Study Set Test 2

The labor-force participation rate is computed as

(Labor Force / Adult Population) * 100.

Which of the following is the correct formula for calculating the consumer price index?

(Price of basket of goods and services in current year/price of basket in base year) x 100

If the nominal interest rate is 5 percent, and the rate of inflation is 3 percent, then the real interest rate is equal to

2 percent.

Net Exports equals

Exports - Imports

Which of the following is the correct formula for calculating the inflation rate?

[(CPI in year 2 - CPI in year 1) / CPI in year 1] * 100

Real GDP is the yearly production of final goods and services valued at

constant prices.

The deviation of unemployment from its natural rate is called

cyclical unemployment.

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called

frictional unemployment.

Productivity is defined as the quantity of

goods and services produced from each unit of labor input.

Megan is a landscaper. Which of the following are included in her physical capital?

her landscaping equipment, but not her knowledge of landscaping learned in college

The real interest rate tells you

how fast the purchasing power of your bank account rises over time.

The catch-up effect refers to the idea that

it is easier for a country to grow fast and to catch-up if it starts out relatively poor.

Human capital is the

knowledge and skills that workers acquire through education, training, and experience.

The GDP deflator is the ratio of

nominal GDP to real GDP multiplied by 100.

Cyclical unemployment refers to

short-run fluctuations around the natural rate of unemployment.

The CPI is a measure of the overall cost of

the goods and services purchased by a typical consumer.

GDP is defined as the

value of all final goods and services produced within a country in a given period of time.

Which of the following is the correct formula for calculating the unemployment rate?

(number unemployed / labor force) x 100

The natural rate of unemployment i.) is the economy's desirable level of unemployment. ii.) cannot be affected by economic policy. iii.) is typically constant over time.

None of the above is correct.

Which equation do Economists use to study the composition of GDP?

Y = C + I + G + NX

Greg learns how to bake from his grandmother. This is an example of

human capital, but not technological knowledge.

The labor force equals the

number of people employed plus the number of people unemployed.

The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called

physical capital.

Nominal GDP will definitely increase when

prices increase and output increases.