Macroeconomics MyEconLab Ch.4 Homework, Macroeconomics MyEconLab Ch.5 Homework, ECON Final, Econ Exam 1 Review, Exam 2 Macroeconomics, ECON Chap 1 Pearson, ECON-2301 Chapter 2

The United​ Nations' Human Development Index​ (HDI) is based on real GDP per​ person, life expectancy at​ birth, and indicators of the quality and quantity of education. 1)The HDI might be better than real GDP as a measure of economic welfare because the HDI​ ______. The HDI includes measurements of​ ______, which are not measured in real GDP. 2) If the HDI is expanded to include items such as​ pollution, resource​ depletion, and political freedom​ ______. 3) Other influences on economic welfare that could be included in a comprehensive measure include all of the following except​ ______.

1) includes real​ GDP, but also includes other factors that influence our standard of​ living; ​health, life​ expectancy, and education 2) it would be difficult to measure 3) the beauty of local scenery

1. To keep pace with a growing​ population, approximately​ _______ jobs must be created each month. 2. Normally when the pace of job creation exceeds the increase in​ population, the unemployment rate ​_______. 3. When the pace of job creation exceeds the increase in​ population, the unemployment rate sometimes increases because​ _______. 4. We would expect the labor force participation rate to​ _______ in response to job creation in excess of population growth. 5. We would expect an increase in the growth rate of real GDP to​ _______ jobs and​ _______ unemployment.

137,000 falls discouraged workers return to the labor force increase increase; decrease

You plan to go to school this summer. If you​ do, you​ won't be able to take your usual summer job that pays ​$12,000 for the summer. The cost of tuition is ​$3,000 and textbooks cost ​$200. You live with your​ family, which covers your living expenses of ​$1,900. What is your opportunity cost of going to school this​ summer?

15,200

1. From the second quarter of 2013 to the second quarter of​ 2014, real GDP grew by ​_______ percent. 2. Comparing the increase in the second quarter with the​ year-on-year increase shows that the real GDP growth rate is​ _______. 3.​ Generally, business inventories and real GDP​ _______. Inventory changes sometimes lag real GDP changes because​ _______.

2.4 increasing change in the same​ direction; inventories increase during​ recessions, and when an economy moves into expansion it takes some time to move the inventories down to target levels before businesses start producing more inventory

During a​ year, a​ firm's depreciation is ​$1,000 and gross investment is ​$5,000. The​ firm's net investment is​ ______.

4,000

Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of hours the jewelry shop is open as shown in the table to the right. He would have to hire a worker for those hours at a wage rate of​ $25 per hour. hr total revenue $ 1 $275 2 $375 3 $450 4 $500 5 $530 6 $550 Using marginal​ analysis, determine how many hours should Ivan extend his hours of​ operations?

5 hours

Consider the figure showing supply curves for soft drinks. Suppose the economy is at point

A movement to point d would be the result of

________ behavioral assumption about humans was that people usually act in a​ rational, selfminusinterested way.

Adam Smith's

Which of the following correctly describes how price adjustments eliminate a​ shortage?

As the price​ rises, the quantity demanded decreases while the quantity supplied increases.

1. Why does the BEA revises its estimates of​ GDP? 2. What is the percentage difference between the highest and lowest estimate of real GDP in the second quarter of 2009​ trough? 3. How did the revisions change the estimates of the​ peak, trough,​ recession, and recovery over the business​ cycle? 4. Why did the growth rate of consumption expenditure have a bigger effect on real GDP growth than the growth rates of investment and net​ exports?

As time​ passes, more accurate data become available and some data that is used to measure GDP is available only with a time lag. 2 percent The 2010 and 2011 estimates of lowered the value of real GDP at the trough while the 2012 estimate raised the value. Consumption expenditure is a larger component of GDP than investment and net exports combined.

Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut​ market? A. If peanuts were less​ expensive, I'd buy them more often. B. At a price of​ $1 per​ pack, I plan to buy 2 packs of peanuts per week. Your answer is correct.C. I eat peanuts to complement cola. D. ​I'll stop eating peanuts when I can afford to buy walnuts.

At a price of​ $1 per​ pack, I plan to buy 2 packs of peanuts per week.

Markets A. facilitate trade. B. allow traders to enjoy gains from trade. C. coordinate price information between buyers and sellers. D. All of the above answers are correct.

D. All of the above answers are correct.

Which of the following is an example of a final good or service​? A. Dan bought a Toyota Camry. Your answer is correct.B. Dell buys Intel chips. C. PCL construction company buys Lafarge cement. D. GM buys Firestone tires.

Dan bought a Toyota Camry.

If it costs Hobie​ $900 to produce 5 lamps and​ $1,200 to produce 6​ lamps, then the difference of​ $300 is the marginal cost of producing the 5th lamp.

False

The table shows items of income and expenditure in the United States in 2009. Calculate GDP in the United States in 2009.

GDP in the United States in 2009 equals $14,060 billion.

Which of the following statements describes a change in the quantity supplied and which describes a change in supply​? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.

I and IV are changes in supply and II and III are changes in the quantity supplied.

In 2014​, flow D was ​$2 trillion​, flow E was negative $ 1 trillion​, flow A was ​$10 trillion​, and flow C was ​$4 trillion. Calculate consumption expenditure.

