Econ Exam 2

Item quantity price price (2011) (2011) (2012) salt 2 $1 $2 bread 20 $2.5 $3 The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The reference base period is 2011. The cost of the CPI market basket in 2011 is

$52

Item quantity price quantity price (2011) (2011) (2012) (2012) Sneakers 2 $55 2 $60 Manicures 1 $35 1 $40 Consumers in a country but only two goods, sneakers and manicures. The prices and quantities purchased by urban households are in the table above. The reference base year is 2011. The inflation rate between 2011 and 2012 is

10.3 percent

The reference base period for the CPI has an index number of

100

In 2013, the reference base period for the CPI for the nation of Webot, a typical consumer spent 30$ on potatoes and 150$ on steak. If the price of steak is 15$ and the price of potatoes is 1$ then there are ______ units of steak and ______ units of potatoes in the CPI market basket

10;30

Item quantity price price (2011) (2011) (2012) salt 2 $1 $2 bread 20 $2.5 $3 The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The reference base period is 2011. The CPI in 2012 is

123.1

year CPI 1994 90 1996 95.5 1998-2000 100 2002 104 The table above gives the CPI for a nation. Based on the table, we can determine that the reference base period is

1998-2000

Item quantity price price (2011) (2011) (2012) salt 2 $1 $2 bread 20 $2.5 $3 The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The reference base period is 2011. The inflation rate between 2011 and 2012 is

23.1 percent

If the cost of the CPI market basket at current period prices is $1000 and the cost of the CPI market basket at base period prices is $350, the CPI is

400

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 current price/base price x 100

________ wrote "The General Theory"

John Maynard Keynes

The Monetarist economist who said "inflation is always and everywhere a monetary phenomenon" is ________

Milton Friedman

After the passage of the North American Free Trade Agreement, which made it less expensive to import goods from Mexico, workers in some industries found their factories being relocated to Mexico to take advantage of lower labor costs. These workers experienced what type of unemployment

Structural

When measuring GDP

The expenditure on goods and services by all levels of government are included

The CPI is a measure of the

average prices paid by consumers for a fixed basket of goods and services

Consumption expenditure includes spending

by households

Economists define investment to include purchases of

capital goods and inventories

The type of unemployment that arises from a decrease in real GDP is called

cyclical unemployment

In 2008 as the economy moved into a recession,

cyclical unemployment increased

A reduction in unemployment benefits will

decrease the amount of frictional unemployment

When Jamie purchases a classic 1968 Plymouth Cuda convertible from Shane, GDP

does not change, because the car was not produced this year

The working age population includes

employed and unemployed people over the age of 16

An unpaid worker in a family business is classified as

employed if the person worked at least 15 hours in the previous week

Net exports of goods and services is equal to the value of

exports minus the value of imports

If consumption was 70 percent of GDP and investment and government expenditure were both 18 percent each, then we see that

exports must be less than imports

Investment is the expenditure done by

firms

A measure of a country's production is its

gross domestic product

Gross domestic product measures the

market value of the final goods and services produced in a given year within a country

To be considered unemployed, a worker must have had

no employment during the week before the survey and be actively looking for a job

When the unemployment rate equals the natural unemployment rate, most likely the economy is producing

on the PPF

Bo's actions would

raise the September unemployment rate and lower the October unemployment rate

A recession conventionally is defined as a decrease in

real GDP that lasts for at least six months

Which type of unemployment is most likely to lead unemployed workers to retrain or relocate?

structural

Structural unemployment is the result of

technological change or foreign competition

Frictional unemployment is the result of

the normal process of jobs being created and destroyed

In order to measure gross domestic product, we can follow

two approaches: the expenditure approach and the income approach

Suppose the CPI in 1983 is 100 and the CPI this year is 172. These values for the CPI mean that

typically, a good whose price was $100 in 1983 had a price of $172 this year

Item quantity price price (2011) (2011) (2012) salt 2 $1 $2 bread 20 $2.5 $3 The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The reference base period is 2011. The cost of the CPI market basket in 2010 is

unable to calculate because information is needed about the quantities purchased in 2010

_______ wrote "The Wealth of Nations"

Adam Smith

An Austrian economist, ______ wrote "Road to Serfdom"

Friedrich Hayek