ECON201: Test 3 – Flashcards
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Which of the following explain why flexible-income receivers may be effected or benefit by unanticipated inflation?
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Business owners profits may rise if product prices rise faster than resource prices, their incomes may automatically increase when the CPI rises, demand-pull inflation may cause some nominal incomes to increase faster than inflation and lead to real income increases, and they receive COLAs.
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Which of the following is a major factor in preventing the economy from rapidly adjusting to shocks?
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Sticky prices
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On average, less-educated workers have ____ unemployment rates than workers with more education.
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Higher
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Identify all of the consequences of unexpected lower total spending in the short-run when prices are sticky.
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GDP declines, unemployment rises, firms cut back on production, firms sell fewer units of output, and fewer items are purchased.
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Unemployment rates for men and women are normally:
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similar
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The formula for the ____ ____ ____ (full name) is the price of the most recent market basket in a particular year divided by the price estimate of the market basket in 1982-1984 multiplied by 100.
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CPI???
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People with flexible incomes may be:
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unaffected or benefit by unanticipated inflation.
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When inflation occurs, each dollar of income will buy ___ goods and services than before.
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fewer
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When prices are sticky in the short-run, the economy is forced to respond by changes in:
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output and employment
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When inflation occurs, people with ____ incomes see their real incomes ____.
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fixed; fall
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Real interest rates are the:
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interest rates quoted in the market minus the inflation rate
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___ reduces the purchasing power of money.
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inflation
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The formula used to determine the unemployment rate is:
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unemployment divided by labor force times 100.
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The major source of cost-push inflation has been so-called ___ shocks.
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supply
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The natural rate of unemployment is generally thought of as the:
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sum of the frictional unemployment and the structural unemployment rates.
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Identify all of the results of unexpected higher total spending in the short-run when prices are sticky.
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More goods and services are purchased, output rises, GDP rises, and employment rises.
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Which of the following is a consequence of unexpected lower total spending in the short-run when prices are sticky?
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Firms will sell fewer units of output.
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One reason teenagers have a higher unemployment rate than adults is because they:
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have lower skill levels.
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Workers in lower skilled occupations have ___ unemployment rates than workers in higher-skilled occupations.
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higher
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People who are ___ are hurt by unanticipated inflation.
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creditors, savers, or on fixed incomes
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The formula for the rule of 70 to calculate the time for the price level to double is:
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70 divided by the annual percentage increase in the rate of inflation.
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An expansion is a period in which:
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the price level may rise.
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The GDP gap equals actual GDP minus ___ GDP.
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potential
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Income that has been adjusted for changes in prices over time is called:
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real income
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In the trough of a ___, (one word) output and employment "bottom out" at their lowest levels.
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recession or depression
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Which of the following are hurt by unanticipated inflation?
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Savers, fixed-income recipients, and creditors.
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A business cycle is:
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a short-run alternation between economic upturns and downturns.
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Real income equals nominal income divided by the ____ ____.
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price index.
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An expansion usually follows ____ in the business cycle.
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a recession
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Unexpected events that drive economic cycles and fluctuations are called economic ____.
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shocks
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Savers are hurt by unanticipated inflation because:
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as prices rise, the real value of savings decreases.
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Which of the following are characteristics of lower skilled workers?
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Longer spells of structural unemployment and less likely to be self-employed.
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The phase of the business cycle at which the economy is at full employment is known as a(n) _____.
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peak
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The official unemployment rate is understated because it does not count which of the following as unemployed?
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discouraged workers
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The phase of the business cycle that describes a decline in total output, income and employment is called a(n) ____.
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recession
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Which of the following are categories by which unemployment rates are broken down?
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Occupation, duration, education, gender, race and ethnicity, and age.
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Real income will be affected:
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if the change in the price level differs from the change in a person's nominal income.
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Too much spending chasing too few goods is the essence of ____-____ inflation.
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demand-pull
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The interest rates quoted in the market are:
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nominal interest rates
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____ unemployed workers live in areas where jobs exist and they have marketable skills while ____ unemployed workers do not.
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frictional; structural
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The basic economic cost of unemployment is forgone ____.
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output
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Which of the following describe why unemployment rates are higher for African Americans and Hispanics than for whites?
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Lower rates of educational attainment, greater concentration in lower-skilled occupations, and discrimination in the labor market.
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Which of the following two variables change by more than initial change in spending?
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Income and output.
