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ECO exam 2 questions – Flashcards

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Published: June 20, 2022

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question

If you mow the lawn yourself, the lawn mowing is considered household production If you pay Larry's Lawn Service to mow your lawn, the lawn mowing is considered

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a service, that will be counted as part of GDP.

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Because of the circular flows of expenditure and income in the economy, total ________ equals total ________ equals total _______

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expenditure; income; value of production

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Mexico City is notorious for its excessive pollution

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Mexico's measure of GDP is.not affected by the estimated value of the pollution's harm.

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US. real GDP.

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excludes the value of underground production and leisure time.

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Gross Domestic Product is defined to be the market value of all the final goods and services produced during a given time peri

...

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within a country.

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Total expenditure equals

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C + I + G + NX.

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In a circular flow diagram

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i, ii and iii are true statements:
1. the value of production=income
2.the value of production=expenditure
3.expenditure=income

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GDP is best defined as the ________ in a given time period

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market value of the final goods and services produced within a country

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Suppose that business firms spend $500 million on new capital equipment this year

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Of this $500 million, $300 million was spent on domestically produced capital and $200 million was spent on foreign-produced capital. All else equal, these transactions contribute ________ to GDP.$300 million

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Economists define investment to include purchases of

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capital goods and inventories.

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A recession conventionally is defined as a decrease in

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real GDP that lasts for at least six months.

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The business cycle is defined as

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irregular ups and downs in production and jobs.

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Nominal GDP increases

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if either prices and/or total production increase.

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In the business cycle, what immediately precedes the time when real GDP is falling?

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peak

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To calculate GDP it is necessary to

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use the market price to place a dollar value on each good produced. use the market price to place a dollar value on each good produced.

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The calculation of GDP excludes the value of

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a family member painting the family home.

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A restaurant buys fish to offer as a daily menu special

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The purchase of the fish by the restaurant is. an intermediate good.

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Last year U.S.

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net exports of goods and services was negative. This fact means that last year.the value of U.S. exports was less than the value of U.S. imports.

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Which of the following is a final good or service?

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the new economics textbook you are using

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Net exports of goods and services increase when

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exports of goods and services increase and imports of goods and services do not change.

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The difference between nominal GDP and real GDP is

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is that real values are adjusted for inflation, while nominal values are not. As a result, nominal GDP will often appear higher than real GDP.

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Which of the following is NOT part of the business cycle?

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inflation

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Total income in a country in 2012 is $780 billion

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Total expenditure in the country.is $780 billion.

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Production by Honda, a Japanese firm, in the United States is included in ________ GDP and production by Nike Corporation, a U

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S. firm, in Vietnam is included in ________ GDP.U.S.; Vietnamese

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Which of the following would be considered a marginally attached worker?

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Sylvia, who is not working and hasn't looked for work in 3 months.

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Full employment is the level of unemployment that occurs

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when cyclical unemployment is zero.

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Andrew is not working, but is available and willing to work after finishing a month-long mission trip for his church

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While on his mission, Andrew did not look for work. Andrew is considered.a marginally attached worker.

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In 2012, part-time workers for noneconomic reasons were about ________ of total employment, and part-time workers for economic reasons were about ________ of total employment

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13 percent; 6 percent

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During the Great Depression of the 1930s when the unemployment rate was exceptionally high due to the Great Depression, the government had employment programs, such as the Civilian

Conservation Corps, which built campsites and planted trees

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These programs were aimed at reducing which type of unemployment?.cyclical

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In fall 2009, the population of the United States was 301 million, the working-age population was 23 7 million, the total number of people employed and unemployed was 154.9 million, and the total number of unemployed people was 14.7 million. What is the unemployment rate?

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9.5 percent

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In 2012, real GDP in the United States was below potential GDP

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This fact definitely means that. the unemployment rate was above the natural unemployment rate.

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From 1981 to 2011, the unemployment rate in the United States

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was generally lower than the unemployment rate in the Eurozone.was generally lower than the unemployment rate in the Eurozone.

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Vicki would be classified as

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a voluntary part-time worker.

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While in school, Kiki spends 20 hours a week as a computer programmer for Microsoft and studies 30 hours a week

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Kiki is classified as a part-time worker, working 20 hours a week.

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As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences

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frictional unemployment.

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The unemployment rates during the last 10 years in the Eurozone was

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generally higher than the U.S. unemployment rate.generally higher than the U.S. unemployment rate.

