EC 111: Review Exam 1
30 Cards in this Set
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$18 per person
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Ferdonia in yar 1: Real GDP = $9000000 Population= 500000 Hours of work per yr=300000 hrs What is the Real GDP per capita? real GDP/Population
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TRUE
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True or False: An increase in capital goods production will lead to an increase in potential GDP.
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Structural and Frictional
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1 Reason Unemployment Rate can never = 0 is because of the existence of thenatural rat of unemployment which includes __________ and __________ unemployment.
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Structural
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____________ unemployment is caused by the structure of an economy rather than by changes in the economic cycle and can be reduced only by changing the economic structures causing it. For instance, by removing rules that limit LABOUR MARKET FLEXIBILITY.
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Frictional
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__________ unemployment is caused by people simply changing jobs and taking their time about it, because they are spending time on job search or are taking a break before starting with a new employer
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Cyclical Unemployment
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The type of unemployment rate that generally rises and falls in step with the BUSINESS CYCLE.
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Capital Gains
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- The PROFIT from the sale of a capital ASSET - NOTE: _______ are subject to taxation.
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Gross Domestion Production (GDP)
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_____ _______ ______ is a measure of economic activity in a country. It is calculated by adding the total value of a country's annual output of goods and services.
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GDP (Y*)
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_____ = C + I + G +(X-IM)
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Factors of Production
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1) natural Resources (land) 2) labor (workers) 3) capital ( economic capital)--> refers to machinery (computers and equipments used in production), office buildings, and factories...
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FINANCIAL
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Economic capital differs from ______ capital (stocks and bonds)
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FALSE
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TRUE OR FALSE: GDP is a masure of thr nation's economic well-being.
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Inflation
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Real GDP is a far better measure than nominal GDP because real GDP is corrected for ________.
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Inflation Rate
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Rate at which Prices $ increase.
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Recession
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Period of time during hich the total output of the economy declines.
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Stabilization Policy
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________ is a government policy designed to: 1) Stabilize Prices 2) Prevent of shorten recessions 3) & to tame inflation
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Labor Productivity
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Real GDP / Hours of Work
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Labor Force
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# of people employed + # of people unemployed but looking for work
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Labor Force Age
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To be counted for in the labor force: 1) 16+ yrs old (Working Age Population)
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Discouraged Worker
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A person who GIVES UP looking for a job and is therefore NOT counted as unemployed and is NOT part of the labor force.
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Unemployment Rate
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(# of unemployed / Labor force) x 100
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Labor Force Participation Rate
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(Labor Force/ Working Age Population) x 100
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CPI Price Index (in yr t)
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[Cost of market basket in yr t] / [Cost of market basket in base yr] x 100
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Nominal rate of inflation
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In the formula: R = r + pi (expected), what does R represent?
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TRUE
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TRUE OR FALSE: An economy can produce an output level above its potential in the short run.
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Inflation and Unemployment
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Macroeconomics studies economic growth and the sources of ___________ and _____________.
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FULL UEMPLOYMENT
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__________ ___________ is achieved when cyclcal unemployment = 0.
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Core Inflation Rate
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______ _______ ______ is the inflation rate that does not include food and energy prices.
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Deflation
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______ is likely to occur in an economy with a long period of recession.
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FALSE
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True or False: The salary paid to a teacher employed in 2009 will NOT be included in the GDP of 2009.
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EC 111: Exam 3