Macro Exam 2
Unemployment rate =
# of unemployed / labor force x 100
If there are constant returns to scale, the production function can be written as
Y/L = A F(xL, xK, xH, xN)
the measure of the cost of a basket of goods and services bought by firms
producer price index
If a country's saving rate increases, then in the long run_________
productivity and real GDP per person are both higher
Consumption consists of spending by households on goods and services, with the exception of ______
purchases of new houses
When a union raises the wage above the equilibrium level, it __________
raises the quantity of labor supplied and reduces the quantity of labor demanded, resulting in unemployment.
A recession has traditionally been defined as a period during which______
real GDP declines for 2 consecutive quarters
Interest rate corrected for inflation
real interest rate
GDP deflator reflects only prices of all goods and services ________
sold domestically
organized withdrawal from a labor firm by a union
strike
unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one
structural unemployment
People who are unemployed because wages are, for some reason, set above the level that brings labor supply and demand into equilibrium are best classified as_____
structurally unemployed
society's understanding of the best way to produce goods and services
technological knowledge
What agency calculates the CPI?
the Bureau of labor statistics
GDP is defined as
the market value of all final good and services produced within a country in a given period of time
For any given year, the CPI is the price of the basket of goods and services in the _____
given year divided by the price of the basket in the base year, then multiplied by 100
What items are included in US GDP?
goods produced by foreign citizens working in US
Investment in_______
physical capital, like investment in human capital, has an opportunity cost
CPI=
current year/base year x 100
GDP is equal to_______
-C + I + G + NX -Y -the market value of all final goods and services produced within a country in a given period of time
In a market economy, we know that a resource has become scarcer when
-its price rises relative to other prices -it is non-renewable and some of it is used -people search for substitutes
What is a widely acknowledged problem with using the CPI as a measure of the cost of living?
-unmeasured quality change -substitution bias -introduction of new goods
The Bureau of Labor Statistics places people in the "employed" category if they__________
-work without pay in a family member's business -are temporarily absent from their jobs -are self-employed
In the base year, the GDP deflator is always
100
If 2009 is the base year, then the CPI for 209 was____
100 (x/x x100)=100 for when base year is same year as being asked
Real GDP=
Base year price x current year quantity
when bo office receips are corrected for inflation, the most popular movie of all time is?
Gone with the wind
Who is included in the labor force?
Izumi, who does not have a job, but has applied for several in the last week Kawanari, who is on temporary layoff
Jenna is searching for a job that suits her tastes about where to live and coworkers. Mary is looking for a job that makes best use of her skills.
Jenna and Mary are both frictionally employed
GDP per person=
Nominal GDP/Population
The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called
Physical capital
Nominal GDP =
Price x Quantity
Inflation rate=
current yr- price index (last year)/price index (last year)
Who would not be included in the labor force by the Bureau of Labor Stats?
Takaju; who has retired and is not looking for work
The market values of both owner-occupied housing services and rental housing services are included in GDP. T/F
True
The CPI is a measure of the overall cost of the goods and services bought by _______
a typical consumer
The deviation of unemployment from its natural rate is called
cyclical unemployment
indexation
automatic correction by law or contract of a dollar amount for the effects of inflation
the deviation of unemployment from its natural rate
cyclical unemployment
Suppose that an American opens and operate a candy factory in Finland. This is an example of ________
foreign direct investment. American saving is used to finance Finish investment
spending by households on goods and services, with the exception of purchases of new housing
consumption
the property that where-by countries start off poor tend to grow more rapidly than countries that start off rich
catch-up effect
the process by which unions and firms agree on the terms of employment
collective bargaining
a measure of the overall cost of the goods and services bought by a typical consumer
consumer price index
unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills
frictional unemployment
People who are unemployed b/c of job search are best classified as ________
frictionally unemployed
the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases
diminishing returns
A leading environmental group recently published a report contending that humans are running a "resource deficit" because we are using natural resources faster than they can be regenerated. The group claims that this means that economic growth will eventually stop, and will even be reversed. An economist would
disagree with the report, in part because it ignores the mitigating effects of technological change.
individuals who would like to work but have given up looking for a job
discouraged workers
above-equilibrium wages paid by firms to increase worker productivity
efficiency wages
labor force =
employed + unemployed
For an economy as a whole, income must equal expenditure b/c
every dollar of spending by some buyer is a dollar of income for some seller
net exports of goods and services =
exports - imports
stock of equipment and structures used to produce goods and services
physical capital
the knowledge and skills workers acquire through education, training, and experience
human capital
Countries that have lower levels of real GDP per person than the United States _______
in some cases have growth rates that are higher than the US and in other cases that are lower than the US
the percentage of change in the price index from the preceding period
inflation rate
What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and service?
investment
spending on capital equipment, inventories, and structures, including household purchases of new housing
investment
process where workers find jobs according to tastes and skills
job search
Proprietary technology is knowledge that is _____
known only by the company who discovered it
labor force participation rate =
labor force / adult population x 100
the percentage of the adult population that is in the labor force
labor force participation rate
In countries that experience political instability, standards of living tend to be low because of ________
lack of respect for property rights
GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home b/c
measuring them is so difficult
When there is no cyclical unemployment
natural rate of unemployment
the inputs into the production of goods and services that are provided by nature, such as land, rivers, and mineral deposits
natural resources
The GDP deflator is the ratio of _____
nominal GDP to real GDP times 100
the interest rate usually reported without correction for inflation
nominal interest rate
Real interest rate =
nominal interest rate - inflation rate
GDP deflator=
nominal/real x100
Transfer payments are ______
not included in GDP b/c they are not payments for currently produced goods or services
Productivity is defined as
the quantity of goods and services produced from each unit of labor input.
Labor force =
unemployed + employed
a government program that partially protects workers' incomes when they become unemployed
unemployment insurance
% of labor force that is unemployed
unemployment rate
a worker association that bargains with employers over wages, benefits, and working conditions
union
What is not a widely acknowledged problem with using the CPI as a measure of the cost of living?
unmeasured price change