MACRO ANSWERS

MACRO ANSWERS - 1. Measuring National Output a. GDP = C...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Measuring National Output a. GDP = C (consumption) +I(investments) +G(government spending) +NX(exports – imports) b. The price of raw materials or intermediate goods is reflected in the cost of final goods. c. We are importing more than we export. Our external balance is -838 Billion. d. Only ii., none of the others reflect current production 2. Unemployment and Inflation a. Inflation reduces a person’s REAL income; payments(or wages) remain the same while the cost of all goods and services rises (the price level rises). b. This means that the market basket of goods is 120% of its base year cost. c. Structural and Frictional. Structural means a person seeking employment lacks the right skills to acquire the jobs being offered. Frictional means the job-seeker and the company offering jobs have not yet found each other. d. Wages are “sticky” and do not change as often as the price level changes because of contracts. e.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

MACRO ANSWERS - 1. Measuring National Output a. GDP = C...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online