Macro Test 1

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Macro Test 1
2012-09-27 13:35:17

Study Question 1,#'s 1-20e, 21
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  1. Macroeconomics
    Study of overal economy-national responses
  2. Demand
    Relationship that shows the various amounts of a product that people are willing to buy at what factors the determine the numer of units of product you buy
  3. Law of Demand
    • As a price of a product increases people will buy fewer units. or
    • As prices decrease people will buy more units
  4. Supply
    relationship that shows the various amounts of a product that sellers will make available at various prices, all else constant
  5. What are five reasons why society might be concerned about unemployment?
    • Loss of income
    • Phychological aspect
    • Loss of production
    • Decrease in Tax Revenue collected
    • Increase in government spending
  6. What is the formula for calculating the unemployment rate?
    • Number of labor force members(working) / Labor force
    • /=division
  7. Who is included in the labor force?
    • Those who are not working-actively looking for job
    • Working individuals
  8. Who is not included in the labor force?
    • Childen under age 16
    • Adults mentally or physically unable to work
    • Prisoners
    • Individuals not working, not looking by choice
  9. What is a "discouraged worker"?
    Individual not working, want and need a job but are no longer looking for a job
  10. Is a discouraged worker counted in the labor force?
    No, not included in the labor force
  11. What is underemployment?
    • Individual working part-time, who want and cannot find a full time job.
    • Individual working at less than skill level
  12. Are part-time workers counted as employed or unemployed in the government statistics?
    All partime workers are counted as employed
  13. Participation Rate
    Labor force / all adults
  14. What are some reasons why the U.S. participation rate has increased from 1950 to 2011?
    more women in the labor force
  15. Seasonal Unemployment
    Job is seasonal, out of work part of year, unemployment rate is corrected for seasonal
  16. Frictional Unemployment
    Out of work, looking for a job, will find a suitable job quickly 15 weeks or less, always exist not a problem
  17. Structional Unemployment
    unemployment that occurs when there is a mismatch of skills and jobs.
  18. Cyclical unemployment
    unemployment that occurs because of fluctuatuions in real GDP
  19. What is meant by the phrase "Full Employment?"
    The level of unemployment that occurs when the unemployment rate is at the natural rate (frictional +structural)
  20. If the economy is operating at "Full Employment", what is the unemployment rate?
    Structural + Frictional= ?
  21. sustained increases in prices in the entire economy determined by tracking the change in the inflation rate. Increase in overall price level
  22. Deflation
    negative inflation, falling prices of goods and services, decrease in average price level
  23. Stable Prices
    No change in average price level
  24. Nominal Income
    income measured in dollars or actual dollar income
  25. Why is deflation considered to be a problem for the overall economy?
    • 1.It lowers revenue $ for businesses. Businesss; cut cost, lay off, lower wages
    • 2.More difficult for businesses to repay loans