Eco Chapter 19

Which of the following by definition directly adds to a country's GDP (gross domestic product)?

What data do economists use to calculate the real GDP of a nation?

Which questions explore microeconomic topics and which explore macroeconomic topics? Apply the correct label to each question.

Underground economies are smallest in countries with strong economies. T/F

Which of the following are examples of non-market services?

For purposes of computing GDP, how are net exports calculated?

For each output, apply the appropriate label.

Identify each good as either intermediate or final.

How do non-market goods cause inaccuracies in measuring the productivity of a nation?

Which of the following are examples of investment?

Calculate the real GDP of the United States for the year 2014. Use 2009 as the base period and round to the nearest whole number.

Match the use of GDP data to the appropriate situation. -measuring long-term economic growth -measuring living standards -measuring business cycles

Canada's GDP (1) that Canadians have the eleventh-best standard of living. A nation's (2) is a better standard-of-living indicator, because it measures (3). Using this measure, it looks like Canada has a better standard of living than all but one other nation.

What might a decrease in sales of new cars indicate about the state of the economy?

Click the year that produced a 3% rate of real GDP growth.

The real GDP of Country A grew by only 1% from 2011 to 2013, while the real GDP of Country B grew by 5% during that same time span. Based on the data, what can we say definitely about the two countries?

Calculate the annual percentage change in price level for the year 2014. Round to two decimal places.

The most natural interpretation of "better off" is that citizens of Country B have a higher (1). It is possible that the citizens of Country B spend more time (2). It is also possible that they live in a (3). GDP (4) measure the quality-of-life indicators that would explain this.

Assuming that the trends from 1980 to 2008 continue for another decade, which country would you expect to have a lower standard of living in 2020 than in 1970?

Low GDP is not necessarily an indicator of an economy in poor health. For one thing, a (1) country may have a low GDP but a high (2). For another thing, an economy with a low GDP but a strong (3) is healthier than an economy with a comparable GDP that is stagnant or declining.

Classify each concept as microeconomic or macroeconomic.

In the graph, click on the start and end points of a period of recession or contraction. ( long run trend of GDP vs. short run path(business cycle) )

Which of the following statements are good assessments of the value of GDP as an economic statistic?

You can figure out how much the economy has grown over the years by simply looking at nominal GDP. T/F

Calculate the GDP for a country that in one year sells 10,000 speedboats for $40,000 each and 5,000 race cars for $90,000 each, and nothing else. A speedboat engine contributes $9,000 to the total price, and a race car engine is worth $12,000.

Match the component of GDP national income accounting to the correct expenditure. 1-Jennifer buys toothpaste. 2-David buys a new car. 3-Lonnie the police officer cashes her paycheck at the end of the week. 4-Almonds are grown for sale overseas. 5-A farmer buys a new tractor. 6-A family of three purchases a newly built home.

GDP is the best measure of a nation's economic activity. However, GDP does not take into account many factors that affect quality of life, like the amount of people's (1) or the cleanliness of the 920. GDP only measures a country's economic (3).

Goods created within the borders the United States contribute to the (1) of the United States, (2) the company that makes them is foreign-owned. The output of an American company operating in another country contributes to the (3) of the United States.

Which three countries would you expect to have the highest standard of living? Drag the labels to the appropriate country. (keep in mind to look at the per capita GDP to calculate this)

Do recessions always prevent a long-term increase in a nation's real GDP?

Apply the appropriate label to each situation. 1-Your neighbors grow and eat their own vegetables from their private garden. 2-Your mom made a sweater for you for your birthday. 3-The neighborhood kids sell lemonade when it is hot outside. 4-Your child is paid $40 to walk your friends' dog while they are on vacation.

Which of the following products would count toward GDP?

Which of the following statements are true about the underground economy?

Click on the names of countries where the standard of living improved substantially between 1950 and 2000.

A service-based economy is less likely to be a source of prosperity than a goods-based economy. T/F

Correctly classify each situation that GDP cannot measure. 1-You repair your own pants when your rip them. 2-Country A has a very high GDP, but the average person works 60 hours a week. 3-Unregulated industries pollute the air. 4-A restaurant server takes home $75 in unreported tips each night.

How do intermediate goods factor into the calculation of GDP?

Assume Country X has the following statistics: Total relevant population = 50,000,000 Full-time students = 4,200,000 Not employed and not currently searching for jobs = 6,000,000 Not employed and currently searching for jobs = 2,336,000 Currently employed = 29,664,000 Country X has a labor force of (1), a labor force participation rate of (2), and an unemployment rate of (3).

