Chapter 18

Question 1

Consumption (C)

Answer 1

The part of GDP purchased by households as final users

Question 2

Cyclical Unemployment

Answer 2

Joblessness arising from changes in production over the business cycle

Question 3

Discouraged Workers

Answer 3

Individuals who would like a job, but have given up searching for one

Question 4

Employment-Population Ratio

Answer 4

Total employment (from the household survey) divided by the total population over age 16

Question 5

Expenditure approach

Answer 5

Measuring GDP by adding the value of goods and services purchased by each type of final user

Question 6

Factor Payments

Answer 6

Payments to the owners of resources that are used in production

Question 7

Factor Payments approach

Answer 7

Measuring GDP by summing the factor payments earned by all households in the economy

Question 8

Frictional Unemployment

Answer 8

Joblessness experienced by people who are between jobs or who are just entering or reentering the labor market

Question 9

Full Employment

Answer 9

A situation in which there is no cyclical unemployment

Question 10

Government Purchases (G)

Answer 10

Spending by federal, state, and local governments on goods and services

Question 11

Gross Domestic Product

Answer 11

The total value of all final goods and services produced for the marketplace during a given year, within the nation’s borders.

Question 12

Intermediate Goods

Answer 12

Goods used up in producing final goods

Question 13

Involuntary Part-Time Workers

Answer 13

Individuals who would like a full-time job, but who are working only part time

Question 14

Labor force

Answer 14

Those people who have a job or who are looking for one

Question 15

Net Exports (NX)

Answer 15

Total exports minus total imports

Question 16

Net Investment

Answer 16

Investment minus depreciation

Question 17

Nominal Variable

Answer 17

A variable measured without adjustment for the dollar’s changing value

Question 18

Nonmarket Production

Answer 18

Goods and services that are produced but not sold on market

Question 19

Potential Output

Answer 19

The level of output the economy could produce if operating at full employment

Question 20

Real Variable

Answer 20

A variable adjusted for changes in the dollar’s value

Question 21

Seasonal Adjustment

Answer 21

Adjusting an economic variable to remove the effects of changes predicted to occur at that time of year

Question 22

Seasonal Unemployment

Answer 22

Joblessness related to changes in weather, tourist patters, or other seasonal factors

Question 23

Slump

Answer 23

A period during which real GDP is below potential and/or the employment rate is below normal

Question 24

Structural Unemployment

Answer 24

Joblessness arising from mismatches between worker’s skill and employers’ requirements or between worker’s locations and employers locations

Question 25

Transfer Payment

Answer 25

Any payment that is not compensation for supplying goods, services, or resources

Question 26

Unemployment Rate

Answer 26

The fraction of the labor force that is without a job

Question 27

Value Added

Answer 27

The revenue a firm recieves minus the cost of the intermediate goods it buys

Question 28

Value Added Approach

Answer 28

Measuring GDP by summing the value s added by all firms in the economy