Econ unit 6 test

Question 1

Unemployed

Answer 1

People available for work who are seeking a job or who worked less than one hour for pay

Question 2

Frictional Unemployment

Answer 2

Unemployment caused by workers who are between jobs for one reason or another

Question 3

Structural Unemployment

Answer 3

occurs when demand for workers skills are reduced from a fundamental change in the operations of economy

Question 4

Seasonal Unemployment

Answer 4

occurs from changes in weather or demand for certain products

Question 5

Cyclical Unemployment

Answer 5

joblessness caused by a reduction in the economies total demand for goods and services

Question 6

Technological Unemployment

Answer 6

occurs when automation or low skilled jobs are replaced with machines or other equipment that does their job

Question 7

how do you measure unemployment?

Answer 7

of unemployed individuals / total # of people in the civilian labor force

Question 8

Natural rate of unemployment

Answer 8

min level of unemployment that our economy can achieve in normal times

Question 9

Full employment

Answer 9

when the rate of unemployment is equal to the natural rate

Question 10

Civilian labor force

Answer 10

sum of all individuals who are classified as employed or unemployed

Question 11

Inflation

Answer 11

change in price index between years / price index in previous year
increase in the general price level

Question 12

Deflation

Answer 12

decrease in the general price level

Question 13

Creeping inflation

Answer 13

1-3%

Question 14

Galloping inflation

Answer 14

100-300%

Question 15

Hyperinflation

Answer 15

500+%

Question 16

Price index

Answer 16

(price in a given year / price in base year) times 100

Question 17

Gross domestic product (GDP)

Answer 17

the dollar amount of all final goods and services produced within countries national borders in a year

Question 18

Intermediate products

Answer 18

products used to make other products already counted in GDP

Question 19

Secondhand sales

Answer 19

the sales of used goods

Question 20

Non-market transactions

Answer 20

transactions that do not take place in the market

Question 21

Gross national product (GNP)

Answer 21

the dollar value of all final goods, and structures produced in one year with labor and property supplied by a countries residents

Question 22

Expenditures approach to calculate GDP

Answer 22

Household consumption + Investment by firms + Government spending + (Exports - Imports)
C + I + G + (X - M)

Question 23

Income approach to calculate GDP

Answer 23

just add everything together
employee compensations + rental income + net interest + corporate profits + proprietors income + indirect business taxes + capital consumption allowances

Question 24

Aggregate demand

Answer 24

the total quantity of goods and services demanded at different price levels

Question 25

Macroeconomic equilibrium

Answer 25

the level of real GDP consistent with a given price level

Question 26

Real balance effect

Answer 26

increase in the amount of aggregate output demanded that results from the increased real value of the publics financial assets

Question 27

Interest rate effect

Answer 27

the increase in the amount of aggregate output demanded that results when a reduction in overall price level causes interest rates to fall

Question 28

International rate of effect

Answer 28

the increase in the amount of aggregate output demanded that results when a reduction in price level makes domestic products less expensive relative to foreign products

Question 28

a. Fiscal policy b. Government influence

Answer 28

a. gov attempt to stabilize the economy through taxing and gov spending b. gov can influence AD through its policies and manipulate the money supply

Question 29

Shifters of aggregate demand: a. Household consumption b. Investment by firms c. Government spending

Answer 29

a. what peopole in a household buy, if peole buy more stuff it shifts right b. increase in interest rates would lower investment and push the AD curve to the left c. an increase in gov spending would shift the AD curve to the right

Question 29

Aggregate supply

Answer 29

the total value of goods and services that all firms would produce in a specific period of time at various price levels.

Question 30

Shifters of AS: a. Employment costs b. Cost of other inputs c. Impact of gov

Answer 30

a. wages, employment taxes, unit labor costs are also affected by the level of labor productions b. commodity prices, raw materials c. environmental taxes, business regulations that affect the cost of production

Question 31

Real wages

Answer 31

purchasing power of their money wages increase - gave more money/spend less money decrease - have less money/ spend less money

Question 32

Potential GDP

Answer 32

max sustainble level of production in the economy

Question 33

Stagflation

Answer 33

high unemployment combined with high inflation

Question 34

Demand-pull inflation

Answer 34

inflation caused by increases in aggregate demand

Question 35

Cost-push inflation

Answer 35

inflation caused by rising costs of production

Question 36

Business cycle

Answer 36

the recurring ups and downs in the level of economic activity