Econtest 2 study

Using the Rule of 70, if the country of Flowerdom's current growth rate of real GDP per person was 7 percent a year, how long would it take the country's real GDP per person to double? 2 years 10 years 49 years 1 year

10 years

In a country with a working-age population of 130 million, 90 million workers are employed and 10 million workers are unemployed. What is the unemployment rate? 5.0 percent 10.0 percent 7.7 percent 7.1 percent

10.0 percent

Suppose there are currently 100 people unemployed, 1500 people employed, and 2000 people in the working age population. The labor force participation rate equals 100 times 100/1600. 1600/2000. 100/1500. 1500/2000.

1600/2000.

Who was the bet the planet bet between?

Economist Julian Simon and Biologist Paul Ehrlich, Simon won the bet and earned $576.07

Consumer surplus is defined as supply price minus demand price. True False

False

Which type of price index theory averages the base year and current year's quantities? Fisher's Mean Paasche Laspeyres Boskin's Index

Fisher's Mean

Which of the following ideas apply to the neoclassical growth theory? I.The rate of technological change influences the rate of economic growth. II.Technological change promotes saving and investment. III.Convergence of economic growth rates across countries I only III only I and II I, II and III

I, II and III

The Chairman of the Federal Reserve System is: Jerome Powell Milton Friedman Janet Yellen Allan Greenspan

Jerome Powell

Which type of price index theory uses base year's quantities? Laspeyres Paasche Fisher's Mean Boskin's Index

Laspeyres

The CPI uses a _____________________ type price index while the GDP deflator uses a ______________________ based chain-type index. Laspeyres, Fishers Mean Paasche, Fishers Mean Paasche, Laspeyres Paasche, Laspeyres

Laspeyres, Fishers Mean

Suppose the CPI last year is 121 and the CPI this year is 137. The correct method to calculate the inflation rate is 137 × 121 = 258. (137/121) × 100 = 113.2. (137 - 121)/100 = 0.16. [(137 - 121)/121] × 100 = 13.2.

[(137 - 121)/121] × 100 = 13.2.

Cyclical unemployment occurs when individuals with skills no longer valued in the labor market cannot find employment. individuals enter into the labor market making the rounds of potential employers. a business cycle recession decreases employment. individuals give up the search for employment.

a business cycle recession decreases employment.

A rent ceiling creates a shortage. As a result, which of the following occurs? only a loss of consumer surplus for tenants only a loss of producer surplus for landlords a gain of both consumer and producer surplus a loss of both consumer and producer surplus

a loss of both consumer and producer surplus

Deflation represents: a recession. an increase in the unemployment rate. a reduction in the aggregate price level. a reduction in output.

a reduction in the aggregate price level.

The difference between gross investment and net investment is consumption. inflation. initial capital. depreciation.

depreciation

The underground economy exists for all of the following reasons EXCEPT the avoidance of government regulation. production of illegal goods. desire to maintain accurate records of economic transactions. avoidance of taxes.

desire to maintain accurate records of economic transactions

Economists distinguish real GDP from nominal GDP to measure the change in nominal interest rates. determine whether economic welfare has changed. determine whether the government sector is growing. determine whether real production has changed

determine whether real production has changed

Workers who pursue an education directly increase their physical capital. saving. financial capital. human capital.

human capital.

Technological change increases potential GDP. lowers the real wage rate. decreases labor productivity. has no effect on employment.

increases potential GDP.

Unpredictable changes in the value of money, which brings about gains and losses, are a consequence of unpredictable changes in unemployment rate. productivity. inflation. real GDP.

inflation.

Which of the following items is NOT a component of the income approach to measuring U.S. GDP? interest earned on savings deposits income earned by businesses that export goods profits made by businesses nvestment

investment

Activities that encourage faster growth are developing trade barriers to protect national industries. taxes on saving that serve to encourage more spending and less saving. high levels of consumption and low levels of savings. investment in new capital and human capital.

investment in new capital and human capital.

