Econ 2020 Exam 1 WSU

Labor Force Participation Rate

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population

95%

If the number of unemployed workers is 19 million, the number in the working-age population is 500 million, and the unemployment rate is 4%, what is the labor force participation rate?

Not in the labor force

Someone who is available for work but has not actively looked for work in the previous 4 weeks would be classified as

Discouraged workers

workers who have stopped looking for work because they believe there are no jobs for them

40%

If the number of unemployed workers is 200 million, and the number in the labor force is 500 million, what is the unemployment rate?

Structural Unemployment

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called

The search process of matching workers with jobs

Frictional unemployment is the result of

Frictional and structural unemployment

The natural rate of unemployment is made up of

Structural unemployment

The advice to "retrain" would be most appropriate for which of the following types of unemployment?

Sarah is not experiencing unemployment of any kind, because she is not currently part of the labor force

Sarah is a full-time student who is not looking for work. What kind of unemployment is Sarah experiencing?

above the market wage, causing labor demand to be less than labor supply

Min wage laws cause unemployment because the legal min. wage is set...

An increase in unemployment insurance payments

Which of the following would increase the unemployment rate?

above the market wage, causing a surplus of labor

Labor unions cause unemployment because the union contract wage is set..

Government aid to retrain unemployed workers

Which of the following would decrease the unemployment rate?

structural unemployment

By offering training to workers whose firms laid them off because of competition from foreign firms, the federal government is attempting to reduce...

Updates the market basket every 2 years, rather than ever 10 years.

To reduce the bias in the consumer price index, the Bureau of Labor Statistics...

average of prices of the goods and services purchased by a typical urban family of 4

The consumer price index is the

CPI

The most widely used measure of inflation is based on which of the following price indices?

CPI

Which of the following would be the best measure of the cost of living?

CPI

Which of the following price indices comes closest to measuring the cost of living of the typical household?

Fallen, fallen

If your nominal wage rises more slowly than the price level, we can say that your real wage has----and the purchasing power of a dollar has ------.

False

Nominal income is equal to real income is the CPI is less than 100.

Divided by

The real wage equals the nominal wage ----- the CPI, all times 100.

nominal interest rate

The stated interest rate on a loan is the

-3%

(Explanation: 6%-9%= r, thus r = -3%)

If the nominal interest rate is 6% and the inflation rate is 9%, then the real interest rate is

The real interest rate is greater than the nominal interest rate

When deflation occurs,

There is a decline in the price level

Deflation occurs when

production; population

The only way the standard of living of the average person in a country can increase is if --- increases faster than -----.

Technology and the quantity of capital per hour worked

What 2 factors are the keys to determining labor productivity?

2.9%

(Explanation: 3 + 3.2 + 2.5 = 8.7

8.7/3= 2.9%)

If real GDP grows by 3% in 2011, 3.2 % in 2012, and 2.5% in 2013, what is the average annual growth rate of real GDP?

capital stock

The total amount of physical capital available in a country is known as the country's..

firms are producing above capacity

Actual real GDP will be above potential GDP if

about 30 years

(Explanation: 70 / 2.3% = 30.43)

If GDP is currently $13 trillion and is growing at a rate of 2.3% per year, how long will it take GDP to reach $26 trillion?

14 years

(Explanation: 70/5%=14)

According to the "Rule of 70", how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

Bonds

Financial securities that represent promises to repay a fixed amount of funds are known as

Y - C - G

In a closed economy, which of the following equations reflects investment?

Y = GDP; C = Consumption; G = Government purchases; T = Taxes; TR = Transfers

What does Y C G T and Tr stand for?

T - G - TR

In a closed economy, public saving is equal to which of the following?

Y + TR - C - T

In a closed economy, private saving is equal to which of the following?

Investment

In a closed economy, public savings plus private saving is equal to?

savers; borrowers

A financial intermediary's main function is to match ----- with excess funds to ---- with a shortage of funds.

Liquidity

The ease with which a financial security can be traded for cash

intermediate goods

Which of the following is not directly counted in GDP?

Average price levels of goods and services in the economy

Macroeconomics, as opposed to micro, includes the study of what determines the....

The total market value of final goods and services produced in the economy during a period of time

GDP is calculated by summing up

it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional info

The Philippines and Vietnam have roughly the same size population. Suppose the GDP of the PH is $1,000 billion and the GDP of V is $10,000 billion. You should conclude...

The underground economy

GDP understates the total production of final goods and services because of the omission of

GDP is not adjusted for pollution

GDP is not a perfect measure of well-being because

Goods and services people produces for themselves

"Household production" refers to

False

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

Valued in the prices of the base year

Real GDP is GDP in a given year

GDP Deflator

ratio of nominal GDP to real GDP multiplied by 100

The price level falls and the quantity of final goods and services produced rises

Which of the following could cause nominal GDP to decrease, but real GDP to increase?

Nominal GDP is GDP in a given year

valued in the prices of that year