Question 1

The three methods for computing GDP include

Accepted Answer

The three methods for computing GDP are the expenditure approach (summing up all final expenditures on goods and services produced during the year), the value-added approach (summing up the difference between the value of goods and services produced and the cost of inputs used in their production), and the factor payments approach (summing up all payments made to labor and capital for their contributions to the production process).

Question 2

Suppose that the current overall unemployment rate is 7.5%.If structural unemployment is 1.5%,frictional unemployment is 3%,and cyclical unemployment is 2%,what is the unemployment rate that is due to seasonal factors?

Accepted Answer

The overall unemployment rate (7.5%) is the sum of structural (1.5%), frictional (3%), cyclical (2%), and seasonal unemployment rates. Since the first three types add up to 6.5%, the seasonal unemployment rate must account for the remaining 1% to reach the total of 7.5%.

Question 3

Suppose the population falls by 1 percent.For the standard of living to rise

Accepted Answer

The answer of Suppose the population falls by 1 percent.For...

Question 4

GDP is used in the __________ to __________.

Accepted Answer

GDP is often used in the short run to alert us to recessions because it provides a snapshot of economic activity and health, allowing economists and policymakers to identify downturns quickly.

Question 5

Government re-training programs,such as those that train workers who have lost their jobs due to outdated skills,would best fight the problem of

Accepted Answer

Government re-training programs would be most effective in combating structural unemployment as it focuses on providing education and training to workers who have lost their jobs due to changes in the structure of the economy or technology. This type of unemployment is rooted in a mismatch between the skills workers possess and the skills demanded by employers. Re-training programs help to bridge that gap and equip workers with the necessary skills to compete for in-demand jobs.

Question 6

According to economists,changes in the quality of goods

Accepted Answer

Changes in the quality of goods, particularly improvements that lead to goods lasting longer, can lead to underestimates of the measured value of GDP. This is because GDP measures current production, and if goods last longer, fewer replacements are needed, potentially making the economy appear less productive than it actually is.

Question 7

Suppose GDP for 2009 was $1,500,wages and salaries were $800,rent payments were $200,consumption was $1000,and interest payments were $200.What must the value of profits have been?

Accepted Answer

Profits can be calculated by subtracting the sum of wages, rent, and interest payments from the GDP. So, profits = $1500 - ($800 + $200 + $200) = $1500 - $1200 = $300.

Question 8

Mike is an automobile worker.Because of technological changes in the way automobiles are produced and the increased use of automation,Mike was recently laid off and is currently seeking another job.Mike is best described as being

Accepted Answer

Mike's employment has been affected by structural changes in the economy, specifically the use of automation and changes in production processes. This type of unemployment is referred to as structural unemployment.

Question 9

In the factor payments approach,owners of land receive

Accepted Answer

Owners of land receive rent as a factor payment, which is the payment made to factor owners in return for their services.

Question 10

When a mall Santa Claus loses his job at the end of the Christmas season,this is an example of

Accepted Answer

Seasonal unemployment refers to the type of unemployment that occurs due to seasonal changes or fluctuations in demand for labor. In this case, the Santa Claus lost his job at the end of the Christmas season, which is a typical time-limited period for such kind of work.

Question 11

Full employment occurs only when the unemployment rate is 0%.

Accepted Answer

Full employment is often defined as the level of employment where there is no cyclical unemployment, which means that any remaining unemployment is due to frictional or structural factors. While it is possible to reduce unemployment to a very low level, achieving a 0% unemployment rate is not considered feasible or desirable as there will always be some level of frictional and structural unemployment.

Question 12

Suppose that in 2009 the total value of exports was $250 million,while imports were $225 million.The contribution of net exports to GDP was

Accepted Answer

Net exports are calculated by subtracting imports from exports. In this case, net exports would be $250 million - $225 million = $25 million. This $25 million would be added to the GDP, as it represents the value of goods and services that were produced domestically and then sold to other countries.

Question 13

Which of the following people would be considered structurally unemployed?

Accepted Answer

Structurally unemployed refers to a situation where a worker's job skills do not match the jobs that are available. In this case, the computer operator who loses his job due to obsolete job skills is structurally unemployed.

Question 14

Suppose a U.S.automobile manufacturer produced $200 million worth of automobiles in the United States in 2009,but $50 million worth went unsold.How much was the company's contribution to GDP?

Accepted Answer

The company's contribution to GDP is $200 million, which includes the total value of goods produced ($200 million), regardless of whether they were sold or not. Unsold inventory still counts towards GDP as it represents production that occurred within the reporting period.

Question 15

Suppose a computer manufacturer purchases a $100 case from a supplier,a $300 computer chip from another supplier,and sells the computers for $1000.How much did the company contribute to GDP?

Accepted Answer

The answer of Suppose a computer manufacturer purchases a $100...

Question 16

If the economy is operating at an unemployment rate above the full employment rate,

Accepted Answer

If the economy is operating at an unemployment rate above the full employment rate, it means that there is insufficient demand for labor, and therefore actual output is below potential output. Full employment refers to the point where only frictional and structural unemployment exist and cyclical unemployment is eliminated. Therefore, A, C, D, and E are incorrect choices.

Question 17

Which of the following would be classified as a government purchase?

Accepted Answer

Government purchases of computers are goods and services that the government buys from private or public suppliers. The other options listed are transfer payments, which involve the government redistributing income and do not directly contribute to GDP.

Question 18

A real variable is one that is

Accepted Answer

A real variable is one that is adjusted for the dollar's changing value, meaning it takes into account changes in the price level. This is in contrast to nominal variables, which are measured in current dollars and are not adjusted for inflation.

Question 19

Which of the following would be classified as private investment?

Accepted Answer

Private investment refers to spending on capital goods that will be used for future production. This includes the construction of new buildings, machinery, and homes. The purchase of a newly built home is considered an investment in residential capital, thus classifying it as private investment. Purchases of used cars, groceries, bonds, or new cars for personal use do not fall under this category as they do not contribute to future production in the same way.

Question 20

The costs of unemployment is (are)

Accepted Answer

The costs of unemployment include foregone output (as those without a job are not contributing to the economy), psychological effects (such as stress, depression, and anxiety), and physical effects (such as poorer health outcomes due to decreased access to healthcare, exercise, and healthy food). Therefore, the best choice is D which includes all three costs.

Quiz 18: Production, income, and Employment