econ test 5
Which year had the greatest number of involuntary part-time workers as a percentage of the population
2010
Suppose the CPI market basket cost $800 during the base period and $1,800 today. What is the CPI for today
225
An example of a durable good would be
a used car
in September, 2015, Chrysler produced a $40,000 Chrysler 300 car that was delivered to the Chrysler Dealership in Glendale in October 2015. This auto was purchased in February of 2016. This auto would be counted as
investment in 2015 and consumption in 2016
The base year[where nominal and real GDP=100] used in determining the price indexes for the economy below
is 1992
The expenditure approach to measuring GDP sums
consumption, gross private domestic investment, government expenditures, and net exports
In a typical business cycle, what stage immediately follows a peak
contraction
If someone loses his or her job during a recession, what type of unemployment is that
cyclical
If the unemployment rate is 9% & the natural rate of unemployment is 6%, then the:
cyclical unemployment rate is 3%
Which of the following is included in GDP
purchase an iPod Video at the Apple Store
To the economist, which is not considered to be investment(Ig)
purchase of 10,000 shares of Nokia stock
When short-term interest rates creep higher than long-term interest rates the yield curve is said to be inverted and is viewed as a leading indicator of
recession
Suppose there are 8 million part-time workers & 90 million full-time workers. 4 million of the part-time workers switch to full-time work. We can conclude that
the official unemployment rate will remain unchanged
The top of the business cycle is called
the peak
The "market basket" that is used by the Bureau of Labor Statistics to calculate prices is made up of which of the following
typical goods and services for an urban household
Working at a job for which one is over-qualified, or working part-time when full-time work is desired is called
underemployment
How is the Consumer Price Index calculated
updated cost divided by base-period cost and then multiplied by 100
Which of the following is a final good or service
a haircut
A medical school graduate searching for a job as a brain surgeon would best be classified as
a part of frictional unemployment
Which of the following is another reason producers might raise prices that could lead to a wage-price spiral
a poor tomato crop
What is likely to have caused the unemployment rate to rise between 2008 and 2010
a recession
Which of the following is most likely to be worried about high inflation
a retired couple on a fixed income
Which of the following factors does not affect inflation
a stable money supply
What will most likely still occur when the economy has achieved full employment
frictional, seasonal, and structural unemployment
After graduating from college, Kim is interviewing school districts for a job teaching economics. Kim presently is
frictionally unemployed
When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at large urban university, she is
frictionally unemployed
The term "final goods and services" refers to
goods and services purchased by the ultimate users, as opposed to resale or further processing.
If a person's real income has risen during an inflationary period, then
her nominal income has risen more rapidly than prices
Nominal GDP during a particular year is $280 and the GDP price deflator is 175. Therefore real GDP is
$160
Nominal GDP during one year is $300 and the price index is 120. Real GDP is
$250
One year nominal GDP was $286 billion & the price index was 88. Then Real GDP was
$325 billion
The CPI was 140.3 in 2004 and 144.5 in 2005. Therefore, the rate of inflation in 2005 was about
3%
When the economy is working properly, what is the unemployment rate
4 to 6 percent
if Reid's annual real income rises by 8% each year, his annual real income will double in about
9 years
Identify a circumstance outside the economy that can cause unemployment
A hurricane damages the Gulf Coast
How do we figure out the unemployment rate
Divide the number of people who are unemployed by the total labor force, and then multiply by 100
Which diagram indicates declining productive capacity (negative net investment)
Economy B
Which diagram indicates an economy that is growing most rapidly
Economy C
The term "real GDP" refers to
GDP data which have been adjusted for changes in the price level[measures output]
Which best describes a wage-price spiral
Increase wages lead increased prices, which lead to a demand higher wages
What is offshoring and why is it a cause of structural unemployment in the United States
It is when companies relocate facilities to countries where costs are lower which means relocating jobs
How does inflation influence purchasing power
It reduces it.
