Exam 2 Flashcards
(47 cards)
Production possibilities are the
Alternative combinations of output that can be produced using all available resources
2) If a nation experiences a year of unusually high immigration that increases the size of the labor force we can conclude that the
Nation’s production possibilities curve will shift outward.
From 1950 until 2000 the labor force participation rate has
Increased for men and increased for women.
4) When the economy is below full employment it is producing
Inside the production possibilities curves
5) The observation that a 1 percent increase in unemployment tends to lead to a 2 percent decrease in real output is known as
Okun’s Law
The macro consequence of unemployment is
Lost output for the economy.
7) Which of the following groups generally has the lowest unemployment rate
College graduates
8) When migrant workers seek employment after the crops have been picked the unemployment rate goes up- This situation is an example of
Seasonal unemployment
9) Structural unemployment occurs when
Workers do not have the skills required to fill the vacant positions in the job market.
10) In the 1960s the Council of Economic Advisers determined that the acceptable level of un-employment that would be used in determining full employment was
4 percent.
11) Inflation rates above 10 percent occur
Rarely in the United States.
12) Which of the following functions are performed by changes in relative prices but not by changes in average prices
Computing real income from nominal income.
13) Which of the following groups is protected from a sudden increase in inflation
Borrowers who have loans at fixed interest rates.
According to Figure 7.3 prices and wages were rising so
Sellers of output were better off than wage earners
15) To construct the Consumer Price Index the Bureau of Labor Statistics must
Find out what people buy with their incomes and how the prices of what they buy change.
16) Nominal GDP is the
Value of final output produced
17) Real GDP is the
Value of final output produced adjusted for changing prices.
18) In the Full Employment and Balanced Growth Act of 1978
An unemployment goal of 4 percent was set but no inflation goal could be set.
19) Cost-of-living adjustments
Allow individuals to maintain their purchasing power during inflation
20) A mortgage that adjusts the nominal interest rate to changing rates of inflation is
An ARM.
21) Which of the following indexes tracks changes in the average prices paid by consumers
CPI.
22) Say’s Law states that
Supply creates its own demand.
23) Who believed that small disturbances in output prices or unemployment were likely to be magnified by the invisible hand of the marketplace
Adam Smith.
24) Changes in real GDP are best used to measure
Business cycles.
