Which of the following products would count toward GDP?
  • *** correct:-unemployment benefits-government regulation-lack of information***incorrect:-industries shutting down due to long-term changes in consumer tastes-recession
  • **correct:-Nominal GDP cannot indicate whether the economy is getting stronger or weaker.-GDP is correlated with many measures of human welfare.**incorrect:-GDP accurately captures all economic activity.-GDP does not account for goods being imported rather than locally produced.
  • Counted in GDP:-a new bicycle sold by a bike shop-bicycle handlebars sold to consumers as a customization itemNot counted in GDP:-a used bicycle sold at a garage sale-bicycle handlebars sold to a bike manufacturer
  • ***correct:-Long-term agreements become too risky for lenders, making it more difficult to obtain a loan.-Prices begin to rise, so firms increase output.***incorrect:-higher demand-lower prices
Why might the prices of some products decrease while others increase?
  • correct:-It is possible for the underground economy to have an effect on the legitimate economy.-It is not possible to accurately measure the size of the underground economy.incorrect:-All underground economic activity is harmful to society.-All of the goods and services traded in the underground economy are illegal.
  • many prices can be monitored daily
  • advances in tech typically cause the price of some goods to decrease over time
  • *correct:-The economy is weak.-GDP is going to decrease in the near future.*incorrect:-The economy is strong.-GDP rose in the recent past.
The chained CPI is (1) than the traditional CPI. The chained CPI is updated (2) in an effort to compensate for the (3) of new products. The traditional CPI has a strong (4) bias.
  • 1-gov debt2-printing money3-a sluggish4-surprise
  • $164000
  • highest:US2nd highest:Canada3rd highest:Germany
  • 1-2-3-4-
Which of the following represent negative and positive reasons for job separations?
  • ***Positive:-innovations in product markets-returning to full-time schooling***Negative:-economy in recession-poor work performance
  • ***correct:foodhousingtransportation***incorrect:taxesinvestments
  • *** correct:-unemployment benefits-government regulation-lack of information***incorrect:-industries shutting down due to long-term changes in consumer tastes-recession
  • ***correct:-The quantity of goods and services in the economy increases by 2% while the supply of money increases by 4%.-The government prints $500 million in new currency to pay off foreign debts.***incorrect:-The supply of money decreases.-The population of a nation decreases.
Click on the unemployment rate range in which the U.S. natural unemployment rate is located.
  • correct: -changing the oil in your car yourself-cutting your own hairincorrect:-taking your car to the mechanic for routine maintenance-going to the barber
  • 5%
  • False
  • Counted in GDP:-a new bicycle sold by a bike shop-bicycle handlebars sold to consumers as a customization itemNot counted in GDP:-a used bicycle sold at a garage sale-bicycle handlebars sold to a bike manufacturer
The real GDP of Country A grew by only 1% from 2011 to 2013, while the real GDP of Country B grew by 5% during that same time span. Based on the data, what can we say definitely about the two countries?
  • ***correct:foodhousingtransportation***incorrect:taxesinvestments
  • correct: -changing the oil in your car yourself-cutting your own hairincorrect:-taking your car to the mechanic for routine maintenance-going to the barber
  • **correct:-Country B will eventually have a higher real GDP than Country A if the economy of each country continues to grow this way.**incorrect:-Country A has a high real GDP.-Country B has a very high quality of life.-Country A has a modestly high quality of life.-Country A's economy has been in a period of contraction.
  • ***correct:-Long-term agreements become too risky for lenders, making it more difficult to obtain a loan.-Prices begin to rise, so firms increase output.***incorrect:-higher demand-lower prices
The velocity of money is the frequency with which money (1). The greater the money velocity, the (2) goods and services are being traded. By the equation of exchange, the money velocity times (3) equals the price level times (4).
  • 1-small2-per capita GDP3-real GDP growth rate
  • 1-does not indicate2-per capita GDP3-average income
  • 1-unhealthy2-creative destruction3-products4-obsolete
  • 1-changes hand2-more3-the size of the money supply4-real GDP
A country has a non-institutionalized civilian adult population of 263 million. Out of that number:85 million are students, homemakers, retirees, etc.11 million are discouraged workers.122 million are employed full-time.30 million are employed part-time.15 million are out of work and actively looking for work.What is the unemployment rate? Round to one decimal place.
