EC140 Lecture Notes - Lecture 1: Nominal Interest Rate, Real Interest Rate, Canadian Dollar

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14 Jan 2016

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Macroeconomics the study of aggregated economic outcomes such as inflation, unemployment, or economic growth. Nominal national income total income of the population of a country, expressed in national currency. Real national income income calculated in terms of prices from a base year. Actual gdp what the gdp actually is. Potential gdp what the gdp was expected to be based on the previous year. Unemployment not employed and actively searching for a job. Unemployment rate number of people unemployed divided by the number of people in the labour force. People who are not looking for work do not show up in either the unemployment or labour force numbers. Labour productivity real gdp divided by employment or hours worked. Price level average level of all prices in the economy. Inflation rate of change of the price level. Anticipated inflation the percentage increase in prices over a given period that is expected by participants in an economy.

Related Questions

Consider a hypothetical economy in which the labour force consists of 100 people. Of those, 85 people are employed full time and 15 people are unemployed. The government of this economy follows the same conventions as the BLS in computing its employment figures. The unemployment rate is simply the number of unemployed people divided by the number of people in the labour force. Initially, then, the unemployment rate is (15/100) x 100% = 15.0%

Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The following table offers two different possible scenarios resulting from the recession. Calculate the unemployment rate associated with each scenario

2. Firms reduce work hours by 25%. The number of underemployed workers rises as firms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 30 hours per week.

3. Firms reduce employment by 25%. The number of unemployed workers rises as firms respond to the reduction in the demand for their products by laying off 21 previously employed workers.

4. The unemployment rate in scenario 3 ____ the true extent of underemployment in the economy because the BLS counts part-time workers as employed.

A. Overstates

B. Understates

5. Consider a hypothetical economy in which potential output is $400 billion and the natural rate of unemployment is 6%. The current employment rate is 7.4%. Since the unemployment rate is greater than the natural rate of unemployment, the economy's actual GDP will be ____ potential GDP.

A. Less than

B. Greater than

C. Equal to

6. The burden of an increase in the economy-wide unemployment rate can differ widely across regions and different groups of people. For example, in the United States, the jobless rate among minorities has tended to be ___ than the jobless rate among whites.

A. Lower

B. Higher

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8. Which of the following items is included in the calculation of GDP?

a.Purchase of a used car.

b.Purchase of 100 shares of General Motors stock.

c.Purchase of an intermediate good.

d.None of the above would be included

9. Difference between Real and Nominal GDP is:

a.Change in price level from base year to current year

b.Measured by excluding some of the sectors

c.That real GDP is always smaller than Nominal GDP

d.None of the above

10. GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports are:

a.+$53 billion

b.-$84 billion

c.-$47 billion

d.-$161 billion

11. Equality (As a tool of measurement for quality of life) refers to a balance of Economic and Political Power between which two groups?

a.Homeless and Employed

b.Men and Women

c. Different ethnic groups

d. Rich and Poor

12.What is inflation?

a.A fall in the general level of prices occurs, workers need more money to pay for goods, clothing, and shelter

b.A rise in the general level of prices occurs, workers need more money to pay for goods, clothing, and shelter

c.A rise in the general level of prices occurs, workers need less money to pay for goods, clothing and shelter

d.A fall in the general level of prices occurs, workers need less money to pay for goods, clothing and shelter

13.Which of the following is the best measure of how inflation affects consumers?

A.The increase in the price of gold

B. The increase in the consumer price index

C. The increase in the price of a single product

D. The decrease in the consumer price index

14. The Consumer Price Index (CPI)

a. Measures the rate of output in the economy over one year.

b.Measures the increase in wholesale prices since a base year.

c.Is deficient because it does not include medical prices.

d.Is used to calculate the rate of inflation over a given period.

15.How is the unemployment rate computed?

a. Number of unemployed persons divided by the number of economically active (i.e. employed and unemployed) persons aged fifteen years and over.

b.Number of unemployed persons divided by the number of people aged fifteen years and over.

c.Number of unemployed persons divided by the number of employed persons aged fifteen years and over.

d.None of the above

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1.Assume that there was a 10 per cent increase in the price of all goods in 2010; if the base year is 2009, then the price index in 2010 will be Select one:

a. 1100. b. 200. c. 90. d. 110.

2.The value of your money income, in terms of buying goods and services, is referred to like your money's

a. transaction cost.

b. rigidity factor.

c. staying power.

d. purchasing power.

3. Unemployment that is caused by business recessions is called

a. frictional unemployment.

b. seasonal unemployment.

c. structural unemployment.

d. cyclical unemployment.

4.All of the following are examples of a flow EXCEPT

a. the current unemployment rate.

b. a person who is fired from a job.

c. an individual who voluntarily leaves the labour force.

d. a new entrant into the labour force.

5.Which one of these factors plays a role in determining the extent and duration of frictional unemployment?

a. the ease with which job seekers can obtain information about job openings

b. the degree to which the overall level of business activity fluctuates up and down

c. the extent to which government legislation requires firms to provide health insurance for employees

d. the education and skill levels of labour force participants

6.Since 1950, the labour force participation rate in the United States

a. of men and women both decreased.

b. of men decreased and for women increased.

c. of men increased and women decreased.

d. of men and women both increased.

7.Increases in the duration of unemployment may

a. reflect a general downturn in economic activity that depresses job openings.

b. increase the unemployment rate.

c. All of these.

d. increase the number of discouraged workers.

8. A discouraged worker is someone who

a. is unemployed.

b. has been fired.

c. is not in the labour force.

d. is employed.

9.In the United States, the wage floor legislated by the government below which it is generally illegal to pay workers is known as

a. the going wage.

b. the employment gap.

c. the minimum wage.

d. the wage ceiling.

10. Which of the following is an effect of a minimum wage law that establishes a ceiling wage below the current market-clearing wage?

a. Surplus labour, or unemployment

b. A decrease in the market-clearing wage

c. A decrease in the quantity of labour supplied

d. An increase in the quantity of labour supplied

11. Which group of individuals most likely benefits from rent controls?

a. low-income wage earners who fail to obtain rental housing

b. the unemployed who fail to obtain rental housing

c. single-parent families without savings or other financial assets who fail to obtain rental housing

d. upper-income professionals who rent apartments at the price ceiling rate

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EC140 Lecture Notes - Lecture 1: Nominal Interest Rate, Real Interest Rate, Canadian Dollar

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