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The labor force is the

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number of employed

people plus the number of unemployed people.number of employed people plus the number of unemployed people.

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In 1994, the Bureau of Labor Statistics started to report

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alternative measures of the unemployment rate that include narrower measures of the labor market and alternative measures of the unemployment rate that include broader measures of the labor market are correct answers.

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People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called

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discouraged workers.

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The labor force is defined as the number of people who

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are employed plus the number of people who are unemployed.

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The labor force participation rate is the

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labor force divided by the working-age population, then multiplied by 100.

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Structural unemployment includes people who become unemployed from

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technological changes.technological changes.

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Discouraged workers and marginally attached workers are

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not part of the labor force.

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Suppose the population of Timmy Town is 1000 people and the working-age population is 800

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If 200 of these people are unemployed, the unemployment rate in Timmy Town is.There is not enough information provided to calculate the unemployment rate.

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Involuntary part-time workers are workers who

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work less than 35 hours but would like to work full time.

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Jordan recently quit her job as a marketing consultant in Washington, D

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C. and is

looking for a better-paying job with an advertising agency in New York. Jordan is considered to be.frictionally unemployed.

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From the table above, which gives data about the U

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S. labor market in 1933, the labor force participation rate is.60 percent.

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In a country with a working-age population of 200 million, 140 million people are employed and 20 million are unemployed

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The size of the labor force is.160 million.

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When the unemployment rate equals the natural unemployment rate, most likely the economy is producing

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on the production possibilities frontier.

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In order to do well, you need to read the chapters thoroughly before you take your quizzes

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Many students who take a quiz without reading chapters hoping that they would find the answer in the textbook tend to do poorly. This quiz will count towards your final grade.

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If Caterpillar Inc

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raises the price of earth-moving equipment that it manufactures in Illinois, then the CPI will ________ and the GDP deflator will ________.not change; increase

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When the CPI rises ________, the inflation rate is ________

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rapidly; high

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If the inflation rate is greater than the nominal interest rate, then the

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real interest rate will be negative.

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The CPI is calculated by the Bureau of Labor Statistics on a frequency of every

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month.

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The GDP price index can be interpreted as

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(nominal GDP ÷

real GDP) × 100.

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Nominal GDP was $12

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1 trillion and real GDP is $11 trillion. The GDP price index is ________.110.0

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In 2013, the reference base period for the CPI for the nation of Webot, a typical consumer spent $30 on potatoes and $150 on steak

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If the price of steak is $15 and the price of potatoes is $1 then there are ________ units of steak and ________ units of potatoes in the CPI market basket.10; 30

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The real interest rate equals the

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nominal interest rate - inflation rate.

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The CPI was 170 last year and is 190 this year

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What is the inflation rate between these two years?.11.8 percent

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In constructing the CPI, the BLS has to deal with commodity substitution bias, which is defined as

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consumers' substitution of cheaper goods for goods whose prices increase.

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If we look at real and nominal interest rates in the United States since 1971, we see that

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the real interest rate has almost always been less than the nominal interest rate because of inflation.

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For the CPI, the market basket of goods and services is modified

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each time the Consumer Expenditures Survey is conducted.

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The commodity substitution bias is most likely to put ________ into the CPI and so ________ the inflation rate

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an upward bias; overstate

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In the United States between 1981 and

2012, the

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nominal wage rate increased more than the real wage rate.

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If we compare the last 30 years of inflation as recorded by the CPI and the PCE price index, we find that the

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two measures fluctuate together.

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A country's CPI was 84

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5 last year and 100.0 this year. The inflation rate was.18.3 percent.

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In order to determine if the quantity of goods and services that an hour's work can buy has increased or decreased between 2000 and 2012, one should compare the

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2000 real wage with the 2012 real wage.

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The difference between nominal and real is

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nominal is measured in current dollars and real is measured in dollars of a given year.

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The real interest rate is equal to the

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nominal interest rate minus the inflation rate.

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If your real income in base year prices is $50,000, then if the CPI is 170, what is your nominal income?

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$85,000

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Suppose the market basket of consumer goods and services costs $180 using the base period prices, and the same basket of goods and services costs $300 using the current period prices

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The CPI for the current year period equals.166.7.

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The quality change bias is most likely to put ________ into the CPI and so ________ the inflation rate

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an upward bias; overstate

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The GDP deflator is a measure

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prices.

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What is the good or service is given the most weight in the CPI?

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housing

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The Consumer Price Index market basket contains

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the goods and services purchased by an average urban household.

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