  • 66%
  • 9%
  • 1-consumption2-consumption3-government spending4-net exports5-investment6-investment
  • 5%
Apply the correct label to each labor force participation rate line.(top blue and bottom red)
  • box 2 and 4 on graph
  • bottom:agriculturemiddle:industrytop: services
  • blue: menred: women
  • blue:-unemployed plus discouraged and underemployed workersred:-officially unemployed
What could happen if the CPI were under-calculated?
  • Intermediate goods do not factor into GDP; only final goods are counted
  • wages will be too low
  • many prices can be monitored daily
  • increased commercial travel
The unemployment rate in Economy X when it is growing normally is 5%. When Economy X is in a recession, the unemployment rate is 10%. Drag each word or phrase to the appropriate blank space in order to complete the paragraph correctly.Drag word(s) below to fill in the blank(s) in the passage.For Economy X, the natural rate of unemployment (1) 5%. This rate is not due to (2) factors. It applies (3).
  • 1-is always2-cyclical3-at all times
  • 1-CPI2-GDP deflator3-CPI4-consumers5-GDP deflator6-CPI
  • 1-unhealthy2-creative destruction3-products4-obsolete
  • 1-black2-white3-male4-female
Which of the following can be causes of frictional unemployment?
  • ***correct:-The quantity of goods and services in the economy increases by 2% while the supply of money increases by 4%.-The government prints $500 million in new currency to pay off foreign debts.***incorrect:-The supply of money decreases.-The population of a nation decreases.
  • correct: -changing the oil in your car yourself-cutting your own hairincorrect:-taking your car to the mechanic for routine maintenance-going to the barber
  • *** correct:-unemployment benefits-government regulation-lack of information***incorrect:-industries shutting down due to long-term changes in consumer tastes-recession
  • ***correct:-Long-term agreements become too risky for lenders, making it more difficult to obtain a loan.-Prices begin to rise, so firms increase output.***incorrect:-higher demand-lower prices
Click the year that produced a 3% rate of real GDP growth.
  • year:2007Nominal GDP growth rate:9price level growth rate:6
  • it is the economic output when unemployment is at 0
  • am economy with many non-market goods may have its output underrated
  • many prices can be monitored daily
Calculate the real GDP of the United States for the yearUse 2009 as the base period and round to the nearest whole number.
  • 7%-11%
  • higher:-turkey-mexico-Indialower:-Nicaragua
  • (17,348.1/ 109) x 100 = 15,916
  • greg, a 19 year old African american male
The most natural interpretation of "better off" is that citizens of Country B have a higher (1). It is possible that the citizens of Country B spend more time (2). It is also possible that they live in a (3). GDP (4) measure the quality-of-life indicators that would explain this.
  • 1-non-market good2-non-market good3-underground economy4-underground economy
  • 1-structural unemployment2-cyclical unemployment3-frictional unemployment
  • 1-quality of life2-in leisure activities3-cleaner environment4-does not
  • 1-GDP2-even if3-GNP
Which of the following statements are good assessments of the value of GDP as an economic statistic?
  • ***correct:-The quantity of goods and services in the economy increases by 2% while the supply of money increases by 4%.-The government prints $500 million in new currency to pay off foreign debts.***incorrect:-The supply of money decreases.-The population of a nation decreases.
  • ***correct:-The price of a ticket to a baseball game increases after the stadium is rebuilt.-A company releases a new product that many consumers adopt.***incorrect:-Consumers need to purchase gas to get to work.-The typical basket of consumer goods does not change.
  • **correct:-Nominal GDP cannot indicate whether the economy is getting stronger or weaker.-GDP is correlated with many measures of human welfare.**incorrect:-GDP accurately captures all economic activity.-GDP does not account for goods being imported rather than locally produced.
  • ***correct:-Long-term agreements become too risky for lenders, making it more difficult to obtain a loan.-Prices begin to rise, so firms increase output.***incorrect:-higher demand-lower prices
Not all unemployment is (1). Sometimes, unemployment is due to (2), which is the introduction of new (3) and technologies that leads to the shutdown of other industries and jobs, as some jobs become (4).
  • 1-is always2-cyclical3-at all times
  • 1-Unemployment is below the natural rate.2-Unemployment is above the natural rate.3-Cyclical unemployment equals zero. & Unemployment equals the natural rate.
  • 1-unhealthy2-creative destruction3-products4-obsolete
  • 1-small2-per capita GDP3-real GDP growth rate
Which of the following by definition directly adds to a country's GDP (gross domestic product)?
