What are the main components of measuring GDP with what is
produced ? The goods, the durable goods, non durable goods,
services, structures and the change in invetories
Why must double counting be avoided when measuring GDP?
Yes, because output is counted more than once as it travels through
the stages of production
Why does “substitution bias” arise if the inflation rate is
calculated based on a fixed basket of goods? From base year till
now consumers will spend more in some goods than they did on the
What is deflation ? a contraction in the supply of circulated money
within an economy. What is indexing ? adjusting de terms of a
long-term contract to account for the effects of inflation.
What is the difference between being unemployed and being out
of the labor force? Unemployed is when a person is willing but
unable to find a work. A labor force is when a person is not willing or
not looking for work. What forces create the natural rate of
unemployment for an economy? increase labour market flexibility,
trade unions less powerful. Have create new types of job. Increase the
competitiviness of industry leading to more flexible labour markets.
What is frictional unemployment? Give examples of frictional
unemployment. is when workers leave their jobs to find better ones.
examples: mothers who rejoin the workforce after raised children.
construction worker to move arizona in winter