ECN 102 Exam 1 Questions and
Answers14
minimum wage - ANSWERS -may exceed equilibrium wage for the least skilled or experienced
workers, causing structural unemployment
unions - ANSWERS --A worker association that bargains with employers over wages, benefits,
and working conditions
-exert market power for higher wages
-quantity of labor demanded falls and unemployment results
efficiency wages - ANSWERS -firms voluntarily pay above-equilibrium wages to boost worker
productivity
why firms pay high efficiency wages - ANSWERS -1. worker health (allows workers to eat better
and be more productive)
2. reduce worker turnover by giving incentive to stay
3. improves worker quality (better applicants attracted)
4. worker effort (slackers will be fired or work harder because there aren't enough jobs to go
around)
GDP - ANSWERS -the market value of all final goods and services produced within a country in a
given period of time
GDP: market value - ANSWERS -all goods are valued at their market prices and are measured in
the same units (USD)
, GDP: all - ANSWERS -GDP includes all items produced in the economy and sold legally in
markets
GDP: final - ANSWERS -intended for the end user, already embodies the value of intermediate
goods used in production
GDP: goods and services - ANSWERS -tangible goods and intangible services
GDP: currently produced - ANSWERS -not goods produced in the past
GDP: within a country - ANSWERS -GDP measures value of production that occurs in a country's
borders, done by its own citizens or foreigners located there
GDP: period of time - ANSWERS -usually a year or quarter
net exports (NX) - ANSWERS -exports - imports
Equation of GDP - ANSWERS -Y = C + I + G + NX
nominal GDP - ANSWERS -values output using current prices, not corrected for inflation
real GDP - ANSWERS -values output using the prices of a base year
is corrected for inflation
GDP deflator - ANSWERS -= nominal GDP/(real GDP) x 100
Answers14
minimum wage - ANSWERS -may exceed equilibrium wage for the least skilled or experienced
workers, causing structural unemployment
unions - ANSWERS --A worker association that bargains with employers over wages, benefits,
and working conditions
-exert market power for higher wages
-quantity of labor demanded falls and unemployment results
efficiency wages - ANSWERS -firms voluntarily pay above-equilibrium wages to boost worker
productivity
why firms pay high efficiency wages - ANSWERS -1. worker health (allows workers to eat better
and be more productive)
2. reduce worker turnover by giving incentive to stay
3. improves worker quality (better applicants attracted)
4. worker effort (slackers will be fired or work harder because there aren't enough jobs to go
around)
GDP - ANSWERS -the market value of all final goods and services produced within a country in a
given period of time
GDP: market value - ANSWERS -all goods are valued at their market prices and are measured in
the same units (USD)
, GDP: all - ANSWERS -GDP includes all items produced in the economy and sold legally in
markets
GDP: final - ANSWERS -intended for the end user, already embodies the value of intermediate
goods used in production
GDP: goods and services - ANSWERS -tangible goods and intangible services
GDP: currently produced - ANSWERS -not goods produced in the past
GDP: within a country - ANSWERS -GDP measures value of production that occurs in a country's
borders, done by its own citizens or foreigners located there
GDP: period of time - ANSWERS -usually a year or quarter
net exports (NX) - ANSWERS -exports - imports
Equation of GDP - ANSWERS -Y = C + I + G + NX
nominal GDP - ANSWERS -values output using current prices, not corrected for inflation
real GDP - ANSWERS -values output using the prices of a base year
is corrected for inflation
GDP deflator - ANSWERS -= nominal GDP/(real GDP) x 100
