Econ Chapters 5 and 6

The working-age population is defined as the number of

people over the age of 16 who are not in jail, hospital, or other institution

Full-time students and prisoners are

not in the labor force

Which of the following is NOT considered to be in the labor force?

a person who is not working and who has not tried to find a job

The unemployment rate is the ________ who are unemployed.

percentage of people in the labor force

The percentage of people employed aged 16 years and older divided by the working-age population is known as the

employment-to-population ratio

Who of the following is counted as unemployed?

Glenn, a student who just graduated from college last week and is currently looking for a job

Suppose that Matt quits a job with the XYZ Corporation in order to look for more rewarding employment. Matt is best be considered as

frictionally unemployed.

The best example of a cyclically unemployed individual is

Charles who lost his job as a real estate salesperson when the housing market went soft because of a recession.

Full employment occurs when

 cyclical unemployment is zero

The economy is at full employment when

  all unemployment is frictional or structural.

The unemployment rate generally falls during ________ in the business cycle.

an expansion

The cost of inflation to society includes

the opportunity costs of resources used by people to protect themselves against inflation
the diversion of productive resources to forecasting inflation

In a period of rapid, unexpected inflation, resources can be lost

when firms use resources to forecast inflation.

Hyperinflation is defined as

very high inflation rates

If the CPI for this year is 220 and the CPI for last year was 215, the inflation rate is

just over 2 percent

The currently used method for calculating the CPI

probably overstates inflation.

The best definition for economic growth is

a sustained expansion of production possibilities measured as the increase in real GDP over a given period.

We are interested in long-term growth primarily because it brings

 higher standards of living.

The Rule of 70 is used to

estimate how long it will take the level of any variable to double

Using the Rule of 70, if China's current growth rate of real GDP per person was 7 percent a year, how long would it take the country's real GDP per person to double?

10 years

A country in which real GDP per person has grown more slowly than the United States since 1980 would be

Mexico

Over the last 120 years, the average U.S. growth rate in real GDP per person was about

(120 yr) 2 percent per year.

The real wage rate measures the

quantity of goods and services that an hour of work will buy.

Because the productivity of labor decreases as the quantity of labor employed increases

 the quantity of labor a firm demands increases as the real wage rate decreases.

Which of the following is TRUE regarding the labor market?

If the real wage rate falls, the quantity of labor firms demand increases

If the price level falls by 5 percent and workers' money wage rates remain constant, firms

quantity of labor demanded will decrease

If the price level increases and workers' money wage rates remain constant, which of the following will occur?

The quantity of labor supplied will decrease

The real wage rate will decrease.

If the labor market is in equilibrium and then the labor supply curve shifts rightward

there will be a surplus of labor at the original equilibrium wage rate.

Employment and (total) potential GDP increase if the

labor supply curve shifts rightward and the labor demand curve does not shift.

If the population increases, then potential GDP ________ and employment ________.

increases, increases

Potential GDP per labor hour can increase due to

 increases in labor productivity.

Labor productivity is

 real GDP per hour of labor.

If both the supply of labor and the demand for labor increase, then

 potential GDP increases.

Technological change

 increases potential GDP.

Human capital is the

 skill and knowledge accumulated by humans.