Question

True/False

1. Adverse supply shocks such as late frost in orange groves, shifts the SRAS curve to the right.
2. Those people who are serving in the military are considered employed in the civilian labor market.
3. Total market value is the current price value of goods and services at the base year prices
4. The Wealth Effect refers to the impact of interest rates on the value of a person’s monetary assets.
5. The trading of stocks and bonds is not included in the GDP
6. A job loser is a person who was employed in the civilian labor force but has been fired or laid off.
7. An unemployed person will remain unemployed longer if there are no unemployment insurance benefits available to them
8. The business cycle shows us that it is natural for real GDP to fluctuate up and down over time.
9. The civilian non-institutionalized population includes people in the labor force
10. Discouraged workers make up a significant percentage of measured unemployment

Answer 1

1. False, Adverse supply shocks such as late frost in orange groves, shifts the SRAS curve to the LEFT. Reason- When supply reduces due to adverse supply shocks price level rises for all levels of outputs, hence SRAS shifts left.
2. False, Those people who are serving in the military are NOT considered employed in the civilian labor market. Reason- Since military people are not considered as resource available for productive activity.
3. True, Total market value is the current price value of goods and services at the base year prices. Reason- Total market value is the Real GDP and it is measured at base year prices.
4. True, The Wealth Effect refers to the impact of interest rates on the value of a person’s monetary assets. Reason- Wealth is comprised of savings, bonds , property and assets.
5. True, The trading of stocks and bonds is not included in the GDP. Reason- As the trading of stocks and bonds does not lead to production or value addition it is not included in GDP.
6. True, A job loser is a person who was employed in the civilian labor force but has been fired or laid off. Reason- A job loser is a person who had a job but lost it.
7. False, An unemployed person will remain unemployed longer if there ARE unemployment insurance benefits available to them. Reason- When unemployed person knows they can get unemployment benefits it will discourage them to actively look for a job.
8. True, The business cycle shows us that it is natural for real GDP to fluctuate up and down over time. Reason- A business cycle has periods of recession and boom measured by Real GDP and unemployment.
9. True, The civilian non-institutionalized population includes people in the labor force. Labour force is employed and unemployed people. And civilian non institutionalized population is everybody who is 16 years or above excluding certain people.
10. False, Discouraged workers DO NOT make up a significant percentage of measured unemployment. Discouraged workers are not included in unemployment because they are not actively looking for a job.

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