The unemployment rate includes discouraged workers and underemployed workers. T/F

Which of the following type(s) of unemployment are most associated with an economy that is experiencing dynamic growth and technological progress?

Based on recent statistics, which of the following individuals would have the greatest probability of being unemployed?

A country has a non-institutionalized civilian adult population of 263 million. Out of that number: 85 million are students, homemakers, retirees, etc. 11 million are discouraged workers. 122 million are employed full-time. 30 million are employed part-time. 15 million are out of work and actively looking for work. What is the unemployment rate? Round to one decimal place.

Match the job sectors to their workforce shares from 1800 to 2010. (graph: bottom triangle, middle section, top triangle)

Match the level of unemployment with the condition of the overall economy. 1-Actual GDP is above potential GDP. 2-Actual GDP is below potential GDP. 3-Actual GDP is equal to potential GDP.

For each curve below, apply the correct label. (percentage of labor forces: blue top line and red bottom line)

Based on the table below, what conclusions can you draw about unemployment in the United States?

Click the area on the graph below that represents when the United States had the highest level of cyclical unemployment.

Click on the unemployment rate range in which the U.S. natural unemployment rate is located.

When the managers of a grocery store install self-checkout lanes, they place greater value on efficiency than on jobs. T/F

The unemployment rate in Economy X when it is growing normally is 5%. When Economy X is in a recession, the unemployment rate is 10%. Drag each word or phrase to the appropriate blank space in order to complete the paragraph correctly. Drag word(s) below to fill in the blank(s) in the passage. For Economy X, the natural rate of unemployment (1) 5%. This rate is not due to (2) factors. It applies (3).

Which of the following represent negative and positive reasons for job separations?

Which of the following groups would be not be counted as unemployed when calculating the unemployment rate?

Match each scenario to the label that best represents the person's employment situation. Labels may be used more than once. 1-Keith is a captain in the U.S. Army. 2-Carla is a retired librarian who works part-time at a local bookstore. 3-Elisha has moved to California and is taking classes while trying to find a job. 4-Darnell has a part-time job at the post office while looking for a full-time position as an accountant. 5-Olivia can't find a job in her college major, so she's no longer looking for work.

Which of the following can be causes of frictional unemployment?

Marshall has recently lost his job and is currently receiving federal jobless benefits. Marshall benefits by receiving income so that he can continue to (1) goods and services while searching for a new job, which benefits society because it decreases the likelihood of an economic (2). On the other hand, the benefits may also cause Marshall to become (3) incentivized to take a job and (4) the amount of time he spends unemployed.

A country has a noninstitutionalized population of 243 million people. Out of that number, 38 million are under the age of 16 70 million are full-time students and retirees 8 million are unemployed workers 31 million are underemployed 96 million are employed full-time What is the labor force participation rate? Round to the nearest whole percentage.

Government policies are sometimes created to help reduce different types of unemployment. Drag each government program to the appropriate type of unemployment the program would reduce.

Use the table to complete the sentence about race and unemployment. The U.S. unemployment rate of (1) adult workers is consistently higher than that of (2) adult workers, and the labor force participation rate is consistently higher for (3) adult workers than for (4) adult workers.

Match each form of unemployment with an example. Note that every item may not have a match. -An unemployed paper mill worker. The local paper mill shut down due to lack of demand for paper products in a digital age. -An unemployed banker during a recession. The banker would be hired back once the economy began growing normally again. -An unemployed cashier. A small clothing store shut down due to its customers buying clothes from a new big-box retailer.

Which statement is not true of full employment output (Y*)?

The unemployment rate in Economy X when it is growing normally is 5%. When Economy X is in a recession, the unemployment rate is 10%. Drag each word or phrase to the appropriate blank space in order to complete the paragraph correctly. Drag word(s) below to fill in the blank(s) in the passage. The (1) unemployment rate while Economy X is (2) is 0%. The 5% unemployment rate is due to structural and (3) factors.

Put the following hypothetical events, illustrating frictional unemployment, in chronological order.

Apply the correct label to each labor force participation rate line. (top blue and bottom red)

Not all unemployment is (1). Sometimes, unemployment is due to (2), which is the introduction of new (3) and technologies that leads to the shutdown of other industries and jobs, as some jobs become (4).

Some amount of unemployment will always exist, even in a healthy economy. T/F

What best describes why inflation occurs?

Surprise inflation can help people who have borrowed money. T/F

All prices rise evenly during periods of inflation and deflation. T/F

What is the main advantage of the Billion Prices Project over the CPI?

