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40 Cards in this Set
- Front
- Back
GDP equals the ___ of final ___ produced within a country during a give period of time.
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market value; goods and services
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GDP is a measure of an economy's what?
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total output
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A drawback of using market values to aggregate the quantitites of goods and services produced in an economy is what?
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Not all economically valuable goods and services are bought and sold in markets
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Intermediate goods and services are __ in production and _____ counted in GDP.
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used up in the process of; are not
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which of the following would be included in the GDP of the United States?
a. boeing builds a plane in Seattle that is sold to Air Canada b. Daimler Chrysler produces a car in Germany that is sold in Michigan c. Planet Hollywood provides dining services in a restaurant in Hong Kong. |
a.
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What are the four components of aggregate expenditures, or GDP?
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consumption, investment, government spending, and net exports
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What are the three areas of spending that are included in consumption spending?
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durables, nondurables, and services
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What is included in investment spending?
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capital goods, residential housing, and changes in inventories
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The value of goods produced, but unsold in the current period is what?
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counted in GDP as inventory investment
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Real GDP is measured in ____ prices and nominal GDP is measured in ___ prices.
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base-year; current
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Real GDP per person implies greater economic well-being because it tends to be positively associated with what three things?
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better education, health, and life expectancy
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The price of a gallon of gasoline at the pump increased by 10% at the same time that the inflation rate was 15 %. The nominal price of gasoline ___ and the real price of gasoline ___.
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increased; decreased
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Suppose a US medical device manufacturer introduces a next generation tumor imaging scanner currently included int he CPI basket. The price of the scanning procedure is 10% higher than the discontinued procedure, but th enew scanner also includes additional feature to identify disaeses at an earlier and more treatable stage. In this situation the CPI will tend to ___ inflation as a result of ___ bias.
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overstate; quality adjustment
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The "true" costs of inflation are what?
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reduced economic growth and efficiency
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The shoe leather costs of inflation included all of the following except:
a. the lost purchasing power of cash b. the extra costs incurred to avoid holding cash c. the cost of more frequent trips to the bank d. the installation of a new cash management system |
D. the installation of a new cash management system or A. the lost purchasing power of cash?
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Inflation reduces economic efficiency through all of the following channels except by:
a. distorting incentives through interaction with the tax laws b. obscuring information transmitted by prices c. inducing people to minimize cash holdings d. increasing dependence on foreign oil |
D. increasing dependence on foreign oil
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If the market interest rate is 10% and the inflation rate is 3%, then the real interest rate equals what?
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7%
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The demand for labor depends on ____ and ____.
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the marginal product of labor; the price of output produced
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According to the principle of diminishing returns to labor, if the amount of capital and other inputs are held constant, employing additional workers does what?
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increases output at a decreasing rate
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Firms will hire additional workers as long as the wage:
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is less than the value of the marginal product of labor
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The introduction of a new technology that increases the productivity of labor will do what?
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increase the demand for labor
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If unskilled workers in poultry processing unionize, then the real wage of unskilled workers in poultry processing plants is predicated to ____ and the employment of unskilled workers in poultry processing plants is predicted to ___.
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increase; decrease
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What are the two most important factors contributing to increase productivity in industrialized countries in the twentieth century?
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technological progress and increases in the capital stock
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Slower growth in labor demand in combination with increases in labor supply explain ___ accompanied by ___.
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slowdown in real wage growth; employment growth
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What are two explanations for increasing wage inequality?
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globalization; skill-biased technological change
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From an economic perspective, what is the best response to increased wage inequality?
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to provide transition aid to disadvantaged workers
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A person 16 years of older who does not work, but is actively looking for work is classified as what?
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unemployed
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Based on the following information, what is the unemployment rate?
Population 16+ 1,000,000 Participation Rate 80% Employed workers 720,000 |
10.0%
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What are two examples of the psychological costs of unemployment?
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depression and low self esteem
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What are two examples of the economic costs of unemployment?
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lost income and tax revenue
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Jim Brown would like to work, but has not looked for work in the past four weeks because he does not believe any jobs are available. He is official classified as what?
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out of the labor force
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Marsha was laid off from her job with the airline because the recession has reduced the demand for airline travel. She expects to get her job back when the economy picks up. What kind of unemployment is this an example of?
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cyclical unemployment
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Dora lost her job when the textile mill closed. She does not have skills to work in another industry and has been unemployed for over a year. What kind of unemployment does this exemplify?
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structural unemployment
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Hector looked for a job for five weeks after finishing colelge. He turned down several jobs that didn't use his skills, but now has a job requiring the expertise he gained from college. What kind of unemployment was Hector classified as when he didn't have work?
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frictional unemployment
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How might frictional unemployemnt be economically beneficial?
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if it leads to a better match between worker and job
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How do minimum wage laws contribute to structural unemployment?
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by keeping wages above the market-clearing level
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How will government regulations that increase the cost to the employer of hiring workers affect labor?
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They will decrease the demand for labor
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Look at #10 and calculate GDP.
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2500
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The CPI for Planet Econ consists of only two items: books and hamburgers. In 2000 (base year), the typical consumer purchased 10 books for $25 each and 25 hamburgers for $2 each. In 2005, th typical consumer purchased 15 books for $30 each and 30 hamburgers for $3 each. What was the CPI for 2005?
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1.25
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See #23, How many workers will the XYZ-TV company hire if the going wage for TV production workers is $32,000?
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2
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