Econ Exam 3

GDP

value of all final goods and services produced within an economy in a given year

Bureau of Economic Analysis

In charge of reporting and calculating U.S. GDP

Which country has the largest economy in the world

U.S.

If prices rise and quantity stays the same then…

Nominal GDP increases while Real GDP stays the same

If prices fall and quantity rises then…

Real GDP increases and Nominal GDP is undetermined

If economy decreases then…

GDP and expenditures fell

Bureau of Labor Statistics

Calculates and reports CPI

If price of milk produced in the U.S. increases then…

GDP Deflator and CPI increase

If Item X is weighted more than Item Y in CPI then..

consumers buy more of Item X

Why is substitution bias a problem

Because prices of goods and services don’t change in the same proportion from year to year

Minimum wage creates structural unemployment if…

They create a surplus in labor market

Who is not counted at all by BLS

Children under 16

consumption

durables, non-durables, and services

investment

business capital, residential, unsold items

Government

purchase of new equipment and salaries of government workers

Net Exports

Goods produced inside the U.S. and sold abroad and vice versa

frictional unemployment

moving to new area, want a better job, entering work force for the first time

structural unemployment

caused by structural change in the economy i.e. robots

cyclical unemployment

entire economy is in a downturn