Eco Review Chapters 18 & 5-8
If the CPI decreases from one year to the next, then the inflation rate is
negative
In recent years, which of the following has been negative?
net exports of goods and services
The above figure shows the U.S. market for flip-flops. With no international trade, the price in the United States for flip-flops is ________. With international trade, the price in the United States for flip-flops is ________.
$14; $12
The table gives data for a nation. What is the amount of the country's GDP?
$6,200 billion
A country's CPI was 84.5 last year and 100.0 this year. The inflation rate was
18.3 percent
The reference base period that the BLS uses to measure the CPI is
1982-1984
In the years after 1998, the most severe recession occurred during
2008-2009
The highest unemployment rate in U.S. history was about
25 percent in 1933
The above figure shows the U.S. market for flip-flops. With international trade, the United States imports ________ flip-flops.
400,000
You borrow at a nominal interest rate of 10 percent. If the inflation rate is 4 percent, then the real interest rate is
6 percent
If the cost of the CPI market basket at current period prices is $275 and the cost of the CPI market basket at base period prices is $350, the CPI is
79
If 160 million people are employed, 15 million people are unemployed, and the population is 280 million people, the unemployment rate is
8.6 percent
When protection is encouraged to protect a growing domestic industry; which of the following is being used?
Infant-industry argument
Because of the circular flows of expenditure and income in the economy, total ________ equals total ________ equals total ________.
expenditure; income; value of production
One of the major reasons why the United States exports jet airplanes is because Boeing faces ________ opportunity cost than firms in other nations in the production of such aircraft.
a lower
A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is
an intermediate good
When the unemployment rate is ________ the natural unemployment rate, real GDP is ________ potential GDP.
below; above
The fundamental force that drives trade between nations is
comparative advantage
The CPI stands for
consumer price index
The largest expenditure category in the United States is
consumption expenditure
If the United States imports purses, then the quantity of purses produced in the United States will ________ and the quantity of purses purchased by consumers in the United States will ________.
decrease; increase
People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called
discouraged workers
In the Current Population Survey, a person is considered unemployed if the person
does not have a job and is actively looking for a job
The purpose of the Current Population Survey is to determine the
employment status of the population
The United States imports t-shirts because
foreign nations have a lower opportunity cost of production
The ongoing normal creation and destruction of jobs creates
frictional unemployment
According to the CPI basket, the largest item in the households' budgets is
housing
The labor force includes people who i. are less than 16 years of age. ii. are in institutions. iii. are actively seeking a job but do not have a job.
iii only
Which of the following is NOT a source of bias in the CPI? i. quality change bias ii. new goods bias iii. quantity change bias
iii only
Goods and services that the United States buys from other nations are called
imports
The underground economy
includes production that uses illegal workers who are paid less than minimum wage
Since 1960, the labor force participation rate in the United States has
increased for women and decreased for men
If you get an 8 percent increase in your nominal income, your real income
increases only if the inflation rate is less than 8 percent
The unemployment rate generally ________ during recessions and generally ________ during expansions.
increases; decreases
If the nominal wage is $30 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984 dollars
is $14.85
The CPI overstates inflation because the average consumer buys
less of those goods whose relative price has risen
If a quota is imposed on imports of shrimp into the United States, U.S. consumers ________ and U.S. producers ________.
lose; gain
Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using ________, Wobet has GDP equal to ________.
market value; $120
After graduating from college, Yunis, age 22, started working for his parents' real estate business as an unpaid assistant. He works 25 hours a week helping manage rental units. In the Current Population Survey, Yunis is considered
part of the labor force and employed
A nation will import a good if its no-trade, domestic
price is greater than the world price
Although imperfect, which of the following is used as a measure of the standard of living?
real GDP divided by population
If the inflation rate is greater than the nominal interest rate, then the
real interest rate will be negative
To compare the price of a loaf of bread produced in 1993 with the price of a loaf produced in this year, you should compare the value of the bread in
real prices
What is a major reason international trade is restricted?
rent seeking
After a tariff is imposed on a good, the price of the good
rises
Which type of unemployment arises when changes in technology or international competition change the skills needed to perform jobs or change the location of jobs?
structural
Looking at the average tariff rate in the United States since 1930, we see that
tariffs have trended downward for most of the period
A business cycle has two turning points, which are the
trough and peak
In order to measure gross domestic product, we can follow
two approaches: the expenditure approach and the income approach
Where are the final goods and services produced that are included in Germany's GDP?
within Germany