  • structural unemployment
  • correct: -changing the oil in your car yourself-cutting your own hairincorrect:-taking your car to the mechanic for routine maintenance-going to the barber
  • increased commercial travel
  • 130 -145 consumer price index
Thirty years ago Daniel bought a plot of land for $50,000 when the CPI wasNow the CPI is 180 and he sold the land for $180,What issue might inflation cause for Daniel?
  • increased commercial travel
  • $20,000
  • box 2 and 4 on graph
  • tax distortions
Based on the table below, what conclusions can you draw about unemployment in the United States?
  • ***correct:-The price of a ticket to a baseball game increases after the stadium is rebuilt.-A company releases a new product that many consumers adopt.***incorrect:-Consumers need to purchase gas to get to work.-The typical basket of consumer goods does not change.
  • **correct:-After the Great Recession, more than one-quarter of unemployed people spent more than 6 months looking for a job.-The length of time people remained unemployed in 2015 was generally longer than it was in 2007.**incorrect:-The Great Recession did not affect the length of time people remained unemployed.-The majority of people who were unemployed in 2015 were looking for work for an extended length of time.
  • ***correct:-Long-term agreements become too risky for lenders, making it more difficult to obtain a loan.-Prices begin to rise, so firms increase output.***incorrect:-higher demand-lower prices
  • ***correct:-consumers substituting one good for another because of price-changes in the quality of the same good, over time-new products to buy and new ways for consumers to buy them***incorrect:-the difference between nominal and real buying power-changes in the tax rate and therefore in take-home income
Correctly classify each situation that GDP cannot measure.1-You repair your own pants when your rip them.2-Country A has a very high GDP, but the average person works 60 hours a week.3-Unregulated industries pollute the air.4-A restaurant server takes home $75 in unreported tips each night.
  • 1-structural unemployment2-cyclical unemployment3-frictional unemployment
  • 1-uncertainty about future price levels2-wealth redistribution3-price confusion
  • 1-non-market good2-leisure time3-quality of environment4-underground economy
  • 1-non-market good2-non-market good3-underground economy4-underground economy
Match each scenario to the label that best represents the person's employment situation. Labels may be used more than once.1-Keith is a captain in the U.S. Army.2-Carla is a retired librarian who works part-time at a local bookstore.3-Elisha has moved to California and is taking classes while trying to find a job.4-Darnell has a part-time job at the post office while looking for a full-time position as an accountant.5-Olivia can't find a job in her college major, so she's no longer looking for work.
  • 1-uncertainty about future price levels2-wealth redistribution3-price confusion
  • 1-CPI2-GDP deflator3-CPI4-consumers5-GDP deflator6-CPI
  • 1-cyclical2-growing normally3-frictional
  • 1-not in the labor force2-employed3-unemployed4-underemployed5-not in the labor force
What data do economists use to calculate the real GDP of a nation?
  • advances in tech typically cause the price of some goods to decrease over time
  • ***correct:-consumers substituting one good for another because of price-changes in the quality of the same good, over time-new products to buy and new ways for consumers to buy them***incorrect:-the difference between nominal and real buying power-changes in the tax rate and therefore in take-home income
  • correct: market values, price levelincorrect: income tax rate, unemployment rate
  • correct: -changing the oil in your car yourself-cutting your own hairincorrect:-taking your car to the mechanic for routine maintenance-going to the barber
Which three countries would you expect to have the highest standard of living? Drag the labels to the appropriate country.(keep in mind to look at the per capita GDP to calculate this)
  • highest:US2nd highest:Canada3rd highest:Germany
  • 1-gov debt2-printing money3-a sluggish4-surprise
  • bottom:agriculturemiddle:industrytop: services
  • 1-does not indicate2-per capita GDP3-average income
Apply the appropriate label to each situation.1-Your neighbors grow and eat their own vegetables from their private garden.2-Your mom made a sweater for you for your birthday.3-The neighborhood kids sell lemonade when it is hot outside.4-Your child is paid $40 to walk your friends' dog while they are on vacation.
  • 1-non-market good2-non-market good3-underground economy4-underground economy
  • 1-does not indicate2-per capita GDP3-average income
  • 1-consumption2-consumption3-government spending4-net exports5-investment6-investment
  • Richmond,VAPhoenix, AZDetroit, MICharlotte, NCDallas, TX
A country has a noninstitutionalized population of 243 million people. Out of that number,38 million are under the age of 1670 million are full-time students and retirees8 million are unemployed workers31 million are underemployed96 million are employed full-timeWhat is the labor force participation rate? Round to the nearest whole percentage.
