What is the largest component of spending in the united states?

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Inflation Rate Formula

(Current year CPI ) - (Earlier Year CPI) / (Earlier Year CPI) x100

4 categories of income

1. wages 2. interest 3. rent 4. profit

CPI formula

Current basket/base basket X100

GDP is not a perfect measure of well-being; for example,

GDP fails to account for the quality of the environment

the measure of production that values production using the current prices is called

Nominal GDP

GDP deflator

Nominal GDP/Real GDP x 100

what are the three main factors affecting labor productivity?

Property rights, Capital, Technological change

To examine how the total production of an economy has changed over time, it would be better to examine

Real GDP

Labor unions cause unemployment because the union contract wage is set

above the market wage, causing a surplus of labor.

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

which of the following is not a financial intermediate

airlines

Natural Rate of Employment (NRU)

amount of unemployment that the economy normally experiences equals frictional plus structural

Real GDP formula

base year prices x current year quantities

consumption spending

consumption spending

4 major categories of expenditure

consumption, investment, government purchases, and net exports

which of the following terms refers to a flow of funds from savers to firms through financial markets?

direct finance

the informal sector can be a significant drags on the economies of developing countries because the firms in the informal sector

do not pay taxes to the government

Gross Domestic Product (GDP) is measured by

dollar value of all final goods and services produced in the economy

which of the following would decrease the unemployment rate

government aid to retrain unemployed workers

During the great depression, cyclical unemployment increased as the recession continued. This increase in cyclical unemployment

had no effect on the natural rate of unemployment

Legalizing all forms of illegal activities

increases GDP and reduces the size of the underground economy.

the perfect increase in the CPI from one year to the next is a measure of the

inflation rate

which of the following is not directly counted in GDP

intermediate goods

LFPR (Labor Force Participation Rate)

labor force/working age population x 100

i'm a CLOSED economy, which of the following components of GDP is not included

net exports

if a minimum wage is set at 5$ per hour which of the following will occur

none of the above

long-run economic growth requires all of the following expect

political instability

Rate of increase equation

present -past/past

how do we calculate real GDP per capita?

real GDP divided by the population

the producer price index measures the prices that firms

revive for goods and services they use at all stages of production

structural unemployment is the result of

technological change or foreign competition

the most widely used measure of inflation is based on which of the following price indicted

the consumer price index

what is potential GDP

the level of real GDP attained when all firms are producing at capacity

we say the economy is at full employment if the unemployment rate is equal to

the natural rate of unemployment

labor productivity refers to

the quantity of goods and services that can be produced by one worker or by one hour of work

Gross Domestic Product is calculated by summing up

the total market value of final goods and services produced in the economy during a period of time

Economist consider full employment to occur when

the unemployment rate consists of only frictional and structural unemployment

When the labor is at full employment

there is no cyclical unemployment in the economy

unemployment rate

unemployed/labor force x 100

real GPD is GPD in a given year

valued in the prices of the base year


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