ECN 221 EXAM 2 REVIEW QUESTIONS AND VERIFIED
ANSWERS |100% CORRECT | ALREADY GRADED A
define macroeconomics Correct Answers the branch of economics that's
conerned with the overall ups and downs in the economy
Economic variables that measure economic performance Correct
Answers real GDP , unemployment rate, inflation rate , interest rate,
level of stock market, exchange rate
price level: what is it? How do we measure prices? Correct Answers
average of current prices across the entire spectrum of goods / services
produced in the economy
Define CPI Correct Answers Consumer Price Index: measure of average
change over time in the prices paid by Urban consumers for a Market
Basket of consumer goods and services
what is the market basket of Goods Correct Answers hypothetical set of
consumer purchases of goods and services
for what reasons does the government use CPI? Correct Answers to see
inflation / deflation, adjust poverty measure, spending patterns,
economic indicator
be able to use the CPI to measure the inflation rate between two years
Correct Answers IR % change in prices=(CPI 2 - CPI 1 / CPI 1) ×100
, drawbacks of the CPI Correct Answers substitution bias, quality bias,
new product bias, outlet bias - all cause CPI to overstate inflation
substitution bias Correct Answers CPI assumes we continue to buy
Goods when prices rise space parentheses alt index chain weighted
index parentheses
quality bias Correct Answers CPI mistakenly attributes quality prices to
rise to inflation
new product bias Correct Answers BLS misses big price drop for new
products
outlet bias Correct Answers if consumers change where they shop at
Moore discount stores CPI may miss the price drop
Define unemployment Correct Answers number of people who are
actively looking for work but aren't currently employed
what are the two major categories into which the u.s. population can be
split Correct Answers civilian institution population in civilian
noninstitutional population
what two groups comprise the civilian labor Correct Answers employed
and unemployed
ANSWERS |100% CORRECT | ALREADY GRADED A
define macroeconomics Correct Answers the branch of economics that's
conerned with the overall ups and downs in the economy
Economic variables that measure economic performance Correct
Answers real GDP , unemployment rate, inflation rate , interest rate,
level of stock market, exchange rate
price level: what is it? How do we measure prices? Correct Answers
average of current prices across the entire spectrum of goods / services
produced in the economy
Define CPI Correct Answers Consumer Price Index: measure of average
change over time in the prices paid by Urban consumers for a Market
Basket of consumer goods and services
what is the market basket of Goods Correct Answers hypothetical set of
consumer purchases of goods and services
for what reasons does the government use CPI? Correct Answers to see
inflation / deflation, adjust poverty measure, spending patterns,
economic indicator
be able to use the CPI to measure the inflation rate between two years
Correct Answers IR % change in prices=(CPI 2 - CPI 1 / CPI 1) ×100
, drawbacks of the CPI Correct Answers substitution bias, quality bias,
new product bias, outlet bias - all cause CPI to overstate inflation
substitution bias Correct Answers CPI assumes we continue to buy
Goods when prices rise space parentheses alt index chain weighted
index parentheses
quality bias Correct Answers CPI mistakenly attributes quality prices to
rise to inflation
new product bias Correct Answers BLS misses big price drop for new
products
outlet bias Correct Answers if consumers change where they shop at
Moore discount stores CPI may miss the price drop
Define unemployment Correct Answers number of people who are
actively looking for work but aren't currently employed
what are the two major categories into which the u.s. population can be
split Correct Answers civilian institution population in civilian
noninstitutional population
what two groups comprise the civilian labor Correct Answers employed
and unemployed