  • 66%
  • False
  • 1-32,000,0002-64%3-7.3%
  • 1-black2-white3-male4-female
Two things tempt governments to enact inflationary policies. The first is (1), which can be paid off by (2). The second is (3) economy, which in the short term can be jump-started by a (4) increase in the money supply.
  • 1-gov debt2-printing money3-a sluggish4-surprise
  • 1-deal with menu costs2-demand3-confusion
  • 1-unhealthy2-creative destruction3-products4-obsolete
  • 1-small2-per capita GDP3-real GDP growth rate
Match the situation to the inflation-related problem it illustrates.1-Unstable inflation makes it difficult for lenders to anticipate the value of their money in the future.2-A surprise increase in inflation devalues borrowers' future payments to lenders.3-Producers are unable to determine how much output to produce.
  • 1-non-market good2-leisure time3-quality of environment4-underground economy
  • 1-uncertainty about future price levels2-wealth redistribution3-price confusion
  • 1-deal with menu costs2-demand3-confusion
  • 1-non-market good2-non-market good3-underground economy4-underground economy
Match the level of unemployment with the condition of the overall economy.1-Actual GDP is above potential GDP.2-Actual GDP is below potential GDP.3-Actual GDP is equal to potential GDP.
  • 1-substitution2-new products3-changes in quality4-changes in quality5-new location 6-substitution
  • 1-not in the labor force2-employed3-unemployed4-underemployed5-not in the labor force
  • 1-Unemployment is below the natural rate.2-Unemployment is above the natural rate.3-Cyclical unemployment equals zero. & Unemployment equals the natural rate.
  • 1-non-market good2-non-market good3-underground economy4-underground economy
How do intermediate goods factor into the calculation of GDP?
  • 1-non-market good2-leisure time3-quality of environment4-underground economy
  • Intermediate goods do not factor into GDP; only final goods are counted
  • advances in tech typically cause the price of some goods to decrease over time
  • it is the economic output when unemployment is at 0
Marshall has recently lost his job and is currently receiving federal jobless benefits.Marshall benefits by receiving income so that he can continue to (1) goods and services while searching for a new job, which benefits society because it decreases the likelihood of an economic (2). On the other hand, the benefits may also cause Marshall to become (3) incentivized to take a job and (4) the amount of time he spends unemployed.
  • Micro:-The financial decisions of a family-The hiring decisions of a companyMacro:-The median income of a small state-The unemployment rate of a nation
  • 1-deal with menu costs2-demand3-confusion
  • 1-consume2-recession3-less4-increase
  • **correct:-Gwyn may need to spend money to update her price displays throughout the store.-Gwyn might misinterpret rising prices associated with inflation for a higher demand.-Lenders may be wary of providing Gwyn a loan because it is difficult to predict future price levels.***incorrect:-Gwyn will need to pay more capital gains taxes.
How do non-market goods cause inaccuracies in measuring the productivity of a nation?
  • ***correct:foodhousingtransportation***incorrect:taxesinvestments
  • Intermediate goods do not factor into GDP; only final goods are counted
  • am economy with many non-market goods may have its output underrated
  • year:2007Nominal GDP growth rate:9price level growth rate:6
The unemployment rate in Economy X when it is growing normally is 5%. When Economy X is in a recession, the unemployment rate is 10%. Drag each word or phrase to the appropriate blank space in order to complete the paragraph correctly.Drag word(s) below to fill in the blank(s) in the passage.The (1) unemployment rate while Economy X is (2) is 0%. The 5% unemployment rate is due to structural and (3) factors.
  • 1-cyclical2-growing normally3-frictional
  • 1-deal with menu costs2-demand3-confusion
  • 1-consumption2-consumption3-government spending4-net exports5-investment6-investment
  • 1-black2-white3-male4-female
Which of the following may be considered as part of the consumer price index?
  • ***correct:foodhousingtransportation***incorrect:taxesinvestments
  • ***correct:-The quantity of goods and services in the economy increases by 2% while the supply of money increases by 4%.-The government prints $500 million in new currency to pay off foreign debts.***incorrect:-The supply of money decreases.-The population of a nation decreases.