In 2014​, consumption expenditure is ​$5 trillion.

The figure shows the circular flow model. In 2017​, flow D was ​$2 trillion​, flow E was negative $ 1 trillion​, flow A was ​$10 trillion​, and flow C was ​$4 trillion. Calculate consumption expenditure. Consumption Expenditure = A-(D+C-E)

In 2017​, consumption expenditure is ​$5 trillion.

The figure shows the circular flow model. In 2017​, flow A was ​$572 billion​, C was ​$129 billion​, B was ​$278 billion​, and E was $ 39 billion. Calculate investment. Investment = A-(B+C+E)

In 2017​, investment is ​$126 billion.

The BLS reported that in the second quarter of​ 2016, employment increased by​ 100,000 to​ 150,959,000 and the unemployment rate fell from 5 percent to 4.9 percent. About 1.3 million people were marginally attached workers and 0.6 million of them were discouraged. Calculate the change in unemployment in the second quarter of 2016. With 1.3 million marginally attached workers and 0.6 million of them discouraged​ workers, what are the characteristics of the other 0.7 million marginally attached​ workers? With 1.3 million marginally attached workers and 0.6 million of them discouraged​ workers, the other 0.7 million marginally attached workers​ _______.

In the second quarter of​ 2016, the number of unemployed changed by -161,828. have stopped looking for work for reasons other than their inability to find a job

U.K. Living Standards Outstrip U.S. Oxford analysts report that living standards in Britain are set to rise above those in America for the first time since the nineteenth century. Real GDP per person in Britain will be pound​23,500 this​ year, compared with pound​23,250 in​ America, reflecting not only the strength of the pound against the dollar but also the UK​ economy's record run of growth since 2001. But the Oxford analysts also point out that Americans benefit from lower prices than those in Britain. ​Source: The Sunday Times​, January​ 6, 2008 If real GDP per person is greater in the United Kingdom than in the United States but Americans pay lower​ prices, does this comparison of real GDP per person really tell us which country has the higher standard of​ living?

No. To determine which country has the higher standard of​ living, we need to use purchasing power parity prices.

An economy produces only apples and oranges. The base year is​ 2015, and the table gives the quantities produced and the prices. Calculate nominal GDP in 2015 and 2016. Quantities Apples 2015- 100 2016- 150 Oranges 2015- 90 2016- 200 Prices Apples ​2015- $0.50 ​2016- $1.50 Oranges ​2015- $1.00 ​2016- $2.00

Nominal GDP in 2015 is ​$140. Nominal GDP in 2016 is ​$625.

1. Following the​ 2008-2009 recession, the unemployment rate peaked in​ ______. 2. Looking at the three unemployment measures​ U-3, U-4, and​ U-5 from January 2009 to July​ 2010, we can conclude all of the following except that​ ______. 3. Unemployment benefits influence the unemployment rate for all of the following reasons except​ ______. 4. Unemployment benefits influence cyclical unemployment initially and natural unemployment eventually. 5. The rise in unemployment after​ mid-2009 is most likely​ ______ 6. To create more​ jobs, the U.S. government can do all of the following except​ ______.

October 2009 the​ employment-to-population ratio is rising receiving these benefits is a privilege and they encourage people to find jobs as quickly as possible True cyclical increase unemployment benefits

News release In May​ 2017, real personal consumption expenditures​ (PCE) was​ $11,845 billion and the PCE deflator was 112.257. In June​ 2017, real personal consumption expenditure was​ $11,850 billion and personal consumption expenditure was​ $13,305 billion. ​Source: BEA, July​ 31, 2017 Calculate personal consumption expenditure in May 2017 and the PCE deflator in June 2017. Was the percentage increase in real personal consumption expenditure greater or smaller than that in personal consumption​ expenditure?

Personal consumption expenditure in May 2017 was ​$13,297 billion. The PCE deflator in June 2017 was 112.3. The percentage change in real personal consumption expenditure between May 2017 and June 2017 was 0.04 percent. The percentage change in personal consumption expenditure between May 2017 and June 2017 was 0.06 percent. The percentage change in real personal consumption expenditure is smaller than the percentage change in personal consumption expenditure.

An economy produces only apples and oranges. The base year is​ 2015, and the table gives the quantities produced and the prices. Calculate real GDP in 2015 and 2016 expressed in​ base- year prices. Quantities 2015 2016 Apples 60 80 Oranges 160 220 Prices 2015 2016 Apples ​$0.50 ​$0.25 Oranges ​$1.00 ​$2.00

Real GDP in 2015 expressed in​ base-year prices is ​$50. Real GDP in 2016 expressed in​ base-year prices is ​$135.

Which of the following is an example of an intermediate good or service​? A. Mike bought Puma shoes. B. United buys Boeing aircrafts. C. Sarah bought a Sony HDTV. D. Samsung buys compressors for manufacturing refrigerators.

Samsung buys compressors for manufacturing refrigerators.

A typical family on Sandy Island consumes only juice and cloth. Last​ year, which was the base​ year, the family spent ​$42 on juice and ​$15 on cloth. In the base​ year, juice was ​$6 a bottle and cloth was ​$3 a length. This​ year, juice is ​$7 a bottle and cloth is ​$10 a length. Calculate a. The CPI basket. b. The CPI in the current year. c. The inflation rate in the current year.