In the national income accounts, the purchase of a new house counts as a transfer. an addition to inventory. consumption expenditure. investment.

investment.

According to the new growth theory the concept of a labor market is not necessary. the labor demand curve does not shift rightward over time. the rate of technological progress is determined by chance. knowledge is not subject to diminishing returns.

knowledge is not subject to diminishing returns.

Price indexes can overstate inflation because they omit some quality improvements. do not contain the prices of any used goods. do not contain the prices of services. do not contain the prices of foreign goods.

omit some quality improvements.

Labor productivity is real GDP per hour of labor times the number of people. real GDP per hour of labor or real GDP per worker. the rate of change in real GDP per hour of labor. real GDP per hour of labor times the hours of work.

real GDP per hour of labor or real GDP per worker.

Structural unemployment is the result of normal labor market turnover. irresponsible workers with poor work habits. technological change, absolute job skills, or foreign competition. a slowdown in the rate of economic expansion.

technological change, absolute job skills, or foreign competition

Pollution is a by-product of some production processes, so on this count real GDP as measured is adjusted downward to take into account the pollution. tends to overstate economic welfare. is adjusted upward to take into account the expenditures that will be made in the future to clean up the pollution. tends to understate economic welfare

tends to overstate economic welfare

When calculating GDP, underground economic activity is an aspect of the quality of life, such as health and life expectancy. the production of goods and services in the home. the part of the economy purposely hidden. that portion of the time when we are enjoying leisure activities and not producing marketable goods.

the part of the economy purposely hidden

Hyperinflation is defined as very high inflation rates. declining inflation rates. rising but low inflation rates. very low inflation rates.

very high inflation rates.

The labor force is defined as people with full time jobs. all people capable of work. workers with jobs and unemployed workers. All of the above answers are correct.

workers with jobs and unemployed workers.

Question -- Given the following: Consumption of fixed capital (depreciation) $1,257 Rents $120 Indirect business taxes less subsidies $682 Social security contributions $800 Corporate income taxes $500 Undistributed Corporate Profits-retained earnings $274 Transfer payments $2,000 Personal income taxes $1,500 Compensation of employees (wages) $7,650 Net interest $571 Profits-(Corporate and Proprietors Income) $1,668 Personal Consumption expenditures $8,000 Gross private domestic investment $1,855 Government purchases $1,843 Net Exports (X-M) $300 Statistical discrepancy $50 What is Net Domestic Income at factor prices? $10,948 $8,098 $10,009 $10,087

$10,009

Question -- Given the following: Consumption of fixed capital (depreciation) $1,257 Rents $120 Indirect business taxes less subsidies $682 Social security contributions $800 Corporate income taxes $500 Undistributed Corporate Profits-retained earnings $274 Transfer payments $2,000 Personal income taxes $1,500 Compensation of employees (wages) $7,650 Net interest $571 Profits-(Corporate and Proprietors Income) $1,668 Personal Consumption expenditures $8,000 Gross private domestic investment $1,855 Government purchases $1,843 Net Exports (X-M) $300 Statistical discrepancy $50 What is GDP (Expenditure Approach)? $11,998 $10,948 $9,572 $8,098

$11,998

When the Smiths were shopping for their present home, the asking price from the previous owner was $250,000.00. The Smiths had decided they would pay no more than $245,000.00 for the house. After negotiations, the Smiths actually purchased the house for $239,000.00. They, therefore, enjoyed a consumer surplus of $6,000.00. $11,000.00. $5,000.00. $239,000.00.

$6,000.00.

Over the last 100 years, the average U.S. growth rate in real GDP per person was about 12.5 percent per year. 1 percent per year. 6 percent per year. 2 percent per year.

2 percent per year.