  • ***correct:-brazil-angola***incorrect:-nicaragua-guinea
  • ***correct:-Long-term agreements become too risky for lenders, making it more difficult to obtain a loan.-Prices begin to rise, so firms increase output.***incorrect:-higher demand-lower prices
Match the component of GDP national income accounting to the correct expenditure.1-Jennifer buys toothpaste.2-David buys a new car.3-Lonnie the police officer cashes her paycheck at the end of the week.4-Almonds are grown for sale overseas.5-A farmer buys a new tractor.6-A family of three purchases a newly built home.
  • bottom:agriculturemiddle:industrytop: services
  • 1-consumption2-consumption3-government spending4-net exports5-investment6-investment
  • 1-non-market good2-leisure time3-quality of environment4-underground economy
  • 1-CPI2-GDP deflator3-CPI4-consumers5-GDP deflator6-CPI
The Consumer Price Index (CPI) and the GDP deflator are both price indices, so they both serve as measures of inflation. However, the (1) uses a smaller basket of goods. The (2) aims to take into account all final goods and services, whereas the (3) only includes goods and services sold to (4). So, for instance, prices on farm equipment are included in the (5) but not in the (6).
  • ***correct:-brazil-angola***incorrect:-nicaragua-guinea
  • 1-CPI2-GDP deflator3-CPI4-consumers5-GDP deflator6-CPI
  • 1-cyclical2-growing normally3-frictional
  • 1-gov debt2-printing money3-a sluggish4-surprise
Which of the following are examples of investment?
  • *investments:-a photojournalist buys a new cameraa professional painter buys new brushes-a mechanic buys a new wrench*not investments:-your neighbor buys a new tv-your friend buys a new set of golf clubs
  • ***correct:foodhousingtransportation***incorrect:taxesinvestments
  • ***correct:-The quantity of goods and services in the economy increases by 2% while the supply of money increases by 4%.-The government prints $500 million in new currency to pay off foreign debts.***incorrect:-The supply of money decreases.-The population of a nation decreases.
  • *intermediate:-tires used by a car manufacturer-lenses bought by a camera manufacturer*final:-tires bought by a driver for her personal vehicle-a memory card bought by a photographer
Low GDP is not necessarily an indicator of an economy in poor health. For one thing, a (1) country may have a low GDP but a high (2). For another thing, an economy with a low GDP but a strong (3) is healthier than an economy with a comparable GDP that is stagnant or declining.
  • 1-black2-white3-male4-female
  • 1-unhealthy2-creative destruction3-products4-obsolete
  • 1-small2-per capita GDP3-real GDP growth rate
  • 1-gov debt2-printing money3-a sluggish4-surprise
Match the use of GDP data to the appropriate situation.-measuring long-term economic growth-measuring living standards-measuring business cycles
  • *long term:-Leia examines real per capita GDP over a ten-year period to determine whether the economy of a particular country is in decline or on the rise. *living standards:-Lupe examines the real per capita GDP of seven nations to determine which country might have the wealthiest citizens.*business cycle:-Brad looks at real per capita GDP to determine what impact the recent recession has had on economic activity.
  • ***correct:-The quantity of goods and services in the economy increases by 2% while the supply of money increases by 4%.-The government prints $500 million in new currency to pay off foreign debts.***incorrect:-The supply of money decreases.-The population of a nation decreases.
  • structural unemployment
  • correct:-It is possible for the underground economy to have an effect on the legitimate economy.-It is not possible to accurately measure the size of the underground economy.incorrect:-All underground economic activity is harmful to society.-All of the goods and services traded in the underground economy are illegal.
Put the following hypothetical events, illustrating frictional unemployment, in chronological order.
  • 1-burger chain A intro...2-customer demand...3-burger chain A hires...4-burger chain B lays off...5-unemployed burger chain...
  • correct: -changing the oil in your car yourself-cutting your own hairincorrect:-taking your car to the mechanic for routine maintenance-going to the barber
  • 1-substitution2-new products3-changes in quality4-changes in quality5-new location 6-substitution
  • **correct:-Nominal GDP cannot indicate whether the economy is getting stronger or weaker.-GDP is correlated with many measures of human welfare.**incorrect:-GDP accurately captures all economic activity.-GDP does not account for goods being imported rather than locally produced.
Mary's costs will rise, and for revenue to keep pace she will have to (1) to keep her prices consistent with inflation. If Mary mistakenly believes the rising price of seafood is the result of increased (2), she may misdirect restaurant resources. This would be an example of price (3).
