Assignment 3 Flashcards Preview

Macroeconomics > Assignment 3 > Flashcards

Flashcards in Assignment 3 Deck (30)
Loading flashcards...
1
Q

An individual is said to be a discouraged worker if he or she _____

A

wants to work but has given up searching for a job

2
Q

When unemployment increases usually ____

A

a reduction in the labor force participation rate

3
Q

The GDP deflator provides a measure of ___

A

the ratio of the nominal GDP to real GDP

4
Q

Changes in GDP in the short run are caused primarily by

A

demand factors

5
Q

Changes in GDP in the medium run are caused primarily by

A

supply factors

6
Q

Changes in GDP in the long run are caused primarily by

A

none of the above

7
Q

Okin’s Law shows the relationship between ___

A

output growth and unemployment

8
Q

The Philips curve describes the relationship between _____

A

inflation and unemployment

9
Q

The non-institutional civilian population is 250 millions, of which 100 million are employed and 10 millions are unemployed. The unemployment rate is ___

A

9.1 %

Unemployment rate = people unemployed/(people employed +people unemployed)

10
Q

The non-institutional civilian population is 250 millions, of which 100 million are employed and 10 millions are unemployed. The labor force rate is ___

A

44%

Labor force rate = (People employed + People Unemployed) /Total Population

11
Q

The non-institutional civilian population is 250 millions, of which 100 million are employed and 10 millions are unemployed. The non-employment rate is ___

A

60%

Non-employed rate = People non-employed/Total population

12
Q

Which variable is most directly determined in the labor market?

A

Nominal wages

13
Q

Efficiency wage theory suggest that

A

productivity might drop if the wage rate is too low

14
Q

in the wage setting relation, the nominal wage tends to decrease when unemployment benefits ___

A

decrease

15
Q

Labor productivity is represented by?

A

The ration of output to employment

16
Q

The natural level of output is the level of output that occurs when

A

the economy is operating at the employment rate consistent with both the wage - setting and price - setting equations

17
Q

The natural level of employment (N) will increase when

A

a reduction in unemployed benefits

18
Q

Suppose workers and firms expect the overall price level to increase by 5%. We would expect that the ____ wage will increase by _____ 5%

A

nominal, exactly

19
Q

Suppose the aggregate production function is given by the following: Y = AN. Labor productivity is represented by __ in the function

A

A

20
Q

What would likely cause a change in the natural rate of unemployment?

A

Changes in expected inflation

21
Q

Which situation generally exists when deflation occurs?

A

The price level is decreasing

22
Q

Suppose policy makers underestimate the natural rate of unemployment. In situations like these, policy makers likely implement policies that result in

A

a higher inflations rate than necessary

23
Q

The Philips curve show that when the unemployment rate is higher than the natural rate

A

inflation is lower than expected

24
Q

Okun’s Law shows that when the unemployment rate is above the natural rate ______

A

output is below potential

25
Q

If the output is too high, to achieve the medium run equilibrium, the central bank will

A

increase policy rate

26
Q

The zero lower bound refers to the situation that _____

A

the lowest the central bank can decrease the nominal rate is 0%

27
Q

In the short run a reduction in the price of oil will cause

A

a reduction in the inflation rate

28
Q

In the medium run, an increase in the price of oil will cause

A

an increase in the unemployed rate

29
Q

Assume that the economy is initially operating at the natural level of output. In the medium run an increase in the price of oil will cause a ____ in output and ____ in the aggregate price level

A

reduction, increase

30
Q

IN the short run an increase in the price of oil will cause

A

An increase in the inflation rate