BEC 5 M2: Economic Measures and Indicators

Question 1

Frictional Unemployement

Answer 1

normal unemployment resulting from workers routinely changing jobs or from workers being temporarily laid off

Question 2

Structural Unemployment

Answer 2

jobs available do not match skills of the workforce, and unemployed workers do not live where jobs are located

Question 3

Seasonal Unemployment

Answer 3

result of seasonal changes in the demand and supply of labor

Question 4

Cyclical Unemployment

Answer 4

amount of unemployment resulting from declines in real GDP during periods of contraction/recession when the economy fails to operate at its potential

Question 5

Expenditure GDP calculation

Answer 5

GICE
Government purchases
Investment expenditures
Consumption expenditures
net Exports (exports-imports)

Question 6

discount rate set by the Federal Reserve is

Answer 6

the rate the central bank charges for loans to commercial banks

Question 7

Fed can decrease money supply by

Answer 7

1. sell gov securities on open market
2. increase the discount rate
3. increase required reserve ratio

Question 8

inflation rate

Answer 8

((CPI this period- CPI last period)/CPI last period)*100

Question 9

real interest rate

Answer 9

nominal interest rate - inflation

Question 10

Consumer price index (CPI)

Answer 10

measures costs of a market basket of specific goods commonly purchased by consumers. It measures consumer buying power and the rate of inflation

Question 11

disposable income

Answer 11

personal income (households/noncorporate businesses)-personal taxes

Question 12

percentage change in expenditures adjusted for inflation

Answer 12

base year

-(current year(BY CPI/CY CPI))