  • 1-uncertainty about future price levels2-wealth redistribution3-price confusion
  • greg, a 19 year old African american male
  • ( 10,000 x $40,000) + (5,000 x $90,000) = $850 million
  • 1-deal with menu costs2-demand3-confusion
Canada's GDP (1) that Canadians have the eleventh-best standard of living. A nation's (2) is a better standard-of-living indicator, because it measures (3). Using this measure, it looks like Canada has a better standard of living than all but one other nation.
  • 1-changes hand2-more3-the size of the money supply4-real GDP
  • ( 10,000 x $40,000) + (5,000 x $90,000) = $850 million
  • 1-deal with menu costs2-demand3-confusion
  • 1-does not indicate2-per capita GDP3-average income
Which of the following groups would be not be counted as unemployed when calculating the unemployment rate?
  • **correct:-Gwyn may need to spend money to update her price displays throughout the store.-Gwyn might misinterpret rising prices associated with inflation for a higher demand.-Lenders may be wary of providing Gwyn a loan because it is difficult to predict future price levels.***incorrect:-Gwyn will need to pay more capital gains taxes.
  • *** correct:-unemployment benefits-government regulation-lack of information***incorrect:-industries shutting down due to long-term changes in consumer tastes-recession
  • ***Structural -unemployment:offering job training and educational programs-providing subsidies to encourage people to relocate***frictional -unemployment:decreasing the amount of paperwork employers must complete for newly hired workers-increasing the amount of severance pay employers must pay when they fire someone
  • ***Included:-recently laid-off workers who are searching for new jobs***Not included:-retired workers-recently laid-off workers who are not searching for jobs-a 15-year old student searching for his first job-employed workers who want to work more hours
Your parents bought their first car for $5,The price level in the year your parents bought their car was 50, while the price level today isCalculate how much your parents' car would have cost if they bought it today.
  • 1-2-3-4-
  • 66%
  • $20,000
  • Richmond,VAPhoenix, AZDetroit, MICharlotte, NCDallas, TX
Do recessions always prevent a long-term increase in a nation's real GDP?
  • ***correct:foodhousingtransportation***incorrect:taxesinvestments
  • *not included in GDP:-a microprocessor chip sold to a computer manufacturer-a smartphone manufactured overseas and sold locally*included in GDP:-landscaping on a residence-a computer sold to a retail consumer
  • No; a nation will normally also have periods of economic expansion that balance out recessions.
  • Intermediate goods do not factor into GDP; only final goods are counted
Government policies are sometimes created to help reduce different types of unemployment. Drag each government program to the appropriate type of unemployment the program would reduce.
  • 1-consume2-recession3-less4-increase
  • ***Structural -unemployment:offering job training and educational programs-providing subsidies to encourage people to relocate***frictional -unemployment:decreasing the amount of paperwork employers must complete for newly hired workers-increasing the amount of severance pay employers must pay when they fire someone
  • Micro:-The financial decisions of a family-The hiring decisions of a companyMacro:-The median income of a small state-The unemployment rate of a nation
  • ***Included:-recently laid-off workers who are searching for new jobs***Not included:-retired workers-recently laid-off workers who are not searching for jobs-a 15-year old student searching for his first job-employed workers who want to work more hours
Max lives in Boston and earns $132,500 per year. If Max decides to move to San Francisco, what annual salary will he need to make in order to maintain the same real wage?
  • 1-2-3-4-
  • $164000
  • (17,348.1/ 109) x 100 = 15,916
  • tax distortions
Calculate the annual percentage change in price level for the yearRound to two decimal places.
  • 1932: 0.821950: 0.961975: 0.61
  • 130 -145 consumer price index
  • (17,348.1/ 109) x 100 = 15,916
  • (109 - 107 / 107) x 100 = 1.87%
Calculate the GDP for a country that in one year sells 10,000 speedboats for $40,000 each and 5,000 race cars for $90,000 each, and nothing else. A speedboat engine contributes $9,000 to the total price, and a race car engine is worth $12,000.
