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macro econ midterm
| Question | Answer |
|---|---|
| what is included in GDP? | in one year, money value of all newly produced final goods and services; output and price level |
| types of unemployment and their problems? | U-3: most common - uses landlines as survey ; U-6- very broad and adds underemployed & marginally attached & includes U-3 |
| in given scenarios what happens to the unemployment rate? | increases during and after recession - since 1990 avg in U.S. is 6% |
| interest rate effect and it's implications | Interest rates decrease → additional rounds of increased spending and people purchase in increased quantities |
| Conceptual questions about business cycle | x-axis = years, y-axis = real GDP, peaks = local max, troughs = local min, recessions then economic growth/recovery ex: peak>recession>trough>economic recovery>peak |
| problems using GDP as general welfare measure | - not adjusted for population difference - good and bad events can impact GDP similarly - not adjusted for environmental damage - not adjusted for leisure time - not adjusted for cost of living |
| conceptual questions on unemployment and survey used to calculate | BLS survey conducted with 3 questions asked over phone (landline) 1. Are you currently employed? 2. Are you expecting to return to work in the next month? 3. Have you looked for work in the last 4 weeks? |
| problem with trad CPI in calculating rate of inflation? | - substitution effect - trad CPI overstates inflation - changes in quality > quality increases, price increases - new locations and goods/services> new places offer lower prices increases competition |
| how nominal GDP can change | changes occur if current year prices change compared to consistent yr prices |
| general observations about nominal and real GDP | Real GDP changes concurrent to output, ex: RGDP increases, output increased; nominal GDP makes no adjustment for changes in PL |
| problems with the way in which the unemployment rate is calculated | -landline bias -day/time of survey: 9am-6pm -only in English - misunderstanding - deliberate misinformation/lying - errors in recording -discouraged worker category is too broad - slow person bias |
| U.S. economic history key observations | - since 1990 avg rate is ~6%, short term rate has increased, long term rate has decreased, higher rates for males, higher rates for teenagers, higher for black americans |
| given a CPI table, identify disinflation/deflation | disinflation > slowed down rate of inflation (common in US) deflation > sustained decrease in overall PL (uncommon) |
| sing same CPI table as in previous question, adjust wages across time | $amnt of interest (CPI yr adjust to/ CPI yr adjusting from) *100% |
| using same CPI table as in previous question, calculate the rate of inflation | (CPI later yr - CPI earlier yr)/CPI earlier yr *100% |
| using same CPI table as in previous question, what can you tell about the economy | tells us how economy is doing; changes in price level; where people spend money; amount consumers spend |
| given key statistics, calculate a country’s unemployment rate | (# of unemployed/#in the labor force)*100% |
| given key statistics, calculate a country’s labor force participation rate | (# in labor force/#working age population)*100% |
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