The CPI basket is 7 bottles of juice and 5 lengths of cloth. The CPI in the current year is 173.7 The inflation rate in the current year is 73.7 percent.

Hardworking Americans Should Not Be Living in Poverty The federal minimum wage has remained frozen for the past three years at​ $7.25 an​ hour, while the prices of gas and milk have risen steadily. Over this​ three-year period, the real value of the minimum wage has fallen to​ $6.77 per hour. ​Source: CNN​, July​ 25, 2012 By what percentage did the CPI increase over these three​ years?

The CPI increased by 6.6 percent over these three years.

Adjusted for​ Inflation, the Federal Minimum Wage is Worth Less than 50 Years Ago The federal minimum wage was raised to​ $7.25 an hour from​ $6.55 nearly seven years ago. Despite periodic​ increases, its buying power​ hasn't kept up with inflation. In​ 1968, the federal minimum was equivalent to​ $10.90 in 2015​ dollars, nearly​ $4 higher than​ today's rate. ​Source: CNN​, July​ 25, 2012 Given the additional information that in 1968 the federal minimum wage was​ $1.60 an​ hour, by what percentage did the CPI increase between 1968 and​ 2015?

The CPI increased by 581 percent between 1968 and 2015.

Choose the statement that is incorrect. A. The Lucas wedge accumulated to​ $400,000 per person by 2013. B. The Lucas wedge arises from the slowdown of productivity growth that began during the 1970s. C. The Lucas wedge equals real GDP minus potential GDP. Your answer is correct.D. The Lucas wedge is the dollar value of the accumulated gap between what real GDP per person would have been if the 1960s growth rate had persisted and what real GDP per person turned out to be.

The Lucas wedge equals real GDP minus potential GDP.

Read the news clip then answer the following questions. Five Measures of Growth That Are Better Than GDP Speaking at the World Economic​ Forum, Stewart​ Wallis, a​ self-described advocate of a new economic​ system, suggested five economic indicators that he says are better than GDP. His five are Good​ jobs, Well-being,​ Environment, Fairness, and Health. ​Source: World Economic​ Forum, April​ 19, 2016 1. What are the factors that the news clip identifies as limiting the usefulness of GDP as a measure of economic​ welfare? 2. What are the challenges faced in trying to incorporate measurements of the factors suggested by Mr. Wallis in an effort to better measure economic​ welfare? 3. Does the United​ Nations' Human Development Index captures any of the five​ indicators? The UN Human Development Index captures​ _______ in its measurement. 4. What factors included in GDP and that increase the likelihood of a high correlation between GDP and​ Wallis' indicators of economic welfare​ indirectly?

The failure to include a measurement of good​ jobs, well-being,​ environment, fairness, and health An accurate measure and an appropriate weighting of the factors health good​ jobs, health, and environment

The table shows the data reported by the Bureau of Labor Statistics in 2006. Calculate the labor​ force, employment, and the unemployment rate. Labor Force = (Labor force participation rate/100)xWorking-age population Emploment = (employment-to-population ratio/100)xWorking-age population Unemployment rate = (number of people unemployed/labor force)x100

The labor force is 154 million. Employment is 146 million. The unemployment rate is 5.3 percent.

Every​ week, Sally plays guitar for two hours​, and her grade on each psych test is 75 percent. Last​ week, after playing guitar for two hours​, Sally considered playing for another hour. She decided to play for another hour and cut her study time by one hour. But last​ week, her psych grade fell to 70 percent. Given that Sally spent a third hour playing guitar​, what can you conclude about the marginal benefit and marginal cost of the second hour of playing guitar​?

The marginal benefit of the second hour of playing guitar exceeded its marginal cost.

Which of the following statements by Tom demonstrates that his buying plans obey the law of demand​? A. At an average price of​ $80 per text​ book, I plan to buy 5 text books per semester. B. I​ can't afford as many textbooks because my rent has increased. C. The only thing​ that's changed is the price of​ textbooks: they've become more expensive and now​ I'm not buying as many. Your answer is correct.D. For​ me, a good course website is a substitute for a textbook.

The only thing​ that's changed is the price of​ textbooks: they've become more expensive and now​ I'm not buying as many.

Which of the following will hold true if the market for cameras is in equilibrium at a price of​ $40?

The quantity of cameras produced will equal the quantity of cameras bought in the market.

A firm agreed to pay its workers ​$24 an hour in 2016 and ​$46 an hour in 2017. The price level for these years was 241 in 2016 and 245 in 2017. Calculate the real wage rate in each year​ (to the nearest​ cent). What is the real wage increase received by these workers in​ 2017?

The real wage rate in 2016 was ​$9.96. The real wage rate in 2017 was ​$18.78. The change in the real wage rate between 2016 and 2017 is 8.82 dollars.

In the New Orleans metropolitan area in August​ 2005, the labor force was​ 634,512 and​ 35,222 people were unemployed. In September 2005 following Hurricane​ Katrina, the labor force fell by​ 156,518 and the number employed fell by​ 206,024. Calculate the unemployment rate in August 2005 and in September 2005. Unemployment rate = number of people unemployed/labor force x 100

The unemployment rate in August 2005 was 5.6 percent. The unemployment rate in September 2005 was 17.7 percent.

Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan. Toyota assembles cars for the U.S. market in Kentucky. Choose the correct statement. A. The wings appear as a positive entry in calculating U.S. GDP. B. The wings appear as investment in U.S. GDP. C. The wings appear as imports in U.S. GDP. Your answer is correct.D. The wings appear as exports in U.S. GDP. Choose the statement that is incorrect. A. If any parts for the cars come from​ Japan, they are U.S. imports. B. Expenditure made by Toyota on building the assembly plant in Kentucky is recorded as investment. C. Household expenditure on the cars is part of consumption expenditure in calculating U.S. GDP. D. If any parts for the cars come from​ Japan, they are recorded as a positive entry in calculating U.S. GDP.

The wings appear as imports in U.S. GDP. If any parts for the cars come from​ Japan, they are recorded as a positive entry in calculating U.S. GDP.

Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan. Toyota assembles cars for the U.S. market in Kentucky. Explain where these activities appear in the U.S. National Income and Product Accounts. Choose the correct statement about the wings of the new Boeing 787 Dreamliner. Choose the correct statement about the cars assembled by Toyota in Kentucky.

The wings appear as imports in U.S. GDP. Household expenditure on the cars is part of U.S. consumption expenditure and expenditure made by Toyota on building the assembly plant in Kentucky is recorded as U.S. investment.

Which of the following best describes an assumption economists make about human​ behavior? A. They assume that individuals act randomly. B. They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time. Your answer is correct.C. They assume that people take into account the question of fairness in all decisions they make. D. They assume that individuals act rationally all the time in all circumstances.

They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.

n economy produces only apples and oranges. The base year is​ 2015, and the table gives the quantities produced and the prices. Calculate the​ chained-dollar real GDP in 2016 expressed in 2015 dollars.

The​ chained-dollar real GDP in 2016 expressed in 2015 dollars is ​$285.

Which of the following statements is false​? A. Trademinusoffs do not apply when the consumers purchase a product for which there is excess​ supply, such as a stock clearance sale. Your answer is correct.B. Economics is a social science that studies the trademinusoffs we are forced to make because of scarcity. C. Anytime you have to decide which action to take you are facing an economic trademinusoff. D. Every​ individual, no matter how rich or​ poor, is faced with making trademinusoffs.

Trademinusoffs do not apply when the consumers purchase a product for which there is excess​ supply, such as a stock clearance sale.

A high unemployment rate tells us that a large percentage of the labor force is​ unemployed, but it​ doesn't tell us why the unemployment rate is high. What unemployment measure tells us if ​(i) people are searching longer than usual to find a​ job, ​(ii) more people are economic​ part-time workers, or ​(iii) more unemployed people are job​ losers? The​ ______ measure of unemployment tells us if people are taking longer than usual to find a job. The​ ______ measure of unemployment tells us if more people are economic​ part-time workers. The​ _______ measure of unemployment tells us if more unemployed people are job losers.

U-1; ​U-6 - ​U-5 U-2

The table lists some macroeconomic data for the United States in 2016. Calculate U.S. GDP in 2016. GDP = Consumption expenditure+Investment+Government expenditure+Net exports Items Wages - 9,908 Consumption Expenditure - 12,498 Other factor incomes - 4,567 Investment - 3,037 Government Expenditure - 3,257 Net Exports - -507

U.S. GDP in 2016 equals ​$18,282 billion.

The IMF World Economic Outlook reports the unemployment rates given in the table. What do these numbers tell us about the relative size of their natural unemployment​ rates? These numbers tell us that most​ likely, ______ the highest natural unemployment rate and​ ______ the lowest natural unemployment rate.

Venezuela and Spain​ have; Singapore has

Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan. Toyota assembles cars for the U.S. market in Kentucky. Explain where these activities appear in​ Japan's National Income and Product Accounts.

When the wings are sent to the United​ States, their value appears as Japanese exports in calculating​ Japan's GDP.

Orange juice drinkers want to consume more orange juice at a lower price. Which of the following events would have this​ effect?

a decrease in the price of orange juice processing

Classify each of the following items as a final good or service or an intermediate good or​ service, and identify which is a component of consumption​ expenditure, investment, or government expenditure on goods and​ services: Item 1. Upper A new limousine for the president Item 2. Upper A textbook bought by a student Item 3. Coffee beans bought by Starbucks Item 4. Upper A new car bought by Hertz comma the car rental firm Item 1 is​ ______ and item 2 is​ ______. Item 3 is​ ______ and item 4 is​ ______.

a final good which is government expenditure; a final good that is consumption expediture an intermediate good​; a final good that is investment

Classify each of the following items as a final good or service or an intermediate good or service and identify which is a component of consumption​ expenditure, investment, or government expenditure on goods and​ services: Item 1. The purchase of a new security system for Congress Item 2. Jet engines bought by Boeing Item 3. Upper A new bridge across the creek in the Augusta National Golf Club Item 4. Banking services bought by a student Item 1 is​ ______ and item 2 is​ ______. Item 3 is​ ______ and item 4 is​ ______.

a final good which is government expenditure; an intermediate good a final good that is investment; a final good that is consumption expenditure