  • ***correct:-brazil-angola***incorrect:-nicaragua-guinea
  • ( 10,000 x $40,000) + (5,000 x $90,000) = $850 million
  • (17,348.1/ 109) x 100 = 15,916
  • Richmond,VAPhoenix, AZDetroit, MICharlotte, NCDallas, TX
Match the situation to the factor that affects the accuracy of the CPI1-The cost of bananas increases dramatically. Many people switch to oranges because they are cheaper.2-A new smartphone app solves math problems simply by pointing the camera at the page.3-Video game consoles offer better graphics and gameplay than they did a decade ago.4-Newer cars have built-in GPS and Bluetooth capabilities.5-New pop-up stores at airports sell clothing, personal electronics, and designer eyewear at low prices.6-The cost of cable increases. People decide to switch to Netflix instead.
  • 1-burger chain A intro...2-customer demand...3-burger chain A hires...4-burger chain B lays off...5-unemployed burger chain...
  • 1-structural unemployment2-cyclical unemployment3-frictional unemployment
  • 1-substitution2-new products3-changes in quality4-changes in quality5-new location 6-substitution
  • 1-non-market good2-non-market good3-underground economy4-underground economy
What is the main advantage of the Billion Prices Project over the CPI?
  • advances in tech typically cause the price of some goods to decrease over time
  • many prices can be monitored daily
  • wages will be too low
  • ***correct:foodhousingtransportation***incorrect:taxesinvestments
For purposes of computing GDP, how are net exports calculated?
  • (109 - 107 / 107) x 100 = 1.87%
  • 1-deal with menu costs2-demand3-confusion
  • True
  • net exports = exports -imports
Identify each good as either intermediate or final.
  • *investments:-a photojournalist buys a new cameraa professional painter buys new brushes-a mechanic buys a new wrench*not investments:-your neighbor buys a new tv-your friend buys a new set of golf clubs
  • *not included in GDP:-a microprocessor chip sold to a computer manufacturer-a smartphone manufactured overseas and sold locally*included in GDP:-landscaping on a residence-a computer sold to a retail consumer
  • *intermediate:-tires used by a car manufacturer-lenses bought by a camera manufacturer*final:-tires bought by a driver for her personal vehicle-a memory card bought by a photographer
  • Counted in GDP:-a new bicycle sold by a bike shop-bicycle handlebars sold to consumers as a customization itemNot counted in GDP:-a used bicycle sold at a garage sale-bicycle handlebars sold to a bike manufacturer
Classify each concept as microeconomic or macroeconomic.
  • Micro:-The financial decisions of a family-The hiring decisions of a companyMacro:-The median income of a small state-The unemployment rate of a nation
  • correct: -changing the oil in your car yourself-cutting your own hairincorrect:-taking your car to the mechanic for routine maintenance-going to the barber
  • *investments:-a photojournalist buys a new cameraa professional painter buys new brushes-a mechanic buys a new wrench*not investments:-your neighbor buys a new tv-your friend buys a new set of golf clubs
  • correct:-It is possible for the underground economy to have an effect on the legitimate economy.-It is not possible to accurately measure the size of the underground economy.incorrect:-All underground economic activity is harmful to society.-All of the goods and services traded in the underground economy are illegal.
Goods created within the borders the United States contribute to the (1) of the United States, (2) the company that makes them is foreign-owned. The output of an American company operating in another country contributes to the (3) of the United States.
  • No; a nation will normally also have periods of economic expansion that balance out recessions.
  • 1-black2-white3-male4-female
  • 1-quality of life2-in leisure activities3-cleaner environment4-does not
  • 1-GDP2-even if3-GNP
Click the area on the graph below that represents when the United States had the highest level of cyclical unemployment.
  • 7%-11%
  • True
  • 1932: 0.821950: 0.961975: 0.61
  • 5%
Suppose you're working in your hometown. You have an opportunity to take a new job in a different city, where the cost of living is different.In each of the following situations, would your real wage be higher or lower in the new job?
  • ***correct:-consumers substituting one good for another because of price-changes in the quality of the same good, over time-new products to buy and new ways for consumers to buy them***incorrect:-the difference between nominal and real buying power-changes in the tax rate and therefore in take-home income
  • *long term:-Leia examines real per capita GDP over a ten-year period to determine whether the economy of a particular country is in decline or on the rise. *living standards:-Lupe examines the real per capita GDP of seven nations to determine which country might have the wealthiest citizens.*business cycle:-Brad looks at real per capita GDP to determine what impact the recent recession has had on economic activity.
  • **correct:-Nominal GDP cannot indicate whether the economy is getting stronger or weaker.-GDP is correlated with many measures of human welfare.**incorrect:-GDP accurately captures all economic activity.-GDP does not account for goods being imported rather than locally produced.
