Vocab Check 2.1, 2.2, 2.3

Gross Domestic Product (GDP)

• The total value of all final goods and services produced within a country in a specific time period

• The total value of all final goods and services produced within a country during a year

• The total value of all goods and services produced

• The total value of all final goods and services produced outside a country within a specific time period

Expenditure Approach

• Measures total income earned through the factors of producion

• GDP = W + R + I + PR

• GDP = C + I + G +(X-M)

• Focuses on the demand for goods and services

Nonmarket Transactions

• Domestic activities, not counted in GDP

• Domestic activities, counted in GDP

• The factors of production used in a final good

• International activities, counted in GDP

Frictional unemployment occurs when which of the following happens?

• A worker is replaced by robots on factory assembly lines.

• A worker voluntarily quits a job to search for a better one.

• A worker is laid off because of a downturn in economic activity.

• A worker undergoes on-the-job training.

• A worker switches from working full-time to part-time.

The natural rate of unemployment can be defined as the

• unemployment rate consistent with accelerating inflation

• unemployment rate of the least-skilled workers

• economy’s long-run equilibrium rate of unemployment

• labor force participation rate plus the unemployment rate

• labor force participation rate minus the unemployment rate

Which type of unemployment would increase if workers lost their jobs because of a recession?

• Cyclical

• Frictional

• Seasonal

• Search

• Structural

GDP does NOT account for which of the following?

• The value added by all firms in the economy

• The depletion of natural resources

• Wages, rent, profit, and interest payments

• The value of final goods and services produced domestically

• Imports from foreign countries

Brazil and Peru produce both coffee and wheat using labor as the only input. The table below shows the labor hours required to produce a unit of coffee and a unit of wheat in each country.

 

Based on the information in the table above, which of the following is true?

• Peru has a comparative advantage in producing wheat.

• Peru has an absolute advantage in producing wheat.

• Brazil has an absolute advantage in producing wheat.

• Peru has a comparative advantage in producing coffee.

• Brazil has a comparative advantage in producing coffee.