### The working age population includes

employed and unemployed people over the age of 16

### Which of the following is true?

To be classified as employed, you must work at lwast 1 hour per week at a paid job or 15 hours or more as unpaid workers in your family business

### Suppose a 23 year old graduate student is looking for a full-time job, but has to take a part-time job instead. He or she will be categorized in the current population survey as __________ when calculating the unemployment rate.

a discouraged worker

### in the current population survey a person is considered unemployed if the person

does not have a job and is actively looking for a job

### phillip is a 22 year old who has no job and is available for work, but has not actively looked for a job in the last month. The current population survey identifies phillip as ______, ___________the labor force, and _______ the working-age population

not employed, not part of, part of

### the working age population consists of all the people in the population

aged 16 and over who are not in jail, hospital, or an institution or in the us armed forces

### if the number of people in the labor force_______, then____________

increases, the labor force participation rate increases

### the labor force is the

number of employed people plus the number of unemployedd people.

### the labor force includes people who

are actively seeking a job but do not have a job

### if jose is 22 years old, is available to work but does not have a job and made no specific efforts to find a job for the previous month, Jose is classified in the current population survey as

not in the labor force

140 million

### the unemployment rate measures the percentage of

people in the labor force who can't find a job

### the unemployment rate equals 100 multiplied by the

number of people unemployed divided by the labor force

### if a significant number of part-time workers successfully find full-time employment, then

the unemployment rate will remain unchanged

7.5 percent

8.6 percent

### The labor force participation rate is equal to

(labor force / working-age population) x 100

### people who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called

discouraged workers

### discouraged workers

would increase unemployment rate if they were added to the number of unemployed workers

### which of the following are sources of unemplyment

job losers, job leavers, and entrants and reentrants

job losers

### frictional unemployment is the result of

normal labor market turnover

### structural unemployment is the result of

technological change or foreign competition

structural

### the type of unemployment that arises from a decrease in real GDP is called

Cyclical unemployment

### full employment occurs when

the cyclical unemployment rate is zero

### when the economy is at full employment, the

natural unemployment rate equals the unemployment rate

### in 2009, real GDP in the US was below potential GDP. This fact definitely meaqns that

the unemployment rate was above the natural unemployment rate

### who is cyclically unemployed

david, a new car salesman who lost his job because the economy went into a recession

### The consumber price index(CPI) measures the changes of

prices paid by consumers for a fixed market basket of consumer goods and services

1982-1984

100

### the consumer price index market basket contains

the goods and services pruchasedc by an average urban household

### for the CPI, the market basket of goods and services is modified

each time the Consumer Expenditures Survey is conducted

housing

### the more money an average household spends on one specific type of good or service per month, the

larger the relative importance of that item in the CPI market basket

### in 2010, the reference based period for the CPI for the nation of Webot, a typical consumer spent \$30 on potatoes and \$150 on steak. If the price of steak is \$15 and the price of potatoes is \$1 then there are ____ units of steak and ______ units of potatoes in the CPI market basket

10 units of steak and 30 units of potatoes

### the formula for the CPI is

cost of CPI market basket at current period prices / cost of CPI market basket at base period prices) x 100

400

### to find the cost of the CPI market basket in the base period prices we have to multiply the

quintities in the CPI market basket by the base period prices

### To find the cost of the CPI market basket inthe current period we have to multiply the

quantities in the CPI market basket by the current period prices

### if the CPI is 231.4 in one year and is 241.2 in the next year, then the inflation rate equals

(241.2 - 231.4) / 231.4 x 100

11.8 percent

### when economists speak of the CPI bias, they are referring to

the tendency for the CPI to overstate price changes

### which of the following is NOT a source of bias in the CPI

quantity change bias

### which of the following is a bias in the CPI

new goods bias and commodity substitution bias

### the CPI overstates inflation because the average consumer buys

less of those goods whose relative price has risen

### suppose higher prices lead consumers to switch from shopping at abercrombie & fitch to shopping at Wal-Mart. If the CPI does not reflect this change, it is referred to as

an outlet substitution bias

### if a private wage contract is agreed upon with a cost of living adjustment such that wage hikes are equal to increases in the CPI

workers benefit because the CPI increases more reapidly than does the cost of living

### because a third government outlays are linked directly to the CPI, as time passes the CPI bias means that the government's outlays are

larger than needed to keep pace with the cost of living

### the difference between nominal and real is

nominal is measured in current dollars and real is measured in dollars of a given year

### if the price of a soda was 15 cents in 1970, when the CPI was 50, and 50 cents in 2007 when the CPI was 172, then the real price of

the 1970 soda in 2007 dollars is 52 cents

### in 1998, Pablo earned \$200 per week at his job. In 2008, Pablo earned \$240 per week. If the CPI in 1998 was 100 and the CPI in 2008 was 152, then

the 2008 wage measured in 1998 dollars is \$157.89

### the real interest rate equals the

nominal interest rate - inflation rate

### if the CPI is 170 at the beginning of the year and 181 at the end, and a bank is paying a nominal interest rate of 6 percent, we see that

the real interest rate is negative

### the total production within an economy is measured as

gross domestic product

### gross domestic product measures the

market value of the final goods and services produced in a given year within a country

### to calculate GDP it is necessary to

use the market price to place adollar value on each good produced.

### how are final goods and services valued when measuring nominal GDP

at current market prices

### if you make dinner for yourself

only the market value of ingredients that you purchased this year is added to GDP

### which of the following is included in Germany's GDP

china produced by the English owned Wedgewood Company at a factory in Berlin, Germany

### a restaurant buys fish to offer as a daily menu special. The pruchase of the fish by the restaurant is

an intermediate good

by households

### investment is defined as the purchase of

the purchase of new capital goods and additions to inventories

### net exports of goods and services are defined as the

value of exports minus the value of imports

### which of the following expenditure components of GDP can be negative or positive

net exports of goods and services

### gross domestic product equals

Y= C + I + G + NX

### total expenditure equals total income

because firms pay out everything they receive as income to the factors of production

### the value of used goods _________ counted as part of GDP ___________.

are not; because they were counted during the period when they were counted as new goods

### which of the following is true regarding the measurement of GDP

wages and profit income are used in the income approach to GDP

### the income approach to measuring GDP is based on summing

wages, interest, rent, and profits

### when measuring GDP by the income approach, wage income includes

health-care insurance paid for by the firm for its employees, social security contributions made by the firm, and wages paid during a worker's vacation time

### adding wages, interest, rent, and profits yields

net domestic product at factor cost

### after calculating net domestic product at foactor cost, to calculate GDP using the income approach, in part we must add

indirect taxes and depreciation

### when the value of nominal GDP increases from one year to the next, we know that one or two things must have happened during that time

the nation produced more goods and services and/or prices rose for goods and services

Example: