Chapter 6 Homework:
price index:
(price of the market basket in year 2 / price of the market basket in the base year year 1) * 100
Which of the following can make the unemployment rate fall? a. An increase in the number of people who are looking for work. b. A decrease in the number of people who are looking for work. c. An increase in the number of people with jobs. d. A decrease in the number of people who are looking for work and an increase in the number of people with jobs.
a decrease in the number of people who are looking for work and an increase in the number of people with jobs
In measuring gross domestic product (GDP), goods produced by foreign firms in the United States are a. counted, and so are goods produced by American firms in foreign countries. b. counted, but goods produced by American firms in foreign countries are not counted. c.not counted, but goods produced by American firms in foreign countries are counted. d. not counted, and goods produced by American firms in foreign countries are also not counted.
counted but goods produced by american firms in foreign countries are not counted
Gross domestic product (GDP) is counted using two methods: one which counts all the ways people _____ money and another which counts all the ways people _____ money. a, earn, spend b.loan, borrow c.earn, save d.spend, save
earn,spend
Seasonal adjustment is used in economic data to _____ the changes in those variables that are the result of regular patterns associated with the calendar. a.overcome b.prepare for c.eliminate d.accentuate
eliminate
Suppose this is the base year and there are only two goods (Good A and Good B) and the average person buys 8 of Good A in a year and 6 of Good B. If the Price of Good A is $8 and the Price of Good B is $6, the price index a. is 100. b. is 64. c. is 36. d. is 50.
is 100
The consumer price index (CPI) is a heavily criticized measure of inflation because a.the government constantly makes adjustments to it without a good reason. b. the government does nothing to fix its known deficiencies. c. it consistently understates the increase in the cost of living. d. it consistently overstates the increase in the cost of living
it consistently overstates the increase in the cost of living
Which measure of productivity describes the increase in production that occurs after accounting for the changes in all inputs? a. labor force productivity b. marginal productivity c.multifactor productivity d. tangential productivity
multifactor productivity
Inflation is measured using _________ in a price index. a.logarithm-adjusted absolute increase b.the absolute increase c.a multiyear weighted average increase d.the percentage year-to-year increase
the percentage year to year increase
Which population group is largely responsible for the increase in the labor force participation rate during the period from 1950 to 2000? a. women bMen c. Teens d. The elderly (delaying their retirement)
women
If a society has 250 million people over the age of 16, 145 million who are working, and 5 million who are looking for work, with 100 million others neither working nor looking for work, the labor force participation rate is a.40% (145/250). b.58% (145/250). c.60% (150/250). d.42% ((5+100)/250).
c.60% (150/250).
If there are 325 million Americans, 162 million with jobs (with 2 million of those in the active duty military), 8 million who are out of work and looking for jobs, and 155 million who do not have jobs and are not looking for work, what is the unemployment rate? a. 163/325 or 50.2 percent b. 8/168 or 4.8 percent c. 8/170 or 4.7 percent d. 8/155 or 5.2 percent
8/168 or 4.8 percent
The expenditures approach to GDP equals a. Employee Compensation + Profit + Net Property Income + Indirect Business Taxes + Depreciation - Income Earned Abroad. b.Consumption + Gross Investment + Government Purchases + Net Exports. c. Consumption + Net Investment (Gross Investment-Depreciation) + Government Purchases + Net Exports. d. Employee Compensation - Profit - Net Property Income - Indirect Business Taxes-Depreciation - Income Earned Abroad.
consumption + gross investment + government purchases + networks
If Real GDP contracted by more than 10%, economists would label that a a. recession b.expansion c.recovery d.depression
depression
Of these, economists consider this the worst: a. inflation of 5 percent b.recession c. deflation of 1 percent d. depression
depression
Unemployment rates typically increase dramatically from December to January because the holiday sales season ends. For this reason, it is best to a.seasonally adjust the data. b.politically adjust the data. c. focus on January increases. d. focus on November/December decreases.
focus on november/december decreases
Suppose there are only two goods (Good A and Good B) and the average person buys 8 of Good A in a year and 6 of Good B. If the Price of Good A is $8 and the Price of Good B is $6, the price of the market basket a. is 100. b. is 64. c. is 36. d. is 50.
is 100
One problem with using real gross domestic product (RGDP) as a measure of social welfare is that a. it fails to count home production b. it double, triple, and sometimes quadruple counts goods that are produced in stages. c.it fails to count services, a growing part of the economy. d.it fails to account for imports, a growing part of the economy
it fails to count home production
On a graph of real gross domestic product over time, recessions appear as a. long, sharp declines on an otherwise increasing path. b. the periods where the rate of growth, while still positive, slows. c.relatively short and shallow drops on an otherwise increasing path. d. the dips on a path that increases and decreases equally.
relatively short and shallow drops on an otherwise increasing path
If the price of gasoline has increased from $3 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 266.66, then you know that the inflation adjusted price of gasoline has a. increased b. decreased c. remained constant
remained constant
In 2019, General Motors announced the closure of its Lordstown, Ohio assembly plant. Those laid off as a result would likely be classified as a. structurally unemployed b. frictionally unemployed. c. cyclically unemployed. d. seasonally unemployed.
structurally unemployed
inflation rate =
((year 2 index - year 1 index) / year 1 index)) *100
If a market basket was defined in 2018 and it cost $10,000 to purchase the items in that basket in 2018, while it cost $11,000 to purchase those identical goods in 2019, then the inflation rate from 2018 to 2019 is a. (100-100)/100*100%=0%. b.(100-90.9)/100*100%=9.1%. c.(110-100)/100*100%=10%. d.unknown given this data.
(110-100)/100*100%=10%.
Suppose a DVR is bought from China for $200 and sold in the US for $250. GDP will count this a. as nothing. b. as a net of $50 ($250 sale minus $200 import). c.as $200. d.as $250.
as a net of $50 ($250 sale minus $200 import).
The "core rate" of inflation a. adds in food and energy to the price index. b.removes food and energy from the price index. c.only includes the price of food and energy in the price index. d.is a price index associated with the important things people buy.
removes food and energy from the price index
The major difference between nominal GDP and real GDP is a. nominal GDP measures the value of output with constant output levels, while real GDP measures output using current-year output levels. b. nominal GDP measures the value of output with current-year output levels, while real GDP measures output using constant output levels. c. nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices. d. nominal GDP measures the value of output in constant prices, while real GDP measures output using current-year prices.
nominal GDP measures the value of output in current-year prices, while real GDP measures output using constant prices.
Suppose a Boeing 777 is sold to a Chinese company for $250 million and resells it to a Hong Kong airline for $251 million. GDP will count this as a.nothing. b.$250 million. $251 million. $451 million.
b. $250 million
If inflation increases unexpectedly due to an increase in oil prices, this helps a.people on fixed incomes. b. lenders. c. workers. d. borrowers
borrowers
With 125 million people working, 8 million out of work and looking for work, and 147 million neither working nor looking for work, "underemployment" would be illustrated by a. 125 million losing their jobs. b. 8 million ending their search for work. c. part of the 125 million holding low-skill jobs when they were qualified for only low-skill jobs. d. part of the 125 million holding low-skill jobs when they were qualified for high-skill jobs.
part of the 125 million holding. low skill jobs when they were qualified for high skill jobs