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Chapter 11: Problem 1

Define: a. price index b. consumer price index c. aggregate demand curve d. aggregate supply curve e. unemployment rate f. employment rate

Short Answer

Expert verified
Price Index is a measure of average prices over time, Consumer Price Index is a measure for a basket of consumer goods, Aggregate Demand Curve shows quantity of goods&services wanted at each price level, Aggregate Supply Curve shows total quantity firms are willing to supply at each price level, Unemployment Rate is the measure of prevalence of unemployment, Employment Rate is the proportion of working-age population that is employed.

Step by step solution

01

Define Price Index

A price index is a normalized average (typically a weighted average) of prices for a given class of goods or services, during a given interval of time. It is a statistical tool that measures relative cost of living over time.
02

Define Consumer Price Index

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
03

Define Aggregate Demand Curve

The Aggregate Demand Curve is a graph that shows the quantity of goods and services that households, firms, the government and customers abroad want to buy at each price level.
04

Define Aggregate Supply Curve

The Aggregate Supply Curve depicts the total quantity that firms are willing and able to supply at a given price level. This curve is upward sloping because it represents how firms will respond to higher prices with higher output.
05

Define Unemployment Rate

Unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force.
06

Define Employment Rate

Employment rate represents the proportion of the country's working-age population that is employed. This involves people with jobs, including part-time.

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Most popular questions from this chapter

The government does not now include the housework that a person does for his or her family as part of GDP. Suppose the government were to include house- work. How might it go about placing a dollar value on housework?

Smith earned \(40,000\) in 2003 and \(50,000\) in 2004 The CPI was 184.0 in 2003 and 188.9 in \(2004 .\) Using the data presented, how can Smith figure out whether his earnings went up by more than, less than, or equal to the change in prices?

Suppose the CPI was 143 in year 1 and 132 in year 2 Did prices rise or fall between year 1 and year \(2 ?\)

Which of the following are included in the calculation of this year's GDP? a. Twelve-year-old Bobby mowing his family's lawn c. Barbara Wilson buying 100 shares of Chrysler Corporation stock d. Stephen Sidwhali's receipt of a Social Security check e. An illegal sale at the corner of Elm and Jefferson

Gross domestic product is \(\$ 6,000\) billion in one year and \(\$ 6,500\) billion the next year. Is output necessarily higher in the second year than in the first? Explain your answer.
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