Question -- Given the following:Given the following: population- 4,500,000Less than 16 years old-500,000unemployed but actively seeking work-100,000philosophers---(non working)50,000house-husbands/housewives (non employed)-20,000discouraged workers-10,000people in institutions-30,000full time students (non working)-100,000full time workers-3,000,000part time workers-690,000 Given the information in the questions above, what is the unemployment rate? 7.1% 2.6% 2.7% 9.2% none of the above

2.6%

Question Year---- Nominal Income-- Price Index1990 $ 9,800 991995 $ 33,000 123Calculate the change in inflation, nominal income, and real income from 1990 to 1995. 75%, 37%, 22% 24%, 237%, 171% 33%,17%,-12% 235%, 233%, -275% None of the above

24%, 237%, 171%

If the nominal interest rate is 8 percent and the current inflation rate is 3 percent, approximately what is the real interest rate? 3 percent 11 percent 5 percent 8 percent

5 percent

If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the unemployment rate is 7.1 percent. 9.1 percent. 10 percent. 6.6 percent.

9.1 percent.

Question -- Given the following:Given the following: population- 4,500,000Less than 16 years old-500,000unemployed but actively seeking work-100,000philosophers---(non-working)50,000househusbands/housewives (non-employed)-20,000discouraged workers-10,000people in institutions-30,000full time students (non-working)-100,000full time workers-3,000,000part time workers-690,000 Given the information in the question above, what is the employment-to-population ratio? 76.1% 89.0% 92.9% 97.8% none of the above

92.9%

Question -- Given the following:Given the following: population- 4,500,000Less than 16 years old-500,000unemployed but actively seeking work-100,000philosophers---(non-working)50,000househusbands/housewives (non-employed)-20,000discouraged workers-10,000people in institutions-30,000full time students (non-working)-100,000full time workers-3,000,000part time workers-690,000 What is the labor force participation rate? 92.9% 87.0% 76.1% 95.5% none of the above

95.5%

Labor productivity, real GDP per labor hour, increases if new technologies are continuously discovered. there is an increase in the accumulation of human capital. saving and investment cause an increase in the quantity of capital per worker. All of the answers are correct.

All of the answers are correct.

Real GDP can be criticized as a measure of economic welfare because it does not take account of the degradation of environmental quality. does not include the value of products produced in the household. does not include leisure time available to a society. All of the answers in this question are correct.

All of the answers in this question are correct

The producer surplus on a unit of output is the difference between the market price and the supply price. True False

True

If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the CPI in the later year equals 450. 225. 250. 300.

CPI = ($450 / $200) x 100 CPI = 2.25 x 100 CPI = 225

Which type of price index theory uses current year's quantities? Boskin's Index Paasche Laspeyres Fisher's Mean

Paasche

Some economists that do not like using the Consumer Price Index as a measure of consumer inflation, instead prefer using: Producer Price Index Personal Consumption Expenditure (PCE) Big Mac price index. GDP Deflator

Personal Consumption Expenditure (PCE)

Suppose the Consumer Price Index is 143.6. What does that number mean? Prices rose 143.6 percent over the reference base period, on average. On average, goods cost $143.60. On average, goods cost $243.60. Prices rose 43.6 percent over the reference base period, on average.

Prices rose 43.6 percent over the reference base period, on average.

Which of the following is consistent with classical growth theory? Real GDP per person will never permanently increase. Competition destroys innovation and decreases profit. As real GDP increases, there will be a decrease in the rate of population growth. Real GDP per person will increase because technological change induces investment.

Real GDP per person will never permanently increase.

The reason the Consumer Price Index has not officially adopted the Fisher's Mean approach to calculating inflation is because: Social Security and many pension funds are indexed to inflation. governmental inertia and bureaucratic red tape. disagreement about the CPI's accuracy by economists. lack of an improved metric to measure inflation.

Social Security and many pension funds are indexed to inflation.

Which of the following statements is INCORRECT? The labor-force participation rate is the labor force divided by the working-age population then times 100. The labor force is equal to the number of people employed plus the number of people unemployed. The unemployment rate is the number of persons who are unemployed divided by the labor force then times 100. The working age population includes everyone over the age of 16.

