. In 2004, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2005,
9.5%
Suppose that the adult population is 6 million, the number of employed is 3.8 million, and the labor-force participation rate is 70%. What is the unemployment rate?
172.5.
Table 23-5 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2011. Refer to Table 23-5. In 2013, Batterland's GDP deflator was
$130.
Table 24-4 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. Refer to Table 24-4. The cost of the basket in 2012 was
the labor force that is unemployed.
The Bureau of Labor Statistics defines the unemployment rate as the percentage of
a typical consumer, and the CPI is computed and reported by the Bureau of Labor Statistics.
The CPI is a measure of the overall cost of the goods and services bought by
the CPI better reflects the goods and services bought by consumers.
The CPI is more commonly used as a gauge of inflation than the GDP deflator is because
nominal GDP to real GDP multiplied by 100.
The GDP deflator is the ratio of
natural rate of unemployment.
The amount of unemployment that an economy normally experiences is called the
The CPI reflects a fixed basket of goods and services; the GDP deflator reflects current production of goods and services.
The consumer price index and the GDP deflator are two alternative measures of the overall price level. Which of the following statements about the two measures is correct?
monitor changes in the cost of living over time.
The consumer price index is used to
GDP deflator in year 2-GDP deflator in year 1 GDP deflator in year 1 X 100
The inflation rate in year 2 equals
by determining the percentage increase in the price index from the preceding period.
The inflation rate is calculated
total adult population that is in the labor force.
The labor-force participation rate measures the percentage of the
12.5 percent
The price index was 320 in one year and 360 in the next year. What was the inflation rate?
Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate.
The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows:
employed, unemployed, not in the labor force
The sum of which of the following must be equal to the adult population?
14.3%
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2011. Refer to Table 23-5. From 2012 to 2013, Batterland's output grew
$300.
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2011. Refer to Table 23-5. In 2010, Batterland's nominal GDP was
$700.
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2011. Refer to Table 23-5. In 2012, Batterland's real GDP was
112.5.
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. Refer to Table 24-4. If the base year is 2010, then the CPI in 2011 was
44.4%
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. Refer to Table 24-4. If the base year is 2010, then the inflation rate in 2012 was
inflation.
The term economists use to describe a situation in which the economy's overall price level is rising is
investment, since GDP aims to measure the value of the economy's production that year.
The value of goods added to a firm's inventory in a certain year is treated as
alter household income, but they do not reflect the economy's production. are not made in exchange for currently produced goods or services. are payments that flow from government to households.
Transfer payments
the GDP deflator and the consumer price index.
Two alternative measures of the overall level of prices are
GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad.
U.S. GDP and U.S. GNP are related as follows:
frictional unemployment.
Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called
investment
What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?
inflation.
When the overall level of prices in the economy is increasing, economists say that the economy is experiencing
a smaller quantity of that good and a larger quantity of substitutes for that good.
When the relative price of a good increases, consumers respond by buying
unemployment insurance
Which of the following does not help reduce frictional unemployment?
Nominal GDP equals real GDP in the base year.
Which of the following is correct?
unmeasured price change
Which of the following is not a widely acknowledged problem with using the CPI as a measure of the cost of living?
carrots grown in your garden and eaten by your family
Which of the following is not included in GDP?
those waiting to be recalled to a job from which they had been laid off
Which of the following is not one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household?
underemployed
Which of the following is not one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household?
The city of Las Vegas, Nevada pays a private firm to collect garbage in that city. The state of Nevada pays a private firm to repair a Nevada state highway. The federal government pays the salary of a Navy officer.
Which of the following items is counted as part of government purchases?
the sale of services such as those performed by a doctor
Which of the following items is included in GDP?
Nominal GDP values production at current prices, whereas real GDP values production at constant prices.
Which of the following statements about GDP is correct?
Tuuli, who is waiting for her new job to start
Who of the following would be included in the Bureau of Labor Statistics' "unemployed" category?
