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The GDP deflator is a measure of the

average level of prices of final goods and services in the economy.

In March 2009, the Seattle Post-Intelligencer newspaper converted to an online-only format. In making this transition, it laid off 145 of its 165 employees. The laid-off employees who were not able to find jobs at another newspaper due to a permanent decline in business in the newspaper industry would be considered

structurally unemployed.

If real GDP in a small country in 2005 is $8 billion and real GDP in the same country in 2006 is $8.3 billion, the growth rate of real GDP between 2005 and 2006

is 3.75%.

In a closed economy, private saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

Y + TR - C - T

The average price of goods and services in the economy is also known as

the price level.

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal

20.

In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA

values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.

The substitution bias in the consumer price index refers to the idea that consumers ________ he quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket.

change; over-estimates

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?

growth in capital per hour accompanied by technological change

The consumer price index implicitly assumes that the demand curve for each good and service in the representative market basket is

vertical.

Refer to Figure above. Which of the following is consistent with the graph depicted?

an increase in the proportion of income after net taxes used for consumption

Refer to Table above. Assume the market basket for the consumer price index has three products Cokes, hamburgers, and CDs with the following values in 2004 and 2009 for price and quantity: The Consumer Price Index for 2009 equals

121.

Which of the following explains the changes in the U.S. adult male labor force participation rate over the period 1948-2008?

younger men are remaining in school longer as compared to the past

Value added equals the market price of the firm's product minus

the price of intermediate goods.

Legalizing all forms of illegal activities

increases GDP and reduces the size of the underground economy.

If the GDP deflator is less than 100, then for that year nominal GDP ________ real GDP.

is less than

The natural rate of unemployment is the amount of unemployment

associated with the business cycle.

If the nominal rate of interest is 6.5% and the inflation rate is 3.0%, what is the real rate of interest?

3.5%

Refer to Figure above. Which of the following is consistent with the graph depicted above?

Technological change increases the profitability of new investment.

An example of business fixed investment spending is

a purchase of a computer by an accounting firm.

Refer to Table above. GDP Deflator for Vicuna for 2007 using 2009 as the base year equals

87.1.

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

not in the labor force.

Actual real GDP will be above potential GDP if

firms are producing above capacity.

The purchase by a foreign government of an airplane produced in the United States is included in U.S.

net exports.

The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S. ________ and the South Korean ________.

GNP; GDP

A student who just graduated from college but has not found a job would most likely be

frictionally unemployed.

The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________ the quantity demanded of loanable funds.

lower; greater; greater

Refer to Table above. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

$1,200.

If the Unemployment rate is 5.4%, the Labor force 135,113, and the Labor force participation rate 67.0%. The Working-age population and the number of unemployed are:

201,661; 7,296

Nominal GDP is GDP in a given year

valued in the prices of that year.

Which of the following policies would reduce structural unemployment?

a job retraining program

When the government runs a budget deficit, we would expect to see that

investment will fall.

Efficiency wages cause unemployment because

firms pay wages that are above the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied.

Refer to Table above. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is

2007.

If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate of real GDP per capita?

4.7%

Refer to Table above. Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 and 1998 were equal to:

2.5, 1.24 percent.

The consumer price index is the

average of the prices of the goods and services purchased by a typical urban family of four.

Countries with high rates of economic growth tend to have

a labor force that is more productive.

Financial securities that represent promises to repay a fixed amount of funds are known as

bonds.

Which of the following could cause nominal GDP to decrease, but real GDP to increase?

The price level falls and the quantity of final goods and services produced rises.

The inflation rate measures the average prices of goods and services in the economy.

F

Economists have not found a way to predict when recessions will begin and end.

T

If inflation is anticipated, some effects of inflation on the redistribution of income can be avoided.

T

Real GDP per capita is calculated by dividing the value of real GDP for a country by the Country's adult population.

F

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

T

Residential investment includes spending by firms on office buildings.

F

Transfer payments are subtracted from national income to get to personal income.

F

The GDP deflator is the best measure that reflects the prices of goods and services purchased by the typical household.

F

Full employment happens when unemployment is zero.

F

Counting part-time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy.

F

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