chapter 11 and 12 economics – Flashcards

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frictional unemployment occurs when
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a worker between an employer and employee
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when unemployment rises above the natural rate it reflects the existence of ___ unemployment
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cyclical
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a federal program aimed the unemployment workers of the declining coal and steel industries is designed reduce which type of unemployment
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structural
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in recent years, economists have come to believe that'll employment in the US economy occurs at an unemployment rate between
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4.5 and 5.5 percent
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which of the following people is structurally unemployed
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clem, a skilled forest maker, lost his job when his factory shut down due to a permanent reduction in the demand for corsets
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which of the following is true
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- at full employment, the economy is producing at its potential output - if unemployment is greater than its natural rate, the economy is producing at less than its potential output - at the natural rate of unemployment, the economy is considered to be at full employment - if we are less than full employment, some cyclical unemployment exists
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the natural rate of unemployment
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is the sum of both frictional and structural unemployment when they are at a maximum
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according to Okun's law, a 2 percent increase in cyclical unemployment reduces output by almost
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4 percent
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cyclical unemployment arises when
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business activity in the macroeconomy declines
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if the economy is operating with full employment, which of the following is essentially eliminated
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cyclical unemployment
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why are creditors harmed by unexpected inflation
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creditors are paid back money with less spending power than when it was originally loaned out
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which of the following groups would not tend to lose from unexpected inflation
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those whose wages have cost of living adjustment clauses in their contracts
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the GDP deflator represents a somewhat _____ measure of prices that the CPI and the GDP deflator tends to be ____ violate than the CPI
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broader; less
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in the typical CPI shopping basket, which of the categories below represents the largest percentages of consumer spending
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housing
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during an inflationary period those most likely to suffer reduced wealth are those who are holding their wealth in
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currency
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economists use the term "business cycle" to refer to
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fluctuations in economic activity measured by GDP or unemployment
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an unanticipated period of deflation will
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redistribute income from borrowers to lenders
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the costs imposed on a firm from changing listed prices are called
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the menu costs of inflation
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inflation exists whenever
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the overall price level is rising
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which of the following is true
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the expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude
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which of the following observations concerning leading economics indicators is true
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they provide warnings of likely downturns
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which of the following observations concerning phases of a business cycle is not correct
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maximum amount of unemployment occurs exactly at the trough
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the period of declining growth between the peak of the business cycle and the trough is called the
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contractionary phase
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economists usually use the term "recession" to refer to
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a significant reduction in output and employment lasting more than a few months
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the type of unemployment that occurs because of a recession is called
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cyclical unemployment
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which of the following describes the historical record of the business cycles in the united states
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periods of contraction seem to have gotten shorter over time
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in the expansion phase of the business cycle
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- output is rising -investment is rising - consumer and business confidence is high - unemployment is falling
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unemployment rises in _____ and falls in ____
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contractions; expansions
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given a fixed nominal interest rate on a loan unanticipated inflation
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decreases the burden of paying off the loan
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real gross domestic product is the total value of all
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final goods and services adjusted for inflation
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a full-time college student who is enrolled in school full-time and not seeking employment is considered
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out of the labor force
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a forestry worker who is out of work because of the temporarily low demand for wood products associated with recession is defined as
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cyclically unemployed
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the index of leading economic indicators usually turns downward
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prior to economic contractions
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deflation exists whenever
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the overall price level falls
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which of the following groups are typically harmed by unexpected inflation
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- lenders -pensioners on fixed incomes
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why do economists prefer using the term economic fluctuation rather than business cycle
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lack of regularity of a cycle
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a country's currency unit changes in purchasing power
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when there is either inflation or deflation
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which of the following individuals would be considered unemployed
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none of the answers
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which of the following groups of people would be included in the official unemployment rate
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workers temporarily laid off from jobs to which they expect to return
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the total labor force consists of
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the number of employed persons plus the number of unemployed persons
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which of the following refers to extremely high rates of inflation for sustained periods of time
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hyperinflation
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if the economy is operating at the natural rate of unemployment which of the following is essentially eliminated
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cyclical unemployment