  • ***real higher:-The cost of living in the new city is 8% higher, and you'd get a raise of 10%.-The cost of living in the new city is 10% lower, and you'd take a 5% pay cut.-The cost of living in the new city is 3% lower, and you'd be paid the same amount.***real lower:-The cost of living in the new city is 12% higher, and you'd get a raise of 10%.
Assuming that the trends from 1980 to 2008 continue for another decade, which country would you expect to have a lower standard of living in 2020 than in 1970?
  • greg, a 19 year old African american male
  • higher:-turkey-mexico-Indialower:-Nicaragua
  • ( 10,000 x $40,000) + (5,000 x $90,000) = $850 million
  • bottom:agriculturemiddle:industrytop: services
What are the three reasons why the CPI is hard to measure accurately?
  • ***correct:-consumers substituting one good for another because of price-changes in the quality of the same good, over time-new products to buy and new ways for consumers to buy them***incorrect:-the difference between nominal and real buying power-changes in the tax rate and therefore in take-home income
  • **correct:-Nominal GDP cannot indicate whether the economy is getting stronger or weaker.-GDP is correlated with many measures of human welfare.**incorrect:-GDP accurately captures all economic activity.-GDP does not account for goods being imported rather than locally produced.
  • **correct:-After the Great Recession, more than one-quarter of unemployed people spent more than 6 months looking for a job.-The length of time people remained unemployed in 2015 was generally longer than it was in 2007.**incorrect:-The Great Recession did not affect the length of time people remained unemployed.-The majority of people who were unemployed in 2015 were looking for work for an extended length of time.
  • ***correct:-The price of a ticket to a baseball game increases after the stadium is rebuilt.-A company releases a new product that many consumers adopt.***incorrect:-Consumers need to purchase gas to get to work.-The typical basket of consumer goods does not change.
Match each form of unemployment with an example. Note that every item may not have a match.-An unemployed paper mill worker. The local paper mill shut down due to lack of demand for paper products in a digital age.-An unemployed banker during a recession. The banker would be hired back once the economy began growing normally again.-An unemployed cashier. A small clothing store shut down due to its customers buying clothes from a new big-box retailer.
  • 1-consumption2-consumption3-government spending4-net exports5-investment6-investment
  • 1-structural unemployment2-cyclical unemployment3-frictional unemployment
  • 1-substitution2-new products3-changes in quality4-changes in quality5-new location 6-substitution
  • 1-not in the labor force2-employed3-unemployed4-underemployed5-not in the labor force
You live in Atlanta and earn $95,600 a year. Your boss offers you a $10,000 raise and the opportunity to move to another city and work remotely. If maintaining at least the same real wage is your only concern, select all the cities to which you could relocate.
  • 1-uncertainty about future price levels2-wealth redistribution3-price confusion
  • 1-non-market good2-leisure time3-quality of environment4-underground economy
  • Richmond,VAPhoenix, AZDetroit, MICharlotte, NCDallas, TX
  • 1-small2-per capita GDP3-real GDP growth rate
For each output, apply the appropriate label.
  • **correct:-Nominal GDP cannot indicate whether the economy is getting stronger or weaker.-GDP is correlated with many measures of human welfare.**incorrect:-GDP accurately captures all economic activity.-GDP does not account for goods being imported rather than locally produced.
  • *intermediate:-tires used by a car manufacturer-lenses bought by a camera manufacturer*final:-tires bought by a driver for her personal vehicle-a memory card bought by a photographer
  • ***Positive:-innovations in product markets-returning to full-time schooling***Negative:-economy in recession-poor work performance
  • *not included in GDP:-a microprocessor chip sold to a computer manufacturer-a smartphone manufactured overseas and sold locally*included in GDP:-landscaping on a residence-a computer sold to a retail consumer
You can figure out how much the economy has grown over the years by simply looking at nominal GDP.T/F
  • True
  • False
GDP is the best measure of a nation's economic activity. However, GDP does not take into account many factors that affect quality of life, like the amount of people's (1) or the cleanliness of theGDP only measures a country's economic (3).
  • ***correct:-brazil-angola***incorrect:-nicaragua-guinea
  • 1-increase2-less3-decrease4-more
  • 1-consumption2-consumption3-government spending4-net exports5-investment6-investment
  • 1-leisure time2-environment3-output
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