Question 1

Economic data that are adjusted for price-level changes are said to be expressed in terms of:

Accepted Answer

A)  indexed dollars. 
B)  deflated dollars. 
C)  nominal dollars. 
D)  real dollars. 
A)  indexed dollars. 
B)  deflated dollars. 
C)  nominal dollars. 
D)  real dollars.

Question 2

The nominal wage divided by a price index provides the value of real wage.

Accepted Answer

A) True 
 B)False

Question 3

Workers who are in the process of changing jobs are counted as being:

Accepted Answer

A)  frictionally unemployed. 
B)  underemployed. 
C)  structurally unemployed. 
D)  cyclically unemployed. 
A)  frictionally unemployed. 
B)  underemployed. 
C)  structurally unemployed