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Econ 202 Midterm #1
Terms in this set (40)
In computing GDP, it is essential to
avoid double counting.
Gross domestic product is
final goods and services produced in an economy over a period of time.
new goods, quality change, and substitution biases
The working-age population can be divided into two groups:
people in the labor force and people who are not in the labor force.
Suppose the working age population in Tarazed is 100 people. If 25 of these people are NOT in the labor force then....
the labor force equals 75.
Macroeconomics differs from microeconomics in that...
macroeconomics focuses on the national economy and the global economy.
The labor force is....
people who have a job or are looking for a job.
The consumer price index (CPI) compares what?
CPI compares the cost in the current period of a basket of goods typically consumed in the base period to the cost in a the base period of that same basket of goods.
What would be counted as employed in the Current Population Survey?
Someone who is working 20 hours a week but wants a full-time job.
Positive and normative statements differ in that...
positive statements can be tested, whereas normative statements cannot.
What do economic models do?
Assume tuition at Penn State cost $6,142 (per semester) in 2007 and $7,562 in 2012. If the price index was 207.34 in 2007 and 226 in 2012, then we could say:
tuition had increased more rapidly than inflation.
To calculate the unemployment rate, what are some necessary pieces of information?
the number of unemployed persons and the number of people in the labor force
Inflation is a problem when...
-it is unpredictable
-it causes consumers and firms to be confused about the relative prices of goods and services
-when it is persistently high
-it causes resources to be diverted from productive uses.
In the expenditure approach to GDP, the largest component for the United States in recent decades has been
personal consumption expenditures
The technique currently used to calculate the CPI implicitly assumes that over time consumers buy
the same relative quantities of goods as in a base year.
An individual is structurally unemployed if
the individual lacks marketable job skills because technology has changed
What is included in the government expenditure component of the expenditure approach to GDP?
state government expenditure on local schools
Holding all else constant, if people who had been discouraged workers decide to start looking for jobs again but haven't yet found them, you will see:
an increase the unemployment rate.
The value of a new 2016 Honda Civic produced in 2016 and purchased in 2017 would contribute to which years GDP?
The investment spending category of GDP does NOT include:
purchases of stocks and bonds by institutional investors (like pension funds).
Goods that firms repackage or bundle w/ other goods for sale at a later date
How to find GDP
Consumption + Investment + Government + Net Exports
How to find real GDP
real GDP= (nominal GPD/price level) x 100
Caused by changes in the industrial makeup/structure of the economy.
delay in matching jobs and workers
is caused by rescission and is not controllable/open ended
How to find unemployment RATE
unemployment rate= (# employed/labor force) x 100
How to find labor force participation rate
labor force p rate= (labor force/ population) x100
How to find inflation rate
inflation rate= (price2-price1/price1) x100
How to find the CPI price index
price index= (basket price/basket price in base year) x 100
What is the fisher equation
real interest rate= nominal interest rate - inflation rate
nominal interest rate= real interest rate + inflation rate
How to find the price today
price today= price earlier x (price level today/price level earlier)
How to find interest rate
interest rate= face value-initial price/initial price
How to find economic growth
economic growth= nominal GDP - price level - population
How to find the growth rate of real GDP per capita
GDP= GDP2-GDP1/GDP1 x100
How to find employment rate
How to find unemployment level
u= e/(1-ur) -e
How to find present value
present value= future value/(1+rate)^time(yrs)
How to find unemployment rate
unemployment rate= u/u+e
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