29 Jan Using the data in the

Week 5 Homework

Question 1

Unemployment benefits in western Europe are more generous than in the United States. As a result, ________ in the United States.

frictional unemployment is higher

cyclical unemployment is higher

structural unemployment is higher

frictional unemployment is lower

avoidable unemployment is lower

Question 2

The business cycle describes

the behavior of GNP over time.

the change in the standard of living across countries.

the change in potential GDP over time.

the behavior of real GDP over time.

the behavior of nominal GDP over time.

Question 3

People who are working up to 34 hours per week but would like to work more are considered

unemployed.

involuntary part-time workers.

discouraged workers.

job seekers.

job leavers.

Question 4

Suppose the working-age population is 500 million, the labor force is 200 million, and the unemployment rate is 15 percent. The number of unemployed people is

15 million.

75 million.

30 million.

105 million.

45 million.

Question 5

The following are groups of individuals in the population:

1. Individuals who are under 16

2. Individuals in institutional care

3. Individual in the armed forces

4. Individuals working for pay at a fulltime job

5. Individuals who are employed

6. Individuals not employed but were available for work and were looking for work

7. Individuals not employed and looking for work

Using the list above, the Current Population Survey classifies the group of individuals who are left after subtracting from the total population groups 1, 2, and 3 as

discouraged workers.

the working-age population.

employed.

unemployed.

the labor force.

Question 6

Consumption expenditure includes spending

by households.

by governments when they are buying goods and services that consumers also buy.

by households and spending on office supplies by firms.

on intermediate goods and services by firms.

on office supplies by firms.

Question 7

U.S. real GDP

includes the value of underground production but excludes the value of leisure time.

excludes the value of underground production and leisure time.

measures the change in the price level over time.

precisely measures the improving standard of living in the United States.

is not as accurate as nominal GDP when measuring standard of living changes over time.

Question 8

Based on the figure above, in which quarter or quarters did an expansion occur?

in 2014, 2nd quarter

between 2013, 2nd quarter to 2014, 2nd quarter

in 2013, 2nd quarter

There are no expansions illustrated in the figure.

between 2012, 2nd quarter to 2013, 2nd quarter and also between 2014, 2nd quarter to the end of the figure

Question 9

Net exports of goods and services is equal to the value of

exports plus the value of imports.

exports minus the value of imports.

imports minus the value of exports.

domestic consumption minus the value of exports.

domestic consumption minus the value of imports.

Question 10

Janae was fired from her job with Microsoft in the 2008-09 recession because Microsoft’s sales dipped. Janae’s unemployment would be best classified as

frictional unemployment.

sales-related unemployment.

structural unemployment.

cyclical unemployment.

natural unemployment.

Question 11

Investment is the expenditure done by

savers.

governments.

the rest of the world.

firms.

Both answers A and B are correct.

Question 12

The working-age population of people over the age of 16 can be divided into two groups, people

looking for work and those in the U.S. Armed Forces.

in the labor force and people with a job.

in the labor force and people looking for work.

in the labor force and people who are not in the labor force.

with a job and people actively seeking a job.

Question 13

Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time.

consumed by the citizens of a country

produced and consumed within a country

produced by the citizens of a country

produced within a country

consumed within a country

Question 14

Which of the following people would be considered unemployed?

Bobby, a full-time student in his last term before he graduates and who has not yet started to look for a job

Sam, a part-time worker who wishes to work full time

Shirley, who is working but expects to be laid off at the end of the month

Victoria, who does not have a job and has been actively searching for work, but turned down a job paying less than she desired

Pat, who gave up looking for a job because he was discouraged about his job prospects

Question 15

For twenty years, Jim was a customer service representation at a call center in Minnesota. In order to save money, his firm moved the call center to India and laid off Jim two years ago. Jim has been unable to find a similar job anywhere. Jim’s unemployment is best classified as

structural.

transported.

competitive.

cyclical.

frictional.

Question 16

Why GDP fails as a measure of well-being

There is a new reason why GDP is a poor measure of economic well-being: It doesn’t measure the benefits we gain from free apps and lots of other free stuff on the Internet. And none of the other indexes deal with this problem.

Source: CBS News, January 27, 2016

What are the other reasons why GDP is a poor measure of economic well-being?

_________________

GDP is a poor measure of economic well-being because it _______.

fluctuates more than potential GDP

includes only production that is traded in markets

exaggerates the depth of recessions and the height of expansions

includes items such as political freedom which cannot be accurately measured

Question 17

One reason the total sum of the income categories does not equal GDP is that

GDP values goods and services at market prices and the income approach values them at factor cost.

taxes are generally larger than subsidies and the depreciation of capital is negligible.