Which of the following scenarios make it difficult to accurately measure the CPI?

Two things tempt governments to enact inflationary policies. The first is (1), which can be paid off by (2). The second is (3) economy, which in the short term can be jump-started by a (4) increase in the money supply.

Inflation occurs when the overall prices of goods (1). This means that consumers have (2) purchasing power. Deflation occurs when the overall prices of goods (3). When this happens, consumers have (4) purchasing power.

Mary's costs will rise, and for revenue to keep pace she will have to (1) to keep her prices consistent with inflation. If Mary mistakenly believes the rising price of seafood is the result of increased (2), she may misdirect restaurant resources. This would be an example of price (3).

What are the three reasons why the CPI is hard to measure accurately?

The graph shows the relationship between money supply growth rate and average inflation for 257 nations over the years 1991-2011. Which two nations lie in the upper right corner, with explosive growth in the money supply and, correspondingly, runaway inflation?

Max lives in Boston and earns $132,500 per year. If Max decides to move to San Francisco, what annual salary will he need to make in order to maintain the same real wage?

The velocity of money is the frequency with which money (1). The greater the money velocity, the (2) goods and services are being traded. By the equation of exchange, the money velocity times (3) equals the price level times (4).

Your parents bought their first car for $5,000. The price level in the year your parents bought their car was 50, while the price level today is 200. Calculate how much your parents' car would have cost if they bought it today.

Take 2014 as the price index base year. That year, you paid $80 for a day at a theme park. In 2015, the price was up to $84. Assuming that the increase reflects the inflation rate and that this rate continues in 2016, match each number to its description. 1-the 2016 price index 2-the cost of a theme park visit in 2016 dollars 3-the 2015 price index 4-the inflation rate as a percentage

Gwyn owns a furniture store. She notices prices at other furniture stores have increased dramatically over the past two years. She decides she needs to expand her output because demand must be growing. However, in order to do so, she needs to find a loan. What problems could inflation cause for Gwyn?

Thirty years ago Daniel bought a plot of land for $50,000 when the CPI was 50. Now the CPI is 180 and he sold the land for $180,000. What issue might inflation cause for Daniel?

Suppose the consumer price index for one year was 120 and for the next year it was 132. What is the corresponding inflation rate? (P2-P1/P1) x100

Click on the part of the graph that best illustrates the upward bias of traditional CPI.

Which of the following problems can inflation cause for suppliers?

Match the situation to the inflation-related problem it illustrates. 1-Unstable inflation makes it difficult for lenders to anticipate the value of their money in the future. 2-A surprise increase in inflation devalues borrowers' future payments to lenders. 3-Producers are unable to determine how much output to produce.

Why might the prices of some products decrease while others increase?

Match the situation to the factor that affects the accuracy of the CPI 1-The cost of bananas increases dramatically. Many people switch to oranges because they are cheaper. 2-A new smartphone app solves math problems simply by pointing the camera at the page. 3-Video game consoles offer better graphics and gameplay than they did a decade ago. 4-Newer cars have built-in GPS and Bluetooth capabilities. 5-New pop-up stores at airports sell clothing, personal electronics, and designer eyewear at low prices. 6-The cost of cable increases. People decide to switch to Netflix instead.

The Consumer Price Index (CPI) and the GDP deflator are both price indices, so they both serve as measures of inflation. However, the (1) uses a smaller basket of goods. The (2) aims to take into account all final goods and services, whereas the (3) only includes goods and services sold to (4). So, for instance, prices on farm equipment are included in the (5) but not in the (6).

Place the correct price in each blank, to reflect the effects of inflation. Use 230 as the price index for the current year.

Which of the following scenarios could lead to inflation?

You live in Atlanta and earn $95,600 a year. Your boss offers you a $10,000 raise and the opportunity to move to another city and work remotely. If maintaining at least the same real wage is your only concern, select all the cities to which you could relocate.

Which of the following may be considered as part of the consumer price index?

Suppose you're working in your hometown. You have an opportunity to take a new job in a different city, where the cost of living is different. In each of the following situations, would your real wage be higher or lower in the new job?

Last year you paid $24 for a round of golf and $12 to rent a golf cart. This year it cost you $30 to golf and $15 to rent a cart. Based on this simple basket of goods, calculate a price index for this year using last year as the base year.

What could happen if the CPI were under-calculated?

The chained CPI is (1) than the traditional CPI. The chained CPI is updated (2) in an effort to compensate for the (3) of new products. The traditional CPI has a strong (4) bias.