econ unit 2

GDP is equivalent to the sum of?

Consumer spending, investment spending, government purchases and net exports

If the Consumer Price Index changes from 100 to 90, economists will know?

There was a deflation in the economy

If the nominal gdp in a given year is $500 billion and the gdp deflator for that year is 125, how much is the real gdp?

$400 billion

What describes a difference between nominal GDP and real GDP?

Nominal GDP uses current prices to measure the value of final output

Real GDP uses constant prices

If the consumer price index rises from 120 to 132, what is the inflation rate?

10%

If the price of a specific market basket in the year 2008 was $240 and the price of the same market basket in the year 2013 was $300. What is the Consumer Price Index of the year 2013 based on the base year 2008 prices?

125

If a worker receives a raise in their nominal wage from $10 to $15 per hour at the same time that price level doubles, the workers real wage has approximately?

Decreased by 50%

All of the following are criticisms of how the government measures the economy except?

Real GDP overstates economic growth since it doesn’t account for changes in price level

When calculating GDP investment is best defined as?

Business spending on capital goods

Which of the following is true about GDP?

Calculations of GDP include the unsold inventories of goods produced within the borders of the country

The official unemployment rate is not always the most accurate indicator of actual unemployment in the economy because?

The official rate does not include persons who have given up looking for work

JAN 30 hours a week min wag of $10 per hour. Last year is the base year CPI. Which of the following is true about Jan’s real wage if at the end of this year the CPI is 125?

Jan’s real wage is $8 per hour at the end of the year

Which of the following is the best example of structural employment?

Workers are fired because they do not have the specific skills employers value

The nominal GDP for the year 2010 is $120 billion and for 2012 is $240 billion. 2010 as the base year and real GDP for 2012 is $200, what is the GDP deflator in 2012?

120

Which of the following is true according to the circular flow model?

Firms are demanders in the resource markets and suppliers in the product markets

As a measure of economic performance, the US GDP accounts for which of the following?

The cleanup of an oil spill

A mechanic that leaves his job working on cars and is currently looking for a job working on planes is considered?

Frictionally unemployed

The natural rate of unemployment?

Is the sum of frictional and structural unemployment

Calculate GDP for 2017

$19 billion

Which of the following describes a limitation of GDP

It does not account for the distribution income in a nation or income inequality

Given the labor market data below, LFPR and UR

LFPR-60%

UR-10%

Which type of unemployment would most likely increase if workers were laid off due to a large decrease in consumer spending

Cyclical

If the nominal GDP for a given year is $500 billion and the real GDP for that year is $400 billion then which of the following must be true?

The GDP deflator is 125

Which of the following is included in the calculations of U.S. GDP

A plane produced in the U.S but sold in Mexico

Which of the following individuals is clearly considered unemployed?

A lawyer that sold his firm and is now looking for a job as a teacher

Which of the following is true regarding inflation?

Inflation decreases the purchasing power of a country’s currency

If the labor force participation rate increased at the same time that the unemployment rate stayed the same, which of the following must be true?

The total number of jobs in the economy increased

The unemployment rate measures the percentage of?

People in the labor force who are actively looking, but do not have jobs

Which of the following is true regarding nominal and real GDP?

The only thing that can increase real GDP is and increase in output

Which of the following is true regarding GDP?

GDP, adjusted for inflation, measures economic growth over time