GDP values goods and services at retail prices and the income approach values them at wholesale cost.

people do not spend all their income, so the value of consumption expenditure is less than the value of wages.

GDP does not include depreciation, which is part of the income categories.

Question 18

The U.S. economy is experiencing falling output, falling employment, falling incomes and rising unemployment. These conditions best describe a business cycle

recession.

trough.

trend.

expansion.

peak.

Question 19

When measuring GDP,

the government sector is not counted because it does not produce goods and services.

the government sector is not included because it is the public sector not the private sector.

the government sector is counted, and the value of the government sector in GDP is equal to its tax revenue.

the expenditure on goods and services by all levels of government are included.

only the federal government’s expenditure on goods and services are included.

Question 20

Natural unemployment equals the sum of

frictional and structural unemployment.

cyclical and structural unemployment.

cyclical and frictional unemployment.

business and cyclical unemployment.

cyclical, business, and structural unemployment.

Question 21

The U.S. economy is experiencing rising output, rising employment, rising incomes and falling unemployment. These conditions best describe a business cycle

expansion.

recession.

trough.

peak.

trend.

Question 22

Potential GDP is the level of output produced when the unemployment rate is

less than the natural unemployment rate.

equal to the natural unemployment rate.

greater than the natural unemployment rate.

made up of only cyclical unemployment.

zero.

Question 23

Andrew is not working, but is available and willing to work after finishing a month-long mission trip for his church. While on his mission, Andrew did not look for work. Andrew is considered

Both answers A and B are correct.

part of the labor force.

a marginally attached worker.

a discouraged worker.

unemployed.

Question 24

U.S. unemployment rate lowest since 2008

The Labor Department said that the economy added 146,000 jobs in November, and the unemployment rate fell to 7.7% from 7.9% in October. But it fell mainly because workers dropped out of the labor force.

Source: CNN Money, December 7, 2012

Explain why workers dropping out of the labor force lowers the unemployment rate and why by more than new jobs do.

____________________

When workers drop out of the labor force, the unemployment rate falls because _______.

the percentage change in the number unemployed is greater than the percentage change in the labor force

the percentage change in the number unemployed is less than the percentage change in the labor force

the percentage change in the number unemployed equals the percentage change in the labor force

the ratio of the number employed to the number unemployed increases

Question 25

Jordan recently quit her job as a marketing consultant in Washington, D.C. and is looking for a better-paying job with an advertising agency in New York. Jordan is considered to be

a discouraged worker.

structurally unemployed.

frictionally unemployed.

cyclically unemployed.

not in the labor force.

Question 26

Based on the figure above, in which quarter or quarters did a peak occur?

between 2012, 2nd quarter to 2013, 2nd quarter and also between 2014, 2nd quarter to the end of the figure

between 2013, 2nd quarter to 2014, 2nd quarter

There are no peaks illustrated in the figure.

in 2014, 2nd quarter

in 2013, 2nd quarter

Question 27

In order to measure gross domestic product, we can follow

three approaches: the expenditure approach, the income approach, and the production approach.

two approaches: the expenditure approach and the income approach.

three approaches: the expenditure approach, the income approach, and the market-based approach.

only one approach: the circular flow approach.

only one approach: the national accounts approach.

Question 28

U.S. economy ended 2015 with slow growth

GDP increased at an annual rate of 0.7 percent in the final quarter of 2015. Government expenditure grew at the same 0.7 percent rate, but consumption expenditure grew at a rate of 2.2 percent. Investment and net exports shrank.

Source: BEA News Release, January 29, 2016

W5-HW-15.png

Use the figure to indicte the flows in which the items in the news clip occur.

How can GDP increase by 0.7 percent if consumption expenditure increased at a 2.2 percent rate?

_____________

It is possible for GDP to increase by only 0.7 percent when consumption expenditure grew at a 2.2 percent rate because _______.

the sum of investment and net exports shrank

total expenditure does not equal total income

the sum of investment and net exports increased by less than 2.2 percent

intermediate goods are included in the measurement of GDP

there is a measurement error

Question 29

A standard definition of recession is

an increase in unemployment from one month to the next.

an increase in GDP that lasts for at least 6 months.

a period of expansion in many sectors of the economy.

a period of time when the unemployment rate exceeds 6.5 percent.

a decrease in real GDP for at least two successive quarters.

Question 30

Using the data in the above table, the labor force participation rate is

56 percent.

4.8 percent.

64.4 percent.

60.8 percent.

61.6 percent.