Chapter 11
The CPI will be most influenced by a 10 percent increase in ...
Housing
True or False
Human Capital (H) is Knowledge and skills: Training, education, experience
True
The main advantage of mutual funds is that they provide _________.
an easy way to hold a diversified portfolio
A union is...
worker association that bargains with employers over wages, benefits, and working conditions
The "basket" on which the CPI is based is composed of _______.
products purchased by the typical consumer
True or False
Countries have great variance in both the level and growth rate of income per person; thus, impoverished countries can become relatively wealthy over time.
True
A bond tends to pay a high interest rate if it is _________,
issued by a corporation of dubious credit quality
Why do firms pay efficiency wages?
At equilibrium wages, workers often quit to find better jobs.
workers shirk their duties when the boss is not looking because workers are not deeply concerned about being fired.
only minimally qualified workers apply for the job.
worker morale is low because workers feel that they are not being treated fairly by the profitable firm.
Inflation can not be measured by ...
finished goods price index
A reasonable measure of the standard of living in a country is _______.
real income per person
A budget deficit is _________
a shortfall of tax revenue from government spending
Some frictional unemployment is inevitable because _______.
there are changes in the demand for labor among different firms
_______________Consumers substitute toward goods that become relatively cheaper, mitigating the effects of price increases.
Substitution Bias
Thomas Malthus argued that _______.
an ever-increasing population is constrained only by the food supply, resulting in chronic famines and unending poverty
___________ is the source of the demand for loanable funds.
________ is the source of the supply of loanable funds.
Investment, Saving
A minimum-wage law tends to _______.
create more unemployment in low-skill job markets than in high-skill job markets
The CPI measures approximately the same economic phenomenon as _________________.
GDP Deflator
Productivity is made up of:
-The level of technology, A
– Physical capital per worker, K/L
– Human capital per worker, H/L
– Natural resources per worker, N/L
The market for loanable funds is ...
the market in which those who want to save supply funds and those who want to borrow to invest demand funds
If, for any reason, the wage is held above the competitive equilibrium wage, _______.
the quantity of labor supplied will exceed the quantity of labor demanded, and there will be unemployment