The working age population includes everyone over the age of 16.

A price ceiling is a price above which a seller cannot legally sell. below which a seller cannot legally sell. that creates a surplus of the good. Both answers A and C are correct.

above which a seller cannot legally sell.

The use of purchasing power parity prices weakens the validity of cross country comparisons of economic welfare. decreases the real GDP per person statistics published by the International Monetary Fund. increases the amount by which U.S. GDP is larger than that of any other nation. accounts for differences in the prices of the same goods in different countries when measuring real GDP.

accounts for differences in the prices of the same goods in different countries when measuring real GDP

Distortions in the CPI that overstate inflation can damage the economy because: distort prices and inefficiently allocate goods and services. lower real growth estimates that can distort governmental policy. increase the budget deficit and national debt. all of the answers are correct.

all of the answers are correct.

Discouraged workers ________ counted as officially unemployed because they ________. are not; are not qualified to work are not; are not actively seeking work are; are still in the labor force are; are not working

are not; are not actively seeking work

The consumer price index (CPI) compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period. measures the increase in the prices of the goods included in GDP. compares the cost of the typical basket of goods consumed in period 1 to the cost of a basket of goods typically consumed in period 2. is the ratio of the average price of a typical basket of goods to the cost of producing those goods.

compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period

The largest component of national income is proprietors' income. compensation of employees. corporate profits. rental income.

compensation of employees

The largest component of national income is rental income. proprietors' income. corporate profits. compensation of employees.

compensation of employees

A minimum wage set above the equilibrium wage will create a lower wage rate for skilled workers than for unskilled workers. create a shortage of labor. have no effect because the equilibrium level of employment is not affected by a minimum wage above the equilibrium wage. create a surplus of labor

create a surplus of labor

Unemployment caused by the fluctuation of the business cycle is called ________ unemployment. cyclical recession-related frictional structural

cyclical

Depreciation is defined as the increase in the stock of capital due to investment by firms. decrease in the stock of capital due to wear and tear. increase in the stock of capital due to wear and tear. decrease in the stock of capital due to investment by firms.

decrease in the stock of capital due to wear and tear.

The decreasing slope of a production function reflects increasing aggregate demand. diminishing returns. decreasing costs. rising unemployment.

diminishing returns.

U6 measure of unemployment is approximately _______ the U3 measure of unemployment. 75% triple 150% double

double

According to new growth theory, technological change is driven by foreign firms' attempts to increase their sales in the domestic market. random chance. firms' attempts to increase their profit. government policies.

firms' attempts to increase their profit.

Core inflation represents the general change in prices excluding: food and energy. housing and medical costs. wages and interest costs. services and imports.

food and energy.

When a student finishes college and begins looking for work frictional and cyclical unemployment increase. frictional unemployment increases. structural unemployment increases. cyclical unemployment increases.

frictional unemployment increases.

The three types of unemployment are frictional, structural, and cyclical. voluntary, part-time, and cyclical. frictional, part-time, and involuntary. voluntary, involuntary, and structural.

frictional, structural, and cyclical.

Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as structurally unemployed. naturally unemployed. frictionally unemployed. cyclically unemployed.

frictionally unemployed.

Net investment equals the total quantity of plant, equipment and buildings. gross investment minus depreciation. capital stock minus depreciation. gross investment/depreciation

gross investment minus depreciation.

We are interested in long-term growth primarily because it brings higher price levels. higher standards of living. lower price levels. trade wars with our trading partners.

higher standards of living.

The labor force participation rate is calculated as the labor force divided by the number of persons employed then multiplied by 100. labor force divided by the unemployment rate then multiplied by 100. number of persons unemployed divided by the labor force then multiplied by 100. labor force divided by the working age population then multiplied by 100.

labor force divided by the working age population then multiplied by 100.

According to the law of diminishing returns, an additional unit of labor produces less output than the previous unit. labor produces more output than the previous unit. capital produces more output than an additional unit of labor. labor decreases output.

labor produces less output than the previous unit.

