Macroeconomics Final Part 2

Front 1

GDP equals the ___ of final ___ produced within a country during a give period of time.

Back 1

market value; goods and services

Front 2

GDP is a measure of an economy's what?

Back 2

total output

Front 3

A drawback of using market values to aggregate the quantitites of goods and services produced in an economy is what?

Back 3

Not all economically valuable goods and services are bought and sold in markets

Front 4

Intermediate goods and services are __ in production and _____ counted in GDP.

Back 4

used up in the process of; are not

Front 5

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.

Back 5

a.

Front 6

What are the four components of aggregate expenditures, or GDP?

Back 6

consumption, investment, government spending, and net exports

Front 7

What are the three areas of spending that are included in consumption spending?

Back 7

durables, nondurables, and services

Front 8

What is included in investment spending?

Back 8

capital goods, residential housing, and changes in inventories

Front 9

The value of goods produced, but unsold in the current period is what?

Back 9

counted in GDP as inventory investment

Front 10

Real GDP is measured in ____ prices and nominal GDP is measured in ___ prices.

Back 10

base-year; current

Front 11

Real GDP per person implies greater economic well-being because it tends to be positively associated with what three things?

Back 11

better education, health, and life expectancy

Front 12

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 ___.

Back 12

increased; decreased

Front 13

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.

Back 13

overstate; quality adjustment

Front 14

The "true" costs of inflation are what?

Back 14

reduced economic growth and efficiency

Front 15

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

Back 15

D. the installation of a new cash management system or A. the lost purchasing power of cash?

Front 16

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

Back 16

D. increasing dependence on foreign oil

Front 17

If the market interest rate is 10% and the inflation rate is 3%, then the real interest rate equals what?

Back 17

7%

Front 18

The demand for labor depends on ____ and ____.

Back 18

the marginal product of labor; the price of output produced

Front 19

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?

Back 19

increases output at a decreasing rate

Front 20

Firms will hire additional workers as long as the wage:

Back 20

is less than the value of the marginal product of labor

Front 21

The introduction of a new technology that increases the productivity of labor will do what?

Back 21

increase the demand for labor

Front 22

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 ___.

Back 22

increase; decrease

Front 23

What are the two most important factors contributing to increase productivity in industrialized countries in the twentieth century?

Back 23

technological progress and increases in the capital stock

Front 24

Slower growth in labor demand in combination with increases in labor supply explain ___ accompanied by ___.

Back 24

slowdown in real wage growth; employment growth

Front 25

What are two explanations for increasing wage inequality?

Back 25

globalization; skill-biased technological change

Front 26

From an economic perspective, what is the best response to increased wage inequality?

Back 26

to provide transition aid to disadvantaged workers

Front 27

A person 16 years of older who does not work, but is actively looking for work is classified as what?

Back 27

unemployed

Front 28

Based on the following information, what is the unemployment rate?
Population 16+ 1,000,000
Participation Rate 80%
Employed workers 720,000

Back 28

10.0%

Front 29

What are two examples of the psychological costs of unemployment?

Back 29

depression and low self esteem

Front 30

What are two examples of the economic costs of unemployment?

Back 30

lost income and tax revenue

Front 31

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?

Back 31

out of the labor force

Front 32

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?

Back 32

cyclical unemployment

Front 33

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?

Back 33

structural unemployment

Front 34

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?

Back 34

frictional unemployment

Front 35

How might frictional unemployemnt be economically beneficial?

Back 35

if it leads to a better match between worker and job

Front 36

How do minimum wage laws contribute to structural unemployment?

Back 36

by keeping wages above the market-clearing level

Front 37

How will government regulations that increase the cost to the employer of hiring workers affect labor?

Back 37

They will decrease the demand for labor

Front 38

Look at #10 and calculate GDP.

Back 38

2500

Front 39

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?

Back 39

1.25

Front 40

See #23, How many workers will the XYZ-TV company hire if the going wage for TV production workers is $32,000?

Back 40

2