Unit 1

Question 1

The total quantity of final goods and services produced within an economy

Answer 1

Aggregate Output

Question 2

The total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year in order to remove the effects of price changes

Answer 2

Real GDP

Question 3

The total value of all final goods and services produced in the economy during a given year, calculated with the prices current in the year in which the output is produced

Answer 3

Nominal GDP

Question 4

The method of calculating changes in the real GDP using the average between the growth rate calculated using early base year and the growth rate calculated using a later base year

Answer 4

Chain-linking

Question 5

The GDP divided by the size of the population; equal to the average GDP per person

Answer 5

GDP per capita

Question 6

People are currently holding a job in the economy, either full time or part time

Answer 6

Employed

Question 7

People are actively looking for work but aren’t currently employed

Answer 7

Unemployed

Question 8

Equal to the sum of the employed and the unemployed

Answer 8

Labor Force

Question 9

The percentage of the population aged 16 or older that is in the labor force

Answer 9

Labor force participation

Question 10

The percentage of the total number of people in the labor force who are unemployed

Answer 10

Unemployment rate

Question 11

Nonworking people who are capable of working but have given up looking for job due to the state of the job market

Answer 11

Discouraged workers

Question 12

Would like to be employed and have looked for a job in the recent past but are not currently looking for work

Answer 12

Marginally attached workers

Question 13

Workers who would like to work more hours or who are overqualified for their jobs

Answer 13

Underemployed

Question 14

Workers who spend time looking for employment

Answer 14

Job search

Question 15

Unemployment due to the time workers spend in job search

Answer 15

Frictional Unemployment

Question 16

Unemployment that results when workers lack the skills required for the available jobs, or there are or people seeking jobs in a labor market than there are jobs available at the current wage rate

Answer 16

Structural Unemployment

Question 17

Wages that employers set above the equilibrium wage rate as an incentive for better employee performance

Answer 17

Efficiency wages

Question 18

Unemployment rate that arises from the effects of frictional plus structural unemployment

Answer 18

Natural rate of unemployment

Question 19

Deviation of the actual rate of unemployment from the natural rate

Answer 19

Cyclical unemployment

Question 20

Wage rate divided by the price level to adjust for the effects of inflation or deflation

Answer 20

Real Wage

Question 21

Income divided by the price level to adjust for the effects of inflation or deflation

Answer 21

Real Income

Question 22

Percentage increase in the overall level of prices per year

Answer 22

Inflation Rate

Question 23

Increased costs of transactions caused by inflation

Answer 23

Shoe-leather costs

Question 24

The real costs of changing listed prices

Answer 24

Menu costs

Question 25

Arise from the way inflation makes money a less reliable unit of measure

Answer 25

Unit-of-account costs

Question 26

Interest rate actually paid for a loan

Answer 26

Nominal interest rate

Question 27

Nominal interest rate minus the rate of inflation

Answer 27

Real interest rate

Question 28

the process of bringing the inflation rate down

Answer 28

Disinflation

Question 29

Measure of the overall level of prices in the economy

Answer 29

Aggregate Price level

Question 30

Hypothetical set of consumer purchases of gods and services

Answer 30

Market Basket

Question 31

Measures the cost of purchasing a given market basket in a given year. The index value is normalized so that it is equal to 100 in a selected base year.

Answer 31

Price Index

Question 32

Measures the cost of the market basket of a typical urban American family.

Answer 32

Consumer Price Index (CPI)

Question 33

Measures the prices of goods and services purchased by producers.

Answer 33

Producer Price Index (PPI)

Question 34

For a given year is 100 times the ratio of nominal GDP to real GDP in that year.

Answer 34

GDP deflator