econ test gdp

Define GDP per Capita

known as "income per person" and is a major indicator of Standard of Living

Define Discouraged Worker

a person who is frustrated with the job search and has completely given up looking for work

Define Underemployed Worker

a person who is working a job that is beneath their education level or skill set

Define Consumer Price Index (CPI)

the official statistic for reporting inflation

Define Nominal GDP

measurement of GDP using current prices

Define Real GDP

measurement of GDP that adjusts for inflation

Define Hyperinflation

extremely high inflation caused by economic growth of the money supply

Define Demand-Pull Inflation

an increase in price level (inflation) due to increased spending

Define Cost-Push Infation

an increase in price level (inflation) due to rise in cost of producing goods

Define Stagflation

a period of high inflation and high unemployment

What is Counted in GDP?

final goods and services, made in the US, newly produced

What is Not Counted in GDP?

intermediate/ingredient goods, made outside the US, produced in another year, used goods, illegal and informal transactions, DIY, stocks and bonds

C or NC in GDP? Farmer Brown sells milk to Hershey's Co. that will be used to make chocolate

NC

C or NC in GDP? Bill buys a bag of skittles at Wal-Mart

C

C or NC in GDP? Ellis receives her social security check from the government

NC

C or NC in GDP? Marcus buys 100 shares of Sony stock

NC

C or NC in GDP? Meg gets a 10% commission for selling a house

C

C or NC in GDP? An Australian grocery store chain buys 1 million cases of soda from Coca Cola Corp

C

What is C+I+G+NX stand for

Consumption, Investment/Business, Government, and Net Exports

How do we measure Net Exports?

Exports - Imports

C, I, G, or NX in GDP? Sam buys a gallon of Canadian made maple syrup

NX

C, I, G, or NX in GDP? Craig buys a new Toyota 4-Runner that was built in Charlotte, NC

C

C, I, G, or NX in GDP? Oconee County builds a new courthouse

G

C, I, G, or NX in GDP? McDonald's buys new milkshake machines for all US restaurants from a Michigan manufacturer

I

C, I, G, or NX in GDP? Emma gets a new hairdo at her local hair salon

C

C, I, G, or NX in GDP? Antonio, an Italian citizen, buys the Lego Death Star online from Lego, USA INC

NX

When calculating total GDP with prices, do we include transfer payments?

no

When calculating total GDP with prices, we add exports but subtract

imports

Who is employed?

16 and older, working 1+ hours a week for pay, working 15+ hours a week without pay for family business, temporarily out of work (vacation, sick, strike, personal leave)

Who is unemployed?

16 and older that is not working, but Actively Looking

Who is not counted in employment or unemployment?

Under 16, stay at home parents, military, retired, full time students, discouraged workers, institutionalized/disabled people

Identify if the following is Employed (E), unemployed (U) or not counted (NC). 36 year old auto worker who has been home on sick leave for a month

E

Identify if the following is Employed (E), unemployed (U) or not counted (NC). 17 year old high school student that doesn't have to work as long as she stays on the track team

NC

Identify if the following is Employed (E), unemployed (U) or not counted (NC). 17 year old high school student that spends about 20 hours helping her mom at their family run daycare center, she doesn't get paid though

E

Identify if the following is Employed (E), unemployed (U) or not counted (NC). 42 year old stay at home parent that has now decided to go back to work and is applying for jobs

U

Identify if the following is Employed (E), unemployed (U) or not counted (NC). 54 year old that was laid off over a year ago and is too frustrated to get out and look for a job anymore

NC

Frictional Unemployment?

move from job to job, new entrants/re-entrants, freedom of choice

Structural Unemployment?

result from changes in technology/automation which eliminates jobs, the industry disappears, the company was outsourced (left the country)

Cyclical Unemployment?

changes due to the business cycle, results from recessions, lay off workers

Is the following F- fricational, S-structural, or C-cyclical unemployment? I just graduated high school, not going to college, but am looking for work

F

Is the following F- fricational, S-structural, or C-cyclical unemployment? The car plant couldn't keep me on since their sales have slipped over the last few months

C

Is the following F- fricational, S-structural, or C-cyclical unemployment? I used to work in a factory making t-shirts, but my company moved to India and closed the plant

S

Is the following F- fricational, S-structural, or C-cyclical unemployment? I am laid off, but told I might get my job back after Christmas when business starts getting better

C

Is the following F- fricational, S-structural, or C-cyclical unemployment? I had a job for a VCR manufacturer, but as demand dropped, the company closed down

S

Is the following F- fricational, S-structural, or C-cyclical unemployment? My spouse got a great job offer in another state, so I quit my job and am now looking for a new one in our new location

F

How to calculate unemployment rate? (SHOW WORK ON TEST)

unemployed / employed + unemployed x 100%

What makes a bank worse off with unanticipated inflation?

fixed rates

What makes people better off with unanticipated inflation?

fixed rates

What makes people worse off with unanticipated inflation?

set income

The unemployment rate is opposite to the

Real GDP

AD is a change in

spending

AS is a change in

costs

Is the following worse off or better off (B or W) A bank that issues a loan of $50,000 with a fixed interest rate

W

Is the following worse off or better off (B or W) A person who signs a 3 year lease on an apartment for a fixed monthly payment

B

Is the following worse off or better off (B or W) A retired teacher living on a fixed income

W

Is the following worse off or better off (B or W) A person who buys a car and makes fixed payments for 5 years

B

Would the following I increase or D decrease real GDP? The government decreases spending on national defense

D

Would the following I increase or D decrease real GDP? Businesses start laying off workers in large numbers.

D

Would the following I increase or D decrease Price Level? Those same businesses replace the workers with robots

D

Would the following I increase or D decrease Price level? consumers feel really optimistic

I

Which phase on the business cycle would see unemployment starting to fall and consumer confidence increasing

expansion

Which phase on the business cycle would the unemployment rate be highest

trough

Which phase on the business cycle would follow if people increase savings and cut back on spending

recession

Which phase on the business cycle would inflation be highest

peak