Exam 5: Monitoring Jobs and Inflation

For each of the following values of nominal GDP and real GDP, calculate the GDP price deflator. a) Nominal GDP = $600; real GDP = $800. b) Nominal GDP = $900; real GDP = $900. c) Nominal GDP = $1,200; real GDP = $1,000

The percentage of the people of working age who have jobs is called the .

The biases in the CPI are

An individual who has stopped looking for a job because he is convinced that he cannot find a job is referred to as

"The market basket used to calculate the CPI is revised monthly to more accurately depict consumers' choices. The price data for the CPI are collected every month." Are the previous sentences true or false?

What is the commodity substitution bias? What effect does it have on the CPI?

Explain how the labor force participation rate and the unemployment rate change in a recession.

Bill is a high- school drop out who lost his job in a fast food restaurant when the economy plunged into a recession. After 8 months, Bill is still looking for work. He is an example of

-If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the CPI in the later year equals

The New York Times reported in november 2008 that 240,000 additional people lost their jobs which increased the unemployment rate to 6.5 percent. In addition, it was noted that a large number of college graduates were "taking jobs that do not require a college degree." It was also expected that "teens will be thrown out of the labor market....causing youths to miss experience" that could help them prepare for higher- skilled jobs. The article reflects the idea that unemployment is a problem because it results in

-The above table shows answers given by people interviewed in a government survey of households. Which individuals are considered to be a part of the labor force?

-In the table above, the number of people officially unemployed is .

Suppose the number of people employed is 25 million and the number of people in the labor force is 75 million. What is the employment- to- population ratio?

When the automobile replaced horse- drawn carriages as the principal means of transportation, firms producing horse- drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing

The natural unemployment rate

Reflecting the state of the economy in 2008, the Bureau of Labor Statistics reported in October that o 1000 jobs were lost in the legal services sector. For example, one firm in Chicago stated that it had fi lawyers in 2008. A representative from the firm stated that most had worked in its real estate divisi The lawyers that were fired are an example of _ unemployment.

When the economy is operating at full employment, the natural unemployment rate consists of only

What is the relationship over the business cycle of potential GDP and real GDP?

-The tables above give the purchases of an average consumer in a small economy. (These consumers purchase on loaves of bread and jugs of soda.) Suppose 2006 is the reference base period. a) What quantities are in the CPI basket? b) What is the cost of the CPI basket using 2006 prices? c) What is the cost of the CPI basket using 2007 prices? d) What is the CPI in 2007?

If the economy is at full employment,