Assignment 3 Flashcards
An individual is said to be a discouraged worker if he or she _____
wants to work but has given up searching for a job
When unemployment increases usually ____
a reduction in the labor force participation rate
The GDP deflator provides a measure of ___
the ratio of the nominal GDP to real GDP
Changes in GDP in the short run are caused primarily by
demand factors
Changes in GDP in the medium run are caused primarily by
supply factors
Changes in GDP in the long run are caused primarily by
none of the above
Okin’s Law shows the relationship between ___
output growth and unemployment
The Philips curve describes the relationship between _____
inflation and unemployment
The non-institutional civilian population is 250 millions, of which 100 million are employed and 10 millions are unemployed. The unemployment rate is ___
9.1 %
Unemployment rate = people unemployed/(people employed +people unemployed)
The non-institutional civilian population is 250 millions, of which 100 million are employed and 10 millions are unemployed. The labor force rate is ___
44%
Labor force rate = (People employed + People Unemployed) /Total Population
The non-institutional civilian population is 250 millions, of which 100 million are employed and 10 millions are unemployed. The non-employment rate is ___
60%
Non-employed rate = People non-employed/Total population
Which variable is most directly determined in the labor market?
Nominal wages
Efficiency wage theory suggest that
productivity might drop if the wage rate is too low
in the wage setting relation, the nominal wage tends to decrease when unemployment benefits ___
decrease
Labor productivity is represented by?
The ration of output to employment
The natural level of output is the level of output that occurs when
the economy is operating at the employment rate consistent with both the wage - setting and price - setting equations
The natural level of employment (N) will increase when
a reduction in unemployed benefits
Suppose workers and firms expect the overall price level to increase by 5%. We would expect that the ____ wage will increase by _____ 5%
nominal, exactly
Suppose the aggregate production function is given by the following: Y = AN. Labor productivity is represented by __ in the function
A
What would likely cause a change in the natural rate of unemployment?
Changes in expected inflation
Which situation generally exists when deflation occurs?
The price level is decreasing
Suppose policy makers underestimate the natural rate of unemployment. In situations like these, policy makers likely implement policies that result in
a higher inflations rate than necessary
The Philips curve show that when the unemployment rate is higher than the natural rate
inflation is lower than expected
Okun’s Law shows that when the unemployment rate is above the natural rate ______
output is below potential
If the output is too high, to achieve the medium run equilibrium, the central bank will
increase policy rate
The zero lower bound refers to the situation that _____
the lowest the central bank can decrease the nominal rate is 0%
In the short run a reduction in the price of oil will cause
a reduction in the inflation rate
In the medium run, an increase in the price of oil will cause
an increase in the unemployed rate
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
reduction, increase
IN the short run an increase in the price of oil will cause
An increase in the inflation rate