Because of the biases in calculating the CPI, actual inflation is more than the measured inflation rate by about 1 percent per month. more than the measured inflation rate by about 1 percent per year. accurately measured. less than the measured inflation rate by about 1 percent per year.

less than the measured inflation rate by about 1 percent per year.

In the equation, GDP = C + I + G + X - M, G refers to federal government expenditures plus all transfer payments. local, state, and federal government spending for all purposes. local, state, and federal government expenditure on goods and services, but does not include transfer payments. the taxes and expenditures of all government units.

local, state, and federal government expenditure on goods and services, but does not include transfer payments

Deadweight loss or welfare loss is made up of a loss of only consumer surplus. made up of a loss of only producer surplus. made up of a loss of both consumer surplus and producer surplus. not a social loss.

made up of a loss of both consumer surplus and producer surplus.

In the United States, resources are most often allocated by contest. market price. lottery. command system.

market price.

Gross domestic product is the total ________ produced within a country in a given time period. market value of all final goods and services market value of all final and intermediate goods and services market value of all goods and services amount of final and intermediate goods and services

market value of all final goods and services

The biases in the CPI include the substitution, new goods, and old goods biases. new goods, quality change, and substitution biases. old goods, new goods, and quality change biases. old goods, unemployment, and inflation biases.

new goods, quality change, and substitution biases.

Which growth theory models growth as a perpetual motion machine? all growth theories model growth as a perpetual motion machine new growth theory neoclassical growth theory classical growth theory

new growth theory

Personal consumption expenditures include all of the following EXCEPT spending on consumer services. consumer durable goods. consumer nondurable goods. new housing.

new housing.

Frictional unemployment comes about because of a general economic slowdown. friction between labor and management. normal labor market turnover. a mismatch between skills and available jobs.

normal labor market turnover.

Marginally attached workers fall into which of the following population categories? unemployed not in the labor force labor force employed

not in the labor force

During a recession, the ________. number of discouraged workers decreases employment-to-population ratio increases number of marginally attached workers increases unemployment rate decreases

number of marginally attached workers increases

Full employment occurs only if unemployment is equal to structural unemployment plus cyclical unemployment. only if the unemployment rate is equal to the natural rate of unemployment. only if the unemployment rate is zero. None of the above answers are correct.

only if the unemployment rate is equal to the natural rate of unemployment.

The bias in the CPI typically overstates inflation. understates inflation. cannot be measured or estimated. about half the time overstates and about half the time understates the inflation rate.

overstates inflation.

The unemployment rate measures the percentage of people who want full-time jobs, but can't find them. the working age population that can't find a full-time job. the working-age population who can't find a job. people in the labor force who can't find a job.

people in the labor force who can't find a job.

Human capital is a measure of the labor productivity of workers. the investment made in industries that make capital goods. the saving done by human beings. people's knowledge and skills.

people's knowledge and skills.

The productivity growth slowdown refers to the period during the 1970s and for some years afterwards. situation in foreign nations but not in the United States. years during the 1990s. years following the 1930s depression.

period during the 1970s and for some years afterwards

In the expenditure approach to GDP, the largest component is net exports. government expenditure on goods and services. personal consumption expenditures. gross private domestic investment.

personal consumption expenditures

The largest component of GDP in the expenditures approach is government expenditure on goods and services. gross private domestic investment. personal consumption expenditures. net exports.

personal consumption expenditures

Factors that influence labor productivity include ________. physical capital, the real wage rate, and technology the labor demand curve physical capital, human capital, and technology the inflation rate, the real wage rate, and the exchange rate

physical capital, human capital, and technology

All of the following contribute to labor productivity growth EXCEPT: physical capital growth. human capital growth. population growth. technological advancements.

population growth.