How does low unemployment lead to higher inflation
Low unemployment leads to an increase in wages
You are given a suitcase full of $100 bills from the sale of smuggled drugs
No, Illegal
Ford buys a ton of sheet metal used in making car doors
No, Intermediate Goods
A woman's husband does all her cooking and cleaning, working for her 16 hours per day
No, Non-market Transaction
You and your family paint your house
No, Non-market Transaction
You and your friend volunteer at Habitat for Humanity building houses for low income earners
No, Non-market Transaction
You volunteer 10 hours a week of your time to work for senior citizens
No, Non-market Transaction
Your dad bakes you home-baked cookies
No, Non-market Transaction
Your mother is teaching your little brother to read
No, Non-market Transaction
Nike produces $10 million worth of Nike Air Jordan's in Vietnam
No, Overseas
You buy 100 shares of Microsoft
No, Purely Financial Transaction
Today, Bob buys a 1965 Ford Mustang convertible which is in mint condition
No, Second Hand Sales
Dr. Payne does $1000 worth of dental work but reports only $500 of it
No, Unreported Income
You are paid to babysit your neighbor's son, but don't report the income on your tax return
No, Unreported Income
Which of the following is a possible effect of inflation
Reduced value of savings
Why does an increase in the price of tomato products lead people to demand higher pay
The rising price of tomatoes affects prices of many foods that families buy
Why is the core inflation rate calculated separately from the inflation rate
To better show long term effects on inflation
What is full employment
When there is no cyclical unemployment
The salesman gets a commission for selling that 1965 Ford Mustang
Yes, Consumption
You buy a hover board from Amazon
Yes, Consumption
You buy a loaf of bread from the bakery
Yes, Consumption
You buy a new "iPod Video" from the Apple store
Yes, Consumption
You send in a $90 check to your dentist for cleaning your teeth
Yes, Consumption
40 additional teachers are hired by Chaffey Unified School District
Yes, Government
The U.S. government purchases another 5 B-2 Bombers for $2 Billion each
Yes, Government
Ford produces 25,000 new F150s which are not sold by the end of the year
Yes, Gross Private Domestic Investment
GM invest in $500 million worth of robots to assemble their cars
Yes, Gross Private Domestic Investment
Your family buys a brand new house from Lewis Group in Rancho Cucamonga
Yes, Gross Private Domestic Investment
Russia buys 300 new Dell computers to improve work stations at the Kremlin
Yes, Net Exports
The phase of the business cycle where real domestic output(GDP) is decreasing and unemployment is rising at a minimum is called
a contraction
The U.S.'s economy is considered to be at "full employment" when
about 4-6% of the labor force is unemployed
Which scenario gives the saver the greatest purchasing power
an interest rate of 4 percent and an inflation rate of 1 percent
During a serious recession we would expect output to fall the most in
auto industry
Why does purchasing power change over time
because the prices of goods and services change
The presence of discouraged workers
causes the official unemployment rate to understate the amount of unemployment
Suppose there are 7 million unemployed workers seeking jobs. Over time, 2 million of them become discouraged and quit looking for work. As a result, the official unemployment rate would
decline
If the CPI falls from 120 to 114 in a particular year, the economy has experienced
deflation of 5%
If the CPI falls from 150 to 137, the economy has experienced
deflation of 8.7%
If CPI falls from 150 to 100 during a particular period
deflation of about 33% has occurred
The amount of money a person has left of his or her income after taxes is called
disposable personal income
The production of durable goods is more variable than the production of non-durable goods because
durable goods purchases are postponable and producers of durables are competitive
Devin's family decided to see a movie at the discount cinema on a Tuesday rather than at the larger cinema on a Friday. Their decision might have been the result of which effect of inflation
effects on purchasing power
The labor force includes
employed workers and persons who are officially unemployed["looking for a job"]
If in a given year Ig was $120 billion and In was a positive $65 billion, then in that year the country's capital stock["national factory"]
increased by $65 billion
A nation's Gross Domestic Product(GDP)
is the dollar value of the total output produced within the borders of the nation.
If depreciation exceeds gross private domestic investment, then
net investment is negative
Econnie Nomics works in her own home as a full time homemaker. Officially, Econnie is
not in the labor force
National income accounts can avoid double counting by
only counting final goods
The largest component of GDP is
personal consumption
In 2015, Randy's nominal income rose by 8% and the price level (inflation) rose by 5%. We can conclude that Randy's real income
rose by 3%
A knitting factory worker who loses her job because the company has relocated the plant to another country is an example of
structural unemployment
Unemployment that occurs when workers' skills do not match the jobs that are available is called
structural unemployment
A person who manages a shoe store may be out of a job as more customers order shoes online instead of shopping in stores. The manager would then be an example of
structural unemployment.
Consumption of fixed capital [depreciation] can be determined by
subtracting In from Ig.
The bottom of a business cycle is called
trough