To make total income equal to GDP we​ ______ indirect taxes less subsidies and​ ______ depreciation.

add; add

Which of the following shifts the demand curve for hot dogs​ leftward?

an increase in the price of a hot dog bun

U.S. Job Openings Rise but Hiring Slips U.S. job openings increased to 5.8 million in April but the number of workers hired decreased to a bit below 5.1 million. ​Source: The Globe and Mail​, June​ 9, 2016 Using the information in the news​ clip, how do you predict the labor force participation​ rate, employment-to-population​ ratio, and unemployment rate​ changed? If the government slashed unemployment​ benefits, how would the numbers in the news clip​ change? Why? Given the information in the news​ clip, the labour force participation rate​ _______. If the government slashed unemployment​ benefits, _______.

and the​ employment-to-population ratio most likely increased and the unemployment rate most likely decreased the number of workers hired would increase

If the marginal cost of producing a television is constant at​ $200, then a firm should produce this item

as long as the marginal benefit it receives is just equal to or greater than​ $200.

The law of demand implies​ that, other things remaining the​ same,

as the price of a cheeseburger​ rises, the quantity of cheeseburgers demanded will decrease.

Ted quits his ​$60,000 -a- year job to be a stay-at-home dad. What is the opportunity cost of his​ decision?

at least​ $60,000

China's Economy Accelerates as​ Retail, Investment Pick Up ​China's real GDP increased 6.9 percent in the first quarter of 2017 from a year earlier. Investment grew by 9.2 percent and retail sales by 10.9 percent. In current​ prices, GDP increased by 11.8 percent from a year earlier. ​Source: Bloomberg News​, April​ 17, 2017 Explain why​ China's real GDP can grow at a 6.9 percent rate when consumption and investment grew faster than 6.9 percent. ​China's real GDP can grow at a 6.9 percent rate when consumption and investment grew faster than 6.9 percent ​ _______.

because government expenditure on goods and services and net exports grew at a rate slower than 6.9 percent

The total amount spent​ _____ is called gross investment.

both buying new capital and replacing depreciated capital

A person has a comparative advantage in an activity whenever he or she

can perform the activity at a lower opportunity cost than can anyone else.

Suppose people buy more of good 1 when the price of good 2 falls. These goods are

complements.

The expenditure approach to measuring GDP sums together​ ______, and the largest component is​ ______.

consumption​ expenditure, investment, government expenditure on goods and​ services, and net​ exports; consumption expenditure

Some Firms Struggle to Hire Despite High Unemployment With about 15 million Americans looking for​ work, some employers are swamped with job​ applicants, but many employers​ can't hire enough workers. The U.S. jobs market has changed. During the​ recession, millions of​ middle-skill, middle-wage jobs disappeared. Now with the​ recovery, these people​ can't find the skilled jobs that they seek and have a hard time adjusting to​ lower-skilled work with less pay. ​Source: The Wall Street Journal​, August​ 9, 2010 If the government extends the period over which it pays unemployment benefits to 99​ weeks, how will the cost of being unemployed​ changed? Extending the period over which the government is willing to pay unemployment benefits to 99 weeks​ ______ the cost of being unemployed and​ ______ the unemployment rate.

decreases; increases

The IMF World Economic Outlook reports the unemployment rates given in the table. Do these numbers tell us anything about the relative size of their labor force participation rates and​ employment-to-population ratios? These numbers​ ______.

do not tell us anything about the relative size of the labor force participation rates or the​ employment- to-population ratios because we​ don't know the sizes of the​ working-age populations,​ employment, or the labor force

A system of property rights

encourages economic growth by creating incentives to invest in capital and to be innovative.

Amazon Will Add​ 100,000 Jobs as​ Bricks-and-Mortar Stores Turn to Rubble Amazon says that it will hire​ 100,000 new employees in the next 18 months.​ Meanwhile, Macy's, J.C.​ Penney, and other traditional retailers are closing stores and laying off workers. And the workers that Amazon is hiring​ aren't the ones being laid off by​ Macy's and J.C. Penney. ​Source: The New York Times​, January​ 13, 2017 Why will the decisions reported in the news clip increase unemployment and what type of unemployment will​ increase? The decisions reported in the news clip will increase unemployment because​ _______. Choose the correct statement

even if all of​ Amazon's new employees come directly from​ unemployment, layoffs from​ Macy's and J.C.​ Penney's will exceed​ 100,000 To the extent that the layoffs at​ Macy's and J.C.​ Penney's are normal labor​ turnover, frictional unemployment will​ increase, and to the extent that​ laid-off workers from​ Macy's and J.C.​ Penney's do not have the skill set to work at​ Amazon, structural unemployment will increase.

Gross domestic product can be measured in two​ ways: By the total​ ______ or the total​ ______. Aggregate income earned is equal to the total amount paid for​ ______ to produce final goods and services. Aggregate expenditure is equal to​ ______. And because firms pay out as incomes everything they receive from the sale of their​ output, aggregate income equals aggregate expenditure.

expenditure on goods and​ services; income earned producing goods and services the factors of production​ used; C​ + I​ + G​ + ​(X-M) True

The table lists some macroeconomic data for the United States in 2015. Explain the approach​ (expenditure or​ income) that you used to calculate GDP. There is sufficient information given in the table to calculate GDP using the​ _______ approach because to calculate GDP using the other method you would also need to know​ _______.

expenditure; indirect taxes less subsidies and depreciation

Allocative efficiency is achieved when

firms produce the goods and services that consumers value most.

