Economics Chapter 13

GDP accounts systematically ignore:

-non market production -illegal and underground production -barter trades

The gross domestic product of a nation can also be correctly described as

-the total value added by all stages of production. -the sum of the wages, profits, rent, and interest paid for the use of productive resources -the value of the national income

Suppose in Pandemonia 5000 people are working, and 5000 people unemployed. What's the unemployment rate?

50%

Inflation is basically:

A fall in the value or purchasing power of money.

The official data on employment and unemployment in the US economy are derived from:

A monthly survey of a carefully constructed sample of households

People who are not currently employed but say they want a job are counted as unemployed but say they want a job are counted as "unemployed" only if they:

Are actively seeking employment

What explains any divergence between nominal and real GDP?

Changing prices.

If you knew the nominal GDP increased 10% over certain period while real GDP increased by 6% you would know that

Inflation had occurred during this period.

(Blank) can be defined as a sustained (Blank) in the price level.

Inflation;rise

Real gross domestic product is

Nominal GDP adjusted for inflation

The gross product of a nation is the sum of annual expenditures

On final goods and services by consumers, investors, and government.

Recessions in the US economy show up in economic data periods of

Slower growth or decline in real GDP

The Kelloggs facility buys corn and makes boxes of corn flakes. The grocer buys those boxes and places them on the shelf. A mother then buys a box for her family. Which one of these is the purchase of a final good.

The cornflakes purchased by the mother.

Economics use GDP to determine

The economic performance of a country over time

The most troubling consequence of recessions in the view of most people is:

The increased levels of unemployment associated with them.

Which of the following economic activities is ignored in GDP accounts?

The market value of illegal drugs.

Which is not included in the gross domestic product?

The purchase price of a used car bought from a friend.

The civilian labor force does not include those members of the population who are:

Under 16

A person who refuses an offer of employment in order to keep looking for a better job is counted by the bureau of labor statistics as

Unemployed

Do inflation, deflation, and disinflation create genuine problems?

Yes, because they create additional uncertainty and coordination difficulties.