Labor growth depends mainly on ________ and labor productivity growth depends mainly on ________. growth in real GDP per person; technological advances population growth; increases in real GDP population growth; technological advances growth in real GDP per person; growth rate of capital

population growth; technological advances

Neoclassical growth theory predicts that growth rates and incomes per person throughout the world will converge. makes no predictions about the relative growth or incomes among countries. predicts that the faster growing underdeveloped nations will overtake and then surpass the industrial nations. predicts that nations that enjoy a technological advantage will maintain that advantage.

predicts that growth rates and incomes per person throughout the world will converge.

U.S. investment is financed from private borrowing, government budget deficits, and lending to the rest of the world. private saving, government budget surpluses, and borrowing from the rest of the world. private saving and borrowing from the rest of the world only. private saving, government budget deficits, and borrowing from the rest of the world.

private saving, government budget surpluses, and borrowing from the rest of the world.

The currently used method for calculating the CPI accounts for people increasing consumption of a good that falls in relative price. has no effect on government expenditures. probably overstates inflation by about 1 percentage point. None of the above answers are correct.

probably overstates inflation by about 1 percentage point.

Which of the following is NOT included in real GDP? production of goods that do not last more than one year, such as gasoline production in the home production of goods that last more than one year, such as television sets production of services, such as the services of doctors

production in the home

All of the following household expenditures are included in consumption expenditure EXCEPT purchase of a new purse. payment to a dentist for filling a tooth. purchase of hair styling. purchase of corporate stock.

purchase of corporate stock.

In the labor market, an increase in labor productivity ________ the real wage rate and ________ the level of employment. lowers; decreases raises; increases raises; decreases lowers; increases

raises; increases

An assumption of classical growth theory is that when ________ the population growth rate ________. real GDP per person exceeds the subsistence level; increases the real wage rate falls; increases saving declines; decreases people become more skilled; decreases

real GDP per person exceeds the subsistence level; increases

According to the new growth theory, competition has no impact on real profit, only nominal profit. reduces profit. is only theoretical because all firms are growing at some rate. increases profit.

reduces profit.

A price floor results in a shortage if the floor price is higher than the equilibrium price. always results in a shortage. always results in a surplus. results in a surplus if the floor price is higher than the equilibrium price.

results in a surplus if the floor price is higher than the equilibrium price.

An increase in the working-age population results in a rightward shift of the supply of labor curve and an increase in potential GDP. rightward shift of the demand for labor curve and no change in potential GDP. leftward shift of the supply of labor curve and a decrease in potential GDP. rightward shift of demand for labor curve and an increase in potential GDP.

rightward shift of the supply of labor curve and an increase in potential GDP.

If new capital or technology increases labor productivity, the supply of labor ________ and the demand for labor ________. stays the same; increases decreases; stays the same increases; increases increases; decreases

stays the same; increases

Ms. Krupsky has shorthand and typing skills and still finds herself unemployed. In today's economy, Ms. Krupsky is an example of what type of unemployment? frictional unemployment structural unemployment cyclical unemployment None of the above answers is correct.

structural unemployment

When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing frictional and cyclical unemployment. structural unemployment. cyclical unemployment. frictional unemployment.

structural unemployment.

Substitution bias in the CPI refers to the fact that the CPI substitutes quality changes whenever they occur without taking account of the cost of the quality changes. takes no account of the substitution of goods by consumers when relative prices change. takes into account the substitution of goods by consumers when relative prices change. substitutes relative prices for absolute prices of goods.

takes no account of the substitution of goods by consumers when relative prices change.

Neoclassical growth theory attributes economic growth to fiscal policy. the law of diminishing returns. increasing population growth. technological change.

technological change

The neoclassical growth theory says, in part, that technological change leads to economic growth. the differences in nation's growth rates will persist indefinitely. a population explosion driven by economic growth will end economic growth. technology does not play a role in economic growth.

technological change leads to economic growth.

Looking at inflation rates in the United States since the 1970s/early 1980s we see that the inflation rate increased with the increased growth of the 1990s. the 1970s/early 1980s experienced the highest inflation rates. the highest inflation rates were the double digits during the 1990s. inflation fell the most during the 1970s productivity slowdown.

the 1970s/early 1980s experienced the highest inflation rates.

