HW1-Freqmiss - service produced in the given year and thus...

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The most frequently missed questions from Homework 1 Econ 2006, Spring 2009 [2]If the unemployment rate is 6 percent, that means that 6 percent of 1. the population is not working 2. potential workers do not have jobs 3. the workforce is not working at that time 4. the individuals who are looking for work cannot find jobs 5. people who want to work cannot find jobs See page 13 of my lecture notes and page 127 of the textbook. [12]This year, Tom sold his 1998 minivan to Honest John's Used Car Emporium for $5,000. Honest John then sold the van to Bob for $7,000. How much would be recorded in GDP this year from these transactions? 1. $0 2. $2,000 3. $5,000 4. $7,000 5. $12,000 GDP measures goods and services produced in a given time period. The used car was produced in another year and thus the $5000 does not count. Honest John had a profit of $2000 from reselling the car. This is his reward as a salesman. This is a
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Unformatted text preview: service produced in the given year and thus $2000 is counted in GDP. I worked similar examples in class. See your in-class notes. Also see 104 of the textbook. Bonus Question [21]Refer to Figure 6-1 . Suppose the graph above refers to inflation as measured by changes in the CPI (CPI inflation). Based on the figure, 1. the price level (the CPI) has fallen since 1965. 2. the price level (the CPI) in 1985 was lower than in 1980. 3. the price level (the CPI) fell from 1980 to 1990. 4. the price level (CPI) has not fallen since 1965. 5. the base year is 1965. Inflation is the percentage change in a price index, in this case the CPI. Therefore as long as inflation is positive, the CPI is increasing. Even though inflation is falling over some of the time periods charted above, inflation is positive for each year. Thus the CPI has risen over the entire period which is to say it has not fallen at any time....
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HW1-Freqmiss - service produced in the given year and thus...

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