Econ 104 Final Review Exam Questions and
Answers 100% Solved
discouraged workers people who are available to work but have not looke for a job during
the previous four weeks becasue they believe no jobs are available to them
labor force participation rate the percentage of the working age population in the labor
force: labor force divided by working age population multiplied by 100
employment population ration measures the percentage of the working age population that
is employed: employment divided by working age population multiplied by 100
Frictional unemployment short-term unemployment that arises from the process of
matching workers with jobs
structural unemployment unemployment that arises from a persistent mismatch between
the skills and attributes of workers and the requirments of jobs
cyclical unemployment unemployment cause by a business cycle recession
natural rate of unemployment the normal rate of unemployment consisting of frictional
plus structrual unemployment (between 5-6%) (full-employment rate of unemployment)
,government policies on unemployment unemployment insureance and other payments,
minimum wage laws, labor unions, efficiency wages
eficiency wages a higher-than-market wage that a firm pays to increase productivity
Inflation Rate the percentage increase in the price level from one year to the next, measure
by changes in CPI
Consumer Price Index (CPI) an average of the prices of the goods and services purchased
by the typcial urban family of four: equals expenditures in current year divided by expenditures
in the base year, multiplied by 100, used to measure inflation
Changes in CPI due to substitution bias, increase in quality bias, new product bias, and
outlet bias
Production Price Index (PPI) an average of all the prices recived by produces of goods
and services at all stages of the production process
Nominal Interest Rate the stated interest rate on a loan
Real Interest Rate The nominal interest rate minus the inflation rate
Deflation a decline in price level, rare and bad
, Menu Costs the cost to firms of changing prices
Long Run Economic Growth the process by which rising productivity increases the
average standard of living
Rule of 70 calculates the number of years it would take for the economy to double, by 70
divided by growth rate
Labor Productivity the quantity of goods and services that can by produced by one worker
or by one hour of work
Capital manufactured goods that are used to produce other goods and services
Potential GDP the level of real GDP attained when all firms are producing at capacity
Financial system the system of financial markets an financial intermediaries through
which firms acquire funds from households
financial markets markes where financial securities, such as stocks and bonds, are bought
as sold
Answers 100% Solved
discouraged workers people who are available to work but have not looke for a job during
the previous four weeks becasue they believe no jobs are available to them
labor force participation rate the percentage of the working age population in the labor
force: labor force divided by working age population multiplied by 100
employment population ration measures the percentage of the working age population that
is employed: employment divided by working age population multiplied by 100
Frictional unemployment short-term unemployment that arises from the process of
matching workers with jobs
structural unemployment unemployment that arises from a persistent mismatch between
the skills and attributes of workers and the requirments of jobs
cyclical unemployment unemployment cause by a business cycle recession
natural rate of unemployment the normal rate of unemployment consisting of frictional
plus structrual unemployment (between 5-6%) (full-employment rate of unemployment)
,government policies on unemployment unemployment insureance and other payments,
minimum wage laws, labor unions, efficiency wages
eficiency wages a higher-than-market wage that a firm pays to increase productivity
Inflation Rate the percentage increase in the price level from one year to the next, measure
by changes in CPI
Consumer Price Index (CPI) an average of the prices of the goods and services purchased
by the typcial urban family of four: equals expenditures in current year divided by expenditures
in the base year, multiplied by 100, used to measure inflation
Changes in CPI due to substitution bias, increase in quality bias, new product bias, and
outlet bias
Production Price Index (PPI) an average of all the prices recived by produces of goods
and services at all stages of the production process
Nominal Interest Rate the stated interest rate on a loan
Real Interest Rate The nominal interest rate minus the inflation rate
Deflation a decline in price level, rare and bad
, Menu Costs the cost to firms of changing prices
Long Run Economic Growth the process by which rising productivity increases the
average standard of living
Rule of 70 calculates the number of years it would take for the economy to double, by 70
divided by growth rate
Labor Productivity the quantity of goods and services that can by produced by one worker
or by one hour of work
Capital manufactured goods that are used to produce other goods and services
Potential GDP the level of real GDP attained when all firms are producing at capacity
Financial system the system of financial markets an financial intermediaries through
which firms acquire funds from households
financial markets markes where financial securities, such as stocks and bonds, are bought
as sold
