Exam 3 Flashcards
What does a consumer price index (CPI) measure?
Inflation The consumer price index is a weighted average of prices of a specific set of goods and services purchased by a typical household, a widely cited index number for the price level.
How do you calculate cpi?
CPI = (Total dollar expenditure current year / total dollar expenditure base year)
x 100
How do you calculate inflation?
(CPI later year - CPI earlier year)
divided by earlier year
x 100
How do you convert dollars from one year to another?
Salary in todays dollars =
salary earlier year x
(CPI later year / CPI earlier year)
Describe how the BLS determines whether an individual is “employed,” “unemployed,” or “not in the labor force.”
The BLS takes the total population of the United States and deducts all persons who are under 16 years of old, active military, or institutionalized, and the remaining that is left is called the civilian noninstitutional population. The civilian noninstitutional population is divided into two groups: people not in the labor force and people in the labor force. People in the civilian labor force are either employed or unemployed. A person is counted as employed if they did any work for pay or profit during the survey reference week, or if they did at least 15 hours of unpaid work in a family-operated enterprise, or if they were temporarily absent from their regular jobs because of illness, vacation, bad weather, industrial dispute, or other personal factors. A person is counted as unemployed if they did not have jobs during the survey reference week but made specific active efforts to find a job during the prior 4 weeks and was available for work, or if he/she was not working, but was waiting to be called back to a job from which he/she had been temporarily laid off.
frictional unemployment definition
Unemployment that is due to the national so-called frictions in the economy and that is caused by changing market conditions and represented by qualified individuals with transferable skills.
structural unemployment definition
Unemployment due to structural changes in the economy that eliminate some jobs and create others for which the unemployed are unqualified.
natural unemployment rate definition
Unemployment caused by frictional and structural factors in the economy.
cyclical unemployment definition
The difference between the unemployment rate and the natural unemployment rate.
How do you calculate how many people are employed?
Civilian labor force - amount of unemployed people
How do you calculate employment rate?
number of employed persons / civilian labor force
How do you calculate unemployment rate?
amount of unemployed people / civilian labor force
define Gross Domestic Product (GDP)
Gross Domestic Product is the total market value of all final goods and services produced annually within a country border.
expenditure approach to calculate GDP
Consumption + Investments + Government Purchases + Net Exports = GDP
Income approach to computing GDP
National income + Sales tax + Depreciation + Net foreign factor income = GDP
Computing Real GDP
Sum of (Base year prices x current year quantities) = Real GDP
What is a business cycle?
A business cycle is recurrent swings up and down in real GDP
What are the phase’s of a business cycle.
The phases are Peak, Contraction, Trough, Recovery, and Expansion
When do we say one business cycle has occurred?
when it gets from the first peak to a second peak
How do you calculate nominal GDP?
sum (current year prices x current year quantities)
How do you calculate economic growth rates?
RealGDP (Later year - earlier year)
/ earlier year
Discuss what productivity and standard of living mean ?
Productivity is the quantity of goods and services produced from each unit of labor. Standard of living depends on a countries ability to produce goods and services. Standard of living also means wealth, comfort, material goods, and necessities of certain classes in certain areas—or, more objectively, measures of income and consumption
Explain why productivity is related to the standard of living?
Productivity is related to standard of living because the more productive a country is the higher the standard of living will be
Make a list of things that determine labor productivity?
Things that determine labor productivity are physical capital, physical capital per worker, human capital, human capital per worker, natural resources, natural resources per worker, and technological knowledge.
- If a person worked at least 15 hours per week as an “unpaid” worker in a restaurant owned by her family, how is she classified by the Bureau of Labor Statistics?
A. as not in the labor force
B. as an unemployed person
C. as an employed person
D. as a discouraged worker
c. an unemployed person
- Look at the following data: Employed persons = 110 million; civilian labor force = 135 million persons; civilian non-institutional population = 190 million. The unemployment rate is __________ percent and the employment rate is __________ percent.
A. 10; 69
B. 8; 57.9
C. 18.5; 57.9
D. 18.5; 81.5
E. 12; 88
c. 18.5; 57.9
- Which of the following would definitely not be included in the measurement of GDP?
A. value of the services of a painter who paints your garage.
B. value of the services of a plumber who fixes your kitchen sink.
C. value of the services of a maid who cleans your house.
D. value of the services of a person who mows his or her own lawn.
d. value of services of a person who mows his or her own lawn
A nation’s standard of living is best measured by its
A. real GDP.
B. real GDP per person.
C. nominal GDP.
D. nominal GDP per person.
b. real GDP per person
not in labor force meaning?
person is considered “not in the labor force” if they are neither employed nor actively seeking work, meaning they are not currently working and not looking for a job; this can include individuals who are retired, students, caregivers, or those who are permanently unable to work.
