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Macroeconomics Exam 2

Terms in this set (52)

the total number of employed and unemployed people
A country's labor force is equal to?
1930s
According to the text, during which time period did the United States have the highest unemployment rates?
discouraged workers
Individuals who have stopped looking for work because they are convinced that they will not find a job are considered:
The Bureau of Labor Statistics
Which federal agency publishes the United States' unemployment figures?
unemployed divided by the number of people in the civilian labor force
The rate of unemployment is calculated as the number of ;
are classified as unemployed
According to the Bureau of Labor Statistics, if you voluntarily leave your job to search for another job, then you;
includes those workers who only work part time
Official umemployment rates may underestimate the true rate of unemployment because the official rate;
discouraged workers who no longer are actively seeking work and are excluded from the statistics
The official unemployment rate may understate the true rate of unemployment because of
relatively high, so the length of his period of unemployment is likely to be short
When Joe, who is among the highest-paid workers in a field in which there are numerous job openings across the nation, recently became unemployed, his opportunity cost of job search is
unemployment rate tends to increase
If the US economy enters a recession, the
dividing the number unemployed by the number of people in the labor force
The rate of unemployment is found by
some workers will always want to make a job transition
Frictional unemployment will always exist since
structually unemployed
If a person loses her job because her abilities and skills are a poor match with current requirements of employers, this person is considered
cannot and probably should not be eliminated because it is 'natural' unemployment. People between jobs or searching for first job after education
Many economists would argue that some frictional unemployment
seasonal unemployment
The fact that a number of lifeguards lose their jobs at the end of each summer would be counted as
When there is no cyclical unemployment
What best describes an economy with full employment?
There are transition costs in finding a job in the labor market
Full employment does not necessarily mean that every adult has a job because
their dependence on average rather than individual prices
A major element of the concepts of inflation and deflation is
deflation
A sustained decrease in the average of all prices of goods and services in the economy is known as
the producer price index (PPI)
The statistical measure of a weighted average of prices of goods and services that firms produce and sell is known as
the average of all prices are on a sustained rise over a period of time
Inflation is best described as a situation in which
the average of all prices are on a sustained rise over a period of time
Deflation is defined as a situation in which
inversely related
The rate of inflation and the purchasing power of money are
the price of the good in today's dollars
The nominal value of a good is
(cost of market basket today/cost of market basket in base year) *100
The formula for computing a basic price index is
170
If the current price of a market basket of goods is $850 and the base year price for the same market basket is $500, what is the value of the price index?
186.6
Assume that the current price of a market basket of goods is $2500 and the base year price of the same market basket is $1340. The price index is
the level of prices with respect to goods and services purchased by a typical consumer in urban areas
The Consumer Price Index measures
the cost of today's goods expressed in terms of the cost of goods in a base year.
A price index shows
110
Assume that there was a 10 percent increase in the price of goods in 2010; if the base year is 2009, then the price index in 2010 will be
Gross Domestic Product (GDP) deflator
The broadest indication of economy-wide inflation is captured by the
Consumer Price Index
The statistical measure of the weighted average of prices of goods purchased by a typical individual is called the
Gross Domestic Product (GDP) deflator
The price index that measures the changes in prices of ALL goods and services produced by the economy is the
show a lower rate of inflation
If the Beareu of Labor Statistics changed the way it calculates the consumer price index (CPI) so as to take into account product quality changes and the changing mix of products and services purchased by the average family, the result would most likely
move in the same direction
Typically, nominal interest rates and anticipated inflation rates
losses for creditors and gains for debtors
Unanticipated positive inflation will create
the inflation is often unanticipated and thererfore comes as a suprise to individuals in the economy
Most of the problems caused by inflation are caused by the fact that
nominal rate of interest minus the anticipated rate of inflation
The real rate of interest is the
7%
If the rate of inflation is 4% and the real interest rate is 3%, the nominal interest rate should be
total expenditures
The simple circular flow of income shows that the total income in an economy equals
equals the market value of all final goods and services produced in the US
The dollar value of total output
The value of spending on new machinery and equipment
Which of the following would be included in the calculation of Gross Domestic Product (GDP)?
the value of goods produced in Candada by US owned firms
US Gross Domestic Product (GDP) does NOT include
500 billion
Suppose the total value of all assets in the Country X is 10 trillion. In 2013, the total value of all final services produced in Country X was 150 billion, the total value of all final goods produced in Country X's firms in other countries was 100 billion. In this siutation, Country X's GDP for 2013 was
Tips received by a waitress who reports them to the IRS
Which of the following transactions is included in GDP?
intermediate goods
Goods that are used up entirely in the production of final goods are known as
they are used in the production of final goods and would then be counted twice
Intermediate goods are NOT included in GDP calculations because
is not included in GDP
If Jack refernished his basement himself, the value of his work
an intermediate good
Wheat used in producing bread is
expenditures approach and the income approach
The two principle methods of measuring GDP are the
expressed in current dollars
When economists discuss the nominal value of an economic variable, the variable is
5 trillion

(10/2.00=5)
Suppose that in 2011, nominal GDP for the economy of Chiconia was 10 trillion and the GDP price index was 200.0. What is Chiconia's real GDP in 2011?
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