GDP Expands 11.4​ Percent, Fastest in 13 Years ​China's gross domestic product grew 11.4 percent last year and marked a fifth year of​ double-digit growth. The increase was especially remarkable given that the United States is experiencing a slowdown due to the​ sub-prime crisis and housing slump. Citigroup estimates that each 1 percent drop in the U.S. economy will shave 1.3 percent off​ China's growth, because Americans are heavy users of Chinese products. In spite of the​ uncertainties, China is expected to post its sixth year of​ double-digit growth next year. ​Source: The China Daily​, January​ 24, 2008 Why might​ China's recent GDP growth rates overstate the actual increase in the level of production taking place in​ China? Explain the complications involved with attempting to compare the economic welfare in China and the United States by using the GDP for each country. ​China's recent​ double-digit GDP growth rates might overstate the actual increase in​ China's production because​ ______. When we attempt to compare the change in economic welfare in China and the United States by using each​ country's GDP growth​ rate, China appears much smaller real GDP per person than United States because​ ______.

goods and services that were traditionally produced in the home are now bought in the market the relative prices in these two countries are very different

Boeing Doubles Outsourcing From India Three Indian firms are producing components for Boeing fighter jets F15 and F18 and for the Chinook​ heavy-lift helicopter in​ Bangalore, Hyderabad, and other places in India. ​Source: The Economics Times​, February​ 17, 2016 Explain how​ Boeing's activities and its transactions affect U.S. and Indian GDP. The sale of​ Boeing's fighter jets and​ heavy-lift helicopters is recorded as​ _______, and the​ Boeing's outsourcing of components to India is recorded as​ _______.

government expenditure in U.S.​ GDP; imports in U.S. GDP

The basic economic problem of scarcity

has always existed and will continue to exist.

Boeing Doubles Outsourcing From India Three Indian firms are producing components for Boeing fighter jets F15 and F18 and for the Chinook​ heavy-lift helicopter in​ Bangalore, Hyderabad, and other places in India. ​Source: The Economics Times​, February​ 17, 2016 Explain how the Indian​ firms' activities and its transactions affect U.S. and Indian GDP. The production of components in India and the sale to Boeing is recorded as an​ ______ in U.S. GDP and as an​ ______ in ​ India's GDP.

import; export

The United​ Nations' Human Development Index​ (HDI) is based on real GDP per​ person, life expectancy at​ birth, and indicators of the quality and quantity of education. Explain why the HDI might be better than real GDP as a measure of economic welfare. Which items in the HDI are part of real GDP and which items are not in real​ GDP? Do you think the HDI should be expanded to include items such as​ pollution, resource​ depletion, and political​ freedom? Explain. What other items should be included in a comprehensive measure of economic​ welfare? The HDI might be better than real GDP as a measure of economic welfare because the HDI​ ______. The HDI includes measurements of​ ______, which are not measured in real GDP. If the HDI is expanded to include items such as​ pollution, resource​ depletion, and political freedom​ ______. Other influences on economic welfare that could be included in a comprehensive measure include​ _______.

includes real​ GDP, but also includes other factors that influence our standard of​ living; ​health, life​ expectancy, and education it would be difficult to measure religious​ freedom, discrimination, and civil or international conflict

An economy produces at point a on the PPF shown in the figure. A drought reduces the amount of wheat produced and the economy produces at point b. The opportunity cost of a unit of wheat​ ________.

increases

Read the news​ clip, then answer the following question. Toyota and Honda Shift Production to North America Toyota plans to stop exporting the Lexus RX to North America from​ Japan, building all of the vehicles in North America. The company will invest​ $98.3 million to boost its production capacity. Honda Motor Co. will shift a major chunk of its manufacturing to North America and increase its production capacity by as much as 40 percent ​Source: The Wall Street Journal​, August​ 8, 2012 Assuming that U.S. consumers buy the same number of Lexus RX models and Hondas regardless of where they are​ built, U.S. GDP​ ______ when Toyota builds the Lexus RX in the United States and Honda increases production in the United States because​ ______.

increases; net exports and investment increase

China's Economy Accelerates as​ Retail, Investment Pick Up ​China's real GDP increased 6.9 percent in the first quarter of 2017 from a year earlier. Investment grew by 9.2 percent and retail sales by 10.9 percent. In current​ prices, GDP increased by 11.8 percent from a year earlier. ​Source: Bloomberg News​, April​ 17, 2017 Explain why the growth rate of GDP in current prices does not provide information about how quickly the economy is really growing. The growth rate of GDP in current prices does not provide information about how quickly the economy is really growing because ​ _______.

it combines price growth and production​ growth, and price growth does not represent growth in the economy

