Econ 222 Second Exam GDP Chapters 8,9,10
What formula does the Bureau of Labor Statistics use to calculate unemployment?
(# unemployed/# in the labor force) * 100
Your father earned ZZZ (34,000) per year in 1984. to the nearest $ what is the equivalent to it in 2008 if the CPI is 215 and the CPI in 1984 is 104
(34,000/104)*215 (Initial amount/initial CPI) times Current CPI Answer is 70,288
Potential GDP
-Increases over time as technological change occurs -Increases over time as the labor force grows
Which of the following contribute to shorter recessions, longer expansions, and less severe fluctuations in real GDP
-Unemployment insurance -Fiscal policy
Technological progress is affected by
-entrepreneurship -new software developments -investment in capital -private property rights
When the economy is at full unemployment
-the natural rate of unemployment prevails -all remaining unemployment is either frictional or structural -Unemployment is greater than 0 (All of the Above)
Assume the average annual CPI values for 2012 and 2013 were 207.3 and 215.3, respectively. What was the inflation rate between these two years
3.86 %. ((Higher CPI- Lower CPI)/ Lower CPI) *100 (215.3-207.3)/207.3=.03859 *100= 3.859%
As of september 2011 which demographic has the highest unemployment rate
African Americans
What are the four major categories of expenditure
Consumption, investment, government purchases, and net exports
Unemployment caused by a recession
Cyclical unemployment
John spends a whole day looking for a job for which he is qualified. When people ask him he says that he is in-between jobs. john is
Frictionally Unemployed
Why is GDP an imperfect measurement of total production in the economy?
GDP does not include household production or production from underground economy
National income is
GDP minus Depreciation
Frictional Unemployment
In between jobs
Which of the following does NOT lead to long-run economic growth
Increase in average wages
An increase in unemployment insurance payments would ________ the amount of time spent searching for a job, which would increase _____________ unemployment
Increase; frictional
Which of the following describes current trend in labor force participation rate?
It is decreasing for men and increasing for women
Which of the following can give an early warning of future increases in price level?
Producer Price Index
In the base year 2001 till present day, what is the relationship between nominal GDP and real GDP?
Real GDP< Nominal GDP because prices are rising
The largest component of gross domestic income is
Wages
What are the four categories of income?
Wages, Interest, Rent, and Profit
How do you calculate real interest rate?
What is paid minus the change in CPI for example 5.5%-4.7%
which of the following explains the changes in the U. S. adult male labor force participation rate since 1948?
Younger men are remaining in school longer as compared to the past
Long-run growth in GDP is determined by
capital, labor productivity, and technology
As output (GDP) is increasing, the amount of cyclical unemployment would ___________
decrease
which of the following causes the unemployment rate to understate the true extent of joblessness?
discouraged workers are not counted as unemployed
A student who just graduated from college but has not found a job would most likely be
frictionally unemployed
In August of 2013, which of the following demographic groups had a higher rate of unemployment than the unemployment rate for the total population?
high school dropouts
An advantage of the household survey over the establishment survey of the labor market is that the household survey
includes the number of self- employed persons
Nominal GDP is higher than real GDP because
not adjusted for inflation
what are efficiency wages
paying your workers higher in expectation of higher performance
Disposable personal income equals
personal income minus personal taxes (the money you have left over after you pay your taxes)
What effect do labor unions have on unemployment rate
since few non-government workers are unionized, there is no significant effect on unemployment rate
Which of the following is most likely to lead to sustained long-run growth
technological change
When the economy is at full employment, unemployment is equal to
the natural rate of unemployment
The true cost of borrowing and lending is best measured by
the real interest rate
The natural rate of unemployment is
the sum of structural unemployment and frictional unemployment
the average period of unemployment was ________ following the 2007 recession
twice as high
What is typical of the length of unemployment in modern U.S. economy
unemployment lasts less than six months
Intermediate goods are
used as inputs in production of other goods also called Final goods. Example of Intermediate good is Coffee beans. final good= coffee, or a car
What is the relationship between the unemployment rate and enacting or increasing a minimum wage? When a minimum wage is enacted or increased across a country, the unemployment rate
will increase some but impacts will be much larger for some groups of workers
