Macro Unit 2

When a price, wage, or interest rate is adjusted automatically with inflation, it is said to be __________.

indexed

The unemployment rate may underestimate the true extent of unemployment if:

many part-time employees would like to work fulltime, but are unable to get the additional work.

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:

14.40%

In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483 persons employed. The local unemployment rate:

2.10%

If the price index moves from 107 to 110, the rate of inflation is:

2.80%

If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals:

25%

Craigburg has a working age population of 20 million. Of those, 11 million are employed and 1 million are unemployed. The unemployment rate is ________ and the participation rate is __________.

8.3%; 60%

Which of the following is included in the calculated Gross Domestic Product?

A local ice cream store sells $17,000 worth of cones & sundaes on July 1.

the labor force consists of:

all adults who are working or actively seeking work

In macroeconomics, the connection from inputs to outputs for the entire economy is called _______________.

an aggregate production function

To compare the GDP of two different countries with different currencies, it is necessary to use _________________________.

an exchange rate

Which of the following factors contribute to economic growth?

an increase in the proportion of the population that is college educated

Which of the following are most likely classified by economists as consumer durable goods?

automobiles, furniture

Economists typically measure economic growth by tracking:

real GDP per capita

The __________________ is the nominal interest rate minus the rate of inflation.

real interest rate

The nominal value of any economic statistic refers to the number that is actually announced at that time, while the ________________ refers to the statistic after it has been adjusted for inflation.

real value

One of the reasons that a rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer's true cost of living, is:

substitution bias

The most commonly cited measure of inflation in the United States is:

the Consumer Price Index (CPI)

Inflation can be calculated in terms of how the overall cost of ___________________ changes over time.

the basket of goods

If a nation's labor force receives a significant influx of young workers:

the natural rate of unemployment is likely to increase

Which of the following is included in GDP calculations?

the university tuition paid to enroll in a course

GDP does not directly include:

the value of intermediate goods sold during a period.

Frictional unemployment is:

unemployment that is due to normal turnover in the labor market.

______________________ argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate.

Efficiency wage theory

When we want to measure wage inflation in the labor market, we use the:

Employment Cost Index

Ethiopia has a GDP of $8 billion (measured in U.S. dollars) and a population of 55 million. Costa Rica has a GDP of $9 billion (measured in U.S. dollars) and a population of 4 million. Calculate per capita GDP for each country.

Ethiopia = $145.00 Costa Rica = $2250.00

A nation's prosperity is sometimes measured in terms of ____.

GDP per capita

When discussing economic growth, it is often useful to focus on ____________, to avoid studying changes in the size of GDP that represent only having more people in the economy, and focus on those increases in GDP which represent an actual rise in the standard of living on a per person basis.

GDP per capita

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

It would fall

_____ is output per hour in the business sector.

Productivity

_____ is the output per hour in the business sector.

Productivity

_____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s.

The Industrial Revolution

Increased investment alone will guarantee economic growth

This is a false statement, because economic growth hinges on the quality and type of investment as well as the human capital and improvements in technology.

Frictional unemployment occurs when:

a worker decides to quit one job to seek a different job.

What distinguishes the real value of a statistic from the nominal value of a statistic?

adjusting for inflation

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________.

business cycle

Which of the following is not included in GDP?

cash income paid to a day laborer that is not reported to the tax authorities

The demand measure of GDP accounting adds together:

consumption, investment, government purchases, and trade balance.

Another term used to describe negative inflation is:

deflation

With regard to the economy, the term negative inflation is synonymous with which of the following?

deflation

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are:

expansion, peak, recession, trough

The difference between nominal GDP and real GDP is:

real GDP adjusts for inflation

Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then:

exports exceed imports by $50 billion

In order to avoid double counting, statisticians just count the __________________.

final goods & services

A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be:

frictionally unemployed

Final goods or services used to compute GDP refer to:

goods & services purchased by the ultimate users

The effects of inflation are seen in:

goods, services, wages, & income levels

In the long run, the most important source of increase in a nation's standard of living is a:

high rate of economic growth

Consumption is the purchase of goods & services by:

households

Which of the following is most likely to contribute to economic growth as measured by GDP per capita?

increased capital formation

A payment is said to be ________________ if it is automatically adjusted for inflation.

indexed

__________ implies that pressure for price increases reaches across _______________markets, not just one.

inflation; most

Investment in human capital:

is characterized by both b) & c). (can be acquired through on-the-job training. & is an important source of economic growth.)

Karen chooses to go to university fulltime rather than to work. Karen:

is not part of the labor force

A nation can achieve higher economic growth if:

it devotes more resources to research and development.

A university student who is enrolled in school fulltime and not seeking employment is considered:

out of the labor force

The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer�s true cost of living, because it doesn�t take into account that the person can substitute between goods according to changes in their relative prices.

overstate

The value of what is produced per worker, or per hour worked, is called _____.

productivity

To achieve a high standard of living, a nation should:

promote economic growth

One factors that complicate the calculation of the inflation rate is:

quality bias sometimes called new product bias