Comparing Real GDP Per Person The International Monetary Fund reported the following data on gross domestic product per​ capita, measured in U.S. dollars at market exchange rates in​ 2016: Canada​ $42,210, China​ $8,113, United Kingdom​ $40,096, and United States​ $57,436. ​Source: International Monetary​ Fund, World Economic Outlook​ Database, April 2017 Explain why the data reported here might be a poor indicator of the differences in economic welfare among​ Canada, the United​ Kingdom, and the United​ States, but nevertheless provide the correct ranking of the countries. The data reported here might be a poor indicator of the differences in economic welfare among​ Canada, the United​ Kingdom, and the United​ States, but nevertheless provide the correct ranking of the countries because​ _______.

items such as​ leisure, home​ production, and ease of access to health care are not included but if these items were included in real GDP the differences between these items are too small to change the ranking in terms of real GDP per person

A​ Half-Year of Job Losses Employers trimmed jobs in June for the sixth straight​ month, with the total for the first six months at​ 438,000 jobs lost by the U.S. economy. The job losses in June were concentrated in manufacturing and​ construction, two sectors that have been badly battered in the recession. ​Source: CNN, July​ 3, 2008 Based on the news​ clip, what might be the main source of increased​ unemployment? Based on the news​ clip, what might be the main type of increased​ unemployment? According to the news​ clip, the main source of increased unemployment might be​ ______, and the main type of increased unemployment is​ ______.

losses in manufacturing and construction​ jobs; cyclical

In the​ figure, if 2 million computers are produced per year then the​ ________ should be produced to achieve the allocatively efficient use of resources

marginal benefit of a computer exceeds the marginal cost of a​ computer, so more computers

Why might the unemployment rate underestimate the underutilization of labor​ resources? The unemployment rate might underestimate the underutilization of labor resources because it does not include​ ______.

marginally attached workers and​ part-time workers who want​ full-time jobs

What is the unemployment rate supposed to measure and why is it an imperfect​ measure? The unemployment rate is supposed to​ ______. It is an imperfect measure because​ ______.

measure underutilized​ labor; it does not include marginally attached workers and​ part-time workers who want​ full-time jobs

Real GDP​ ______ indicator of the standard of living because​ ______.

might be an​ unreliable; the standard of living depends on many​ factors, some of which are not part of real GDP

Comparing Real GDP Per Person The International Monetary Fund reported the following data on gross domestic product per​ capita, measured in U.S. dollars at market exchange rates in​ 2016: Canada​ $42,210, China​ $8,113, United Kingdom​ $40,096, and United States​ $57,436. ​Source: International Monetary​ Fund, World Economic Outlook​ Database, April 2017 Explain the special complications involved with attempting to compare the economic welfare in China and the United States by using the GDP for each country. Special complications involved with attempting to compare the economic welfare in China and the United States by using the GDP for each country occur because​ _______.

more household production tasks takes place in the market in the United​ States, and goods and services are valued at different prices in each country

When the market for a commodity is in​ equilibrium:

no economic agent will want to change their behavior.

Jobs and Wages Notch Gains as the Economy Tries to Heal Hiring in recent months has hit a pace last seen during the late 1990s and the labor force participation rate has started to rise but it remains significantly below its​ pre-recession level of 2007. ​Source: The New York Times​, April​ 1, 2016 If all the newly hired people had been​ unemployed, how would the labor force participation rate and unemployment rate have​ changed? If all the newly hired people had previously given up on their job​ search, how would the labor force participation rate and unemployment rate have​ changed? If all the newly hired people had been​ unemployed, the labor force participation rate would have​ _______ and the unemployment rate would have​ _______. If all the newly hired people had previously given up on their job​ search, the labor force participation rate would have​ _______ and the unemployment rate would have​ _______.

not​ changed; decreased increased; decreased

The business cycle is a​ _____ but​ _____ up-and-down movement of total​ _____ and other measures of economic activity

periodic; irregular; production

A substitute in production is a good that is​ _____ another​ good, and a complement in production is a good that is​ _____ another good.

produced in place​ of; produced together with

When economic growth​ occurs, the

production possibilities frontier shifts outward

India to be Home to​ 437,000 Millionaires by 2018 ​India, with the​ world's largest population of poor​ people, is creating millionaires at a rapid pace and by 2018 is projected to have​ 437,000 millionaires measured in U.S. dollars. That is 1 millionaire for about​ 1,600 people living on less than​ $2 a day. ​Source: The Times of India​, July​ 18, 2015 Why might real GDP per person misrepresent the standard of living of the average​ Indian? Why might​ $2 a day underestimate the standard of living of the poorest​ Indians? The value of real GDP per person might misrepresent the average​ Indian's standard of living because​ ______. The standard of living of those living on​ $2 a day might be underestimated because​ ______.

real GDP does not include home production and​ India's real GDP is calculated with the low prices that prevail in India many of the transactions of the poorest people in India do not occur in markets

If the price of a candy bar is​ $1 and the price of a fast food meal is​ $5, then the

relative price of a fast food meal is 5 candy bars.

As output moves from point a to point b to point c along the PPF in the​ figure, the opportunity cost of one more unit of good X

rises. The opportunity cost of one more unit of good Y falls.

