Each month, the Bureau of Labor Statistics calculates unemployment by
Answer(s): D
The BLS does not contact each person in the U.S. to determine his or her employment status. Instead, it randomly samples 59,500 households drawn from 729 locations in the U.S. The survey is designed to reflect geographic and demographic groups in proportion to their representation in the nation as a whole.
If the Fed conducts a demand stimulus policy, the rational expectations theory implies that
Answer(s): C
Under rational expectations people quickly anticipate the effect of policy changes and adjust their actions accordingly. Thus, under a demand stimulus policy the Phillips curve immediately shifts upward because individuals anticipate an acceleration in the inflation rate due to the more expansionary macropolicy.
If the resources of an economy were fully employed and the marginal propensity to consume were 0.75, a $10 billion increase in investment would cause
When the economy is operating at full employment capacity, increases in aggregate demand cannot be accommodated by increases in output. Instead, increases in aggregate demand are met simply by price increases due to the heightened competition for output.
The consumer price index (CPI) is calculated
The consumer price index is calculated using a market basket based on the Consumer Expenditure Survey of urban consumers. There are 364 items in the market basket. The CPI compares the price of the fixed market basket in the base year with the price of the fixed market basket in the current year to determine how prices have changed over time.
Which of the following will most likely result in an increase in the per capita GDP of a country?
Answer(s): B
Education, training and skill enhancing experience can improve the quality of the labor force and expand the supply of human resources. Such a change causes the potential output of the country to increase so that it is possible to produce and sustain a larger rate of output (in nominal and per capita terms).
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