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if the number of employed persons in a country equals 24 million the number of unemployed persons equals 8 million and the number of persons overage 16 in the population equals 40 million the unemployment rate equals
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25 percent unemployment rate= 8/ 24+8 = .25
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an individual who voluntarily leaves one job and spends a period of time seeking another is considered
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frictionally unemployed
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inflation
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- can decrease the value of a nation's currency relative to other nations - can cause a redistribution of income from creditors to borrowers - may discourage investment and economic growth
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if there are discouraged workers
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the unemployment rate will tend to overstate the true level of unemployment
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the cost incurred when individuals reduce their money holding because of inflation is termed as the
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shoe-leather cost
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offering employees an efficiency wage may
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- reduce turnover - lead to a reduction in training costs - boost employee morale - attract the most production workers
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the term full employment implies an unemployment rate of
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approximately 5%
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Fred has lost his factory job, replaced by welding robots and soon plans to go to technical school to learn computer repair because he cannot find a similar job to the one he lost. the type of unemployment facing Fred is:
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structural
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the unemployment rate is calculated as
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the number of unemployed persons divided by the number of employed plus unemployed persons
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the development of a nationwide computerized job bank listing of all job openings would be most likely to reduce
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frictional unemployment
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GDP is
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the value of all final goods and services produced domestically within a given period
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final goods or services used to compute GDP refer to
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goods and services purchased by the ultimate users
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intermediate products
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produced domestically are not directly reflected in a nation's GDP
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consumption is the purchase of goods and services by
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households
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consumption is the largest single component of GDP. in recent years it represents approximately ____ percent of GDP
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70
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the expenditure method of measuring GDP is calculated by adding up
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- the final goods and services produced domestically during a given period - consumption + investment + government spending + (export and imports) - domestic production of final goods and services for consumers, firms, government, and the international sector
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net exports are defined as
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exports minus imports
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transfer payments are included in which category under the expenditure approach to GDP accounting
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transfer payments are not directly included in GDP calculations
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what is the measure of the income received by owners of resources used in making final goods and services
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factor payments
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which of the following is not part of US GDP
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the value of a Toyota manufactured in Japan and sold in the united states
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given a constant rate of growth of real GDP what would cause a fall in real GDP per capita
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a rate of population growth that is greater than the rate of growth of real GDP
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the prosperity of a nation today is typically measured by its
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output per capita
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a country will roughly double its GDP in twenty years if its annual growl rate is
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3.5 percent
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as more capital per worker is added, per worker production function generally becomes
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later because capital is subject to diminishing marginal returns
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the faster the rate of technological progress
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the greater the rate of economic growth
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in a fully employed economy, invention and discovery
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are achieved through sacrifices in current consumption
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which of the following best describes the relationships between economic growth and literacy
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increased literacy stimulates economic growth by raising labor productivity and as the economy grows people consume more education
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GDP is
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the value of all final goods and services produced domestically within a given period of time
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the goods and services that are used in the production of other goods and services are called
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intermediate goods
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which of the following products are not included current US GDP
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a ford mustang produced last year and sold this year
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GDP does not directly include
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the value of intermediate goods sold during period
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the total dollar value of purchases in the economy is far larger than GDP primarily because
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GDP excludes the value of intermediate goods exchanged
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the largest single expenditure component of GDP is
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consumption
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the most volatile GDP category under the expenditure approach is
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investment
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the investment component of GDP includes
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construction of a new steel mill
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if a nation's imports exceed its exports
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GDP will be less than the sum of consumption, investment and government purchases
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the services rendered by a special agent wit the federal bureau of investigation is included in which expenditure category of GDP
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government purchases
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in 2008, US nominal GDP totaled approximately
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$14.3 trillion
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if the price index is now 120, it means
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prices are 20 percent higher than in the base year
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estimates of the size of the underground economy range from
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4 to 20 percent
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which of the following factors that affect our well-being does GDP fail to adequately account for
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- changes in the quality of goods - externalities - leisure - non market transactions
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measures of well-being include
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- life expectancy - infant mortality rates - literacy rates - pollution levels
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