The primary cause of inflation (per class discussion and most economists) is: the FED injecting too much money into the financial system and keeping interest rates too low. severe supply chain constraints. too much fiscal (i.e., deficits created by congress and the president) spending. too many imported products.

the FED injecting too much money into the financial system and keeping interest rates too low.

The primary tool for policy makers in dealing with inflation is: the FED raising interest rates and cutting money supply growth. the FED lowering interest rates and increasing money supply growth. Congress and the President reducing the budget deficit and national debt. Increasing tariffs and quotas on foreign goods.

the FED raising interest rates and cutting money supply growth.

If a rich country grows at a faster rate than a poor one, then the difference in their living standards will not change over time. the gap in their standard of living will close over time. whether or not the living standards gap widens or closes over time depends on the absolute size of the relative growth rates. the gap in their standard of living will widen over time.

the gap in their standard of living will widen over time.

Other things remaining the same, the greater the expected profit, the flatter is the investment demand curve. the greater the amount of investment. the steeper is the investment demand curve. the less the amount of investment.

the greater the amount of investment.

Two methods of measuring GDP are the goods approach and the services approach. the saving approach and the investment approach. the income approach and the receipts approach. the income approach and the expenditure approach.

the income approach and the expenditure approach

Potential GDP is the level of GDP not adjusted for price changes. the maximum amount of GDP that can be produced ceteris paribus assuming all resources are fully and effectively employed in the economy. another name for real GDP. always different from real GDP.

the maximum amount of GDP that can be produced ceteris paribus assuming all resources are fully and effectively employed in the economy.

GDP declines during a decrease in unemployment. the movement from below potential GDP back to potential GDP. the movement from peak to trough. the movement from trough to peak.

the movement from peak to trough

Real GDP decreases during the movement from trough to peak. the movement from peak to trough. a decrease in unemployment. the movement from below potential GDP back to potential GDP.

the movement from peak to trough

The primary concern for aggressively reducing inflation is: the risk of a recession. the risk of falling interest rates. the risk of too low of unemployment.. true for all of the answers.

the risk of a recession

A market is allocatively efficient if the sum of the consumer surplus and the producer surplus has been maximized. profit has been maximized. producer surplus has been maximized. consumer surplus has been maximized.

the sum of the consumer surplus and the producer surplus has been maximized

When cyclical unemployment is zero, cyclical and frictional unemployment are zero. frictional unemployment is zero. structural unemployment is zero. the unemployment rate equals the natural unemployment rate.

the unemployment rate equals the natural unemployment rate.

Potential GDP is the value of production when all the nation's resources are fully employed. the maximum GDP that an economy actually achieves throughout its entire history. the level of GDP achieved during periods when 100 percent of the labor force is employed. a goal that can never be achieved by the economy.

the value of production when all the nation's resources are fully employed

Intermediate goods are excluded from GDP because their inclusion would involve double counting. they represent goods that have never been purchased so they cannot be counted. the premise of the question is incorrect because intermediate goods are directly included in calculating GDP. their inclusion would understate GDP

their inclusion would involve double counting

The employment-to-population ratio is defined as total employment divided by the labor force then multiplied by 100. total employment divided by the working-age population then multiplied by 100. total employment divided by labor hours then multiplied by 100. the labor force divided by the working-age population then multiplied by 100.

total employment divided by the working-age population then multiplied by 100.

The ________ is calculated as the number of people ________ divided by the labor force multiplied by 100. employment rate; employed unemployment rate; unemployed employment-to-population ratio; in the working age population employment-to-population ratio; unemployed

unemployment rate; unemployed

The Consumer Price Index is a measure of the average of the prices paid by ________ for a fixed basket of consumer goods and services. consumers living in cities with a population greater than 100,000 urban consumers urban wage earners and clerical workers all consumers

urban consumers