Older American Workers Are Still Struggling to Find Jobs Employers are creating new jobs but older workers are not getting them. In August​ 2016, 151,000 new jobs were created. But 2.5 million workers over 55 were either​ unemployed, in​ part-time jobs but wanting full​ time, or had given up on seeking work.​ That's a 12 percent unemployment rate. Age discrimination is illegal but hiring discrimination is hard to prove and economists at the University of California at Irvine and Tulane University say they have found evidence of age discrimination in​ hiring, particularly for older women ​Source: Fortune​, September​ 8, 2016 What type of unemployment might older workers be more prone to​ experience? Explain how the unemployment rate of older workers is influenced by the business cycle. Why might older unemployed workers become marginally attached or discouraged​ workers? Older workers are more prone to experience​ ______ unemployment. During a​ recession, the unemployment rate of older workers​ ______. Older unemployed workers might become marginally attached workers or discouraged workers because​ _______

structural; increases older workers often lack​ resume-writing skills and have a significantly more difficult experience finding a job than younger workers

Retraining Many people graduate with a​ bachelor's degree that​ doesn't open jobs doors. Acquiring a skill provides a way of getting a decent paycheck. But acquiring a skill​ isn't a​ one-time event: It is an ongoing process. A skill​ doesn't last for decades and retraining is required.​ Government-funded job training is a promising way to help individual​ workers, employers and the country as a whole. ​Source: The New York Times​, February​ 26, 2017 What is the main type of unemployment that retraining programs seek to​ avoid? Explain. How might government funded retraining influence the natural unemployment​ rate? Explain. Retraining programs seek to avoid​ _______ unemployment because​ _______. Government funded retraining​ _______the natural unemployment rate because​ _______.

structural; the programs aim to give workers the skills needed for the available jobs decreases; natural unemployment includes structural unemployment

1. The two measures of employment are​ _______. 2. Which of the following categories is included in the Current Population Survey of employment and in the Current Employment​ Survey? 3. Choose the correct statement. 4. Thinking about the information in the news article and its implications for​ unemployment, the change in unemployment is most likely a change in​ _______ unemployment because​ _______. 5. Data on​ employment, unemployment, and underemployment imply that the number​ (and percentage) of people who are not in the labor force has​ _______.

the Current Employment Survey and the Current Population Survey teachers Since​ 2000, the broad cycles in the Current Population Survey and the Current Employment Survey measures of employment are similar. cyclical; as the economy moved into expansion unemployment decreased increased

The IMF World Economic Outlook reports the unemployment rates given in the table. What do these numbers tell us about the phase of the business cycle in the four countries in​ 2016? These numbers tell us that in​ 2016, ______.

the United States and Singapore are most likely in​ expansions, Venezuela is entering a​ recession, and Spain is most likely moving into an expansion

Read the news​ clip, then answer the following questions. GDP Expands 11.4​ percent, Fastest in 13 Years ​China's gross domestic product grew 11.4 percent last year and marked a fifth year of​ double-digit growth. The increase was especially remarkable given that the United States is experiencing a slowdown due to the​ sub-prime crisis and housing slump. Citigroup estimates that each 1 percent drop in the U.S. economy will shave 1.3 percent off​ China's growth, because Americans are heavy users of Chinese products. In spite of the​ uncertainties, China is expected to post its sixth year of​ double-digit growth next year. ​Source: The China Daily​, January​ 24, 2008 According to the expenditure approach for calculating​ China's GDP,​ "each one percent drop in the U.S. economy will shave 1.3 percent off​ China's growth" because as the U.S. economy​ shrinks, ______. ​China's ______ and​ China's real GDP decreases.

the United States imports less from​ China; exports decrease

Exports of goods and services are items that firms in​ _____ produce and sell to​ _____.

the United​ States; any other country

Nominal GDP is​ ______. Real GDP is​ ______.

the value of the final goods and services produced in a given year valued at the prices of that year​; the value of final goods and services produced in a given year when valued at the prices of a reference base year

1. What does Martin Feldstein say is wrong with the growth rate of real GDP per person as a measure of the growth rate of the standard of​ living? Martin Feldstein says the growth rate of real GDP per person​ mis-measures the growth rate of the standard of living because it​ _______. 2. How does the price of a smartphone today compared with the 1991 prices of items it has replaced support​ Feldstein?s argument? The price of a smartphone today compared with the 1991 prices of items it has replaced supports​ Feldstein's argument because replacing a​ $3,000 basket of 13 items in 1991 with a​ $200 on a smartphone​ today_______. 3. How does the falling share of household production in total production modify​ Feldstein?s argument? The falling share of household production in total production modifies​ Feldstein's argument because it​ _______. 4. What other reasons not addressed in the news story make the growth rate of real GDP per person an incomplete measure of the standard of​ living? Among other​ reasons, the growth rate of real GDP per person is an incomplete measure of the standard of living because it​ _______.

undervalues quality improvements and benefits from new goods shrinks GDP but improves the standard of living results in real GDP growth overstating the pace of improvement in the standard of living excludes the value of the increase in leisure time

Suppose that the government is trying to decide between allocating its resources to build more dams or to build more freeways. In terms of forgone​ dams, as more freeways are​ constructed, the marginal benefit of additional freeways​ ________ and the marginal cost of additional freeways​ ________.

​decreases; increases

Real GDP is the value of the​ _____ goods and services produced in a given year expressed in terms of the prices in​ _____ year. Nominal GDP is the value of the​ _____ goods and services produced in a given year expressed in terms of the prices of ​ _____ year.

​final; a​ base; ​final; that same