Question 1

Who from among the following would be classified as out of the labor force?

Accepted Answer

Amanda Pie is out of the labor force because she is not employed or actively looking for work.

Question 2

Based on the information in the table, what is the unemployment rate?

Accepted Answer

There are 800,000 in the labor force, i.e., 1,000,000 × 0.80. From this labor force, 720,000 are employed and so 80,000 must be unemployed. The unemployment rate is 80,000/800,000, or 10%.

Question 3

Countries with high real GDP tend to have ______ infant mortality rates and ______ literacy rates than countries with low real GDP.

Accepted Answer

Real GDP does not measure things that are not traded in conventional markets, such as mowing your own lawn or cooking your own dinner.

Question 4

Who from among the following would be classified as employed?

Accepted Answer

Mario Faubert is employed because he is in the labor force and has a job.

Question 5

Who from among the following would be counted as unemployed?

Accepted Answer

For a person to be classified as unemployed, he or she must be willing to work and have recently looked for work.

Question 6

Although GDP is not the same as economic well-being, high levels of GDP are positively correlated with all of the following except:

Accepted Answer

High GDP correlates with many favorable non-economic conditions. Conversely, low GDP correlates with higher rates of infant mortality and many other non-favorable economic conditions.

Question 7

Based on the information in the table, how big is the labor force?

Accepted Answer

There are 800,000 in the labor force, i.e., 1,000,000 × 0.80.

Question 8

Using real GDP to compare the level of economic well-being in two countries may be misleading because the value of ______ contributes to economic well-being, but is excluded from real GDP.

Accepted Answer

Since leisure time is not traded in conventional markets, it is not measured in GDP even though leisure time is very important.

Question 9

Who from among the following would be classified as out of the labor force?

Accepted Answer

For a person to be classified as out of the labor force, he or she must not be actively looking for work.

Question 10

GDP would be a better measure of economic well-being if it included:

Accepted Answer

Since leisure time is not traded in conventional markets, it is not measured in GDP even though leisure time is very important.

Question 11

If two countries are economically identical except that there is significant air and water pollution in one, then the level of GDP:

Accepted Answer

GDP does not account for pollution and other non-traded features of the economy.

Question 12

Despite some problems with equating GDP with economic well-being, higher real GDP per person does imply greater economic well-being because it tends to be positively associated with:

Accepted Answer

High GDP correlates with many favorable non-economic conditions. Conversely, low GDP correlates with many unfavorable non-economic conditions.

Question 13

A person 16 years or older who does not work, but is actively looking for work, is officially classified as:

Accepted Answer

This is the definition of "unemployed."

Question 14

Each person who is 16 years or older is considered to be in one of the following categories:

Accepted Answer

For economic measurement purposes, workers are sorted into 3 categories: employed, unemployed, or out of the labor force.

Question 15

GDP excludes important factors that affect people's well-being, such as the value of:

Accepted Answer

Since leisure time is not traded in conventional markets, it is not measured in GDP even though leisure time is very important.

Question 16

Which of the following events would increase the unemployment rate, if nothing else changed?

Accepted Answer

The unemployment rate is computed as the number of unemployed divided with the labor force. When employed workers leave the labor force, as often happens at retirement, the denominator in the unemployment rate computation decreases, making the unemployment rate go up, ceteris paribus.

Question 17

The labor force equals the number of people:

Accepted Answer

The labor force includes both people working and those 16 and older who are not working but are actively looking for work.

Question 18

If two countries are economically identical except that citizens in one country have more leisure time, then the level of GDP:

Accepted Answer

Since leisure time is not traded in conventional markets, it is not measured in GDP even though leisure time is very important.

Question 19

Based on the information in the table, how many people are out of the labor force?

Accepted Answer

Since there are 800,000 in the labor force (0.80 × 1,000,000), then there must be 200,000 out of the labor force, i.e., 1,000,000- (0.80 × 1,000,000).

Question 20

If you knew that two countries had the same level of real GDP per person, what additional piece of information would help you determine in which country people had a better standard of living?

Accepted Answer

The answer of If you knew that two countries had...

Quiz 5: Measuring Economic Activity: GDP, Unemployment, and Inflation

Who from among the following would be classified as out of the labor force?

Based on the information in the table, what is the unemployment rate?

Countries with high real GDP tend to have infant mortality rates and literacy rates than countries with low real GDP.

Who from among the following would be classified as employed?

Who from among the following would be counted as unemployed?

Although GDP is not the same as economic well-being, high levels of GDP are positively correlated with all of the following except:

Based on the information in the table, how big is the labor force?

Using real GDP to compare the level of economic well-being in two countries may be misleading because the value of ______ contributes to economic well-being, but is excluded from real GDP.

Who from among the following would be classified as out of the labor force?

GDP would be a better measure of economic well-being if it included:

If two countries are economically identical except that there is significant air and water pollution in one, then the level of GDP:

Despite some problems with equating GDP with economic well-being, higher real GDP per person does imply greater economic well-being because it tends to be positively associated with:

A person 16 years or older who does not work, but is actively looking for work, is officially classified as:

Each person who is 16 years or older is considered to be in one of the following categories:

GDP excludes important factors that affect people's well-being, such as the value of:

Which of the following events would increase the unemployment rate, if nothing else changed?

The labor force equals the number of people:

If two countries are economically identical except that citizens in one country have more leisure time, then the level of GDP:

Based on the information in the table, how many people are out of the labor force?

If you knew that two countries had the same level of real GDP per person, what additional piece of information would help you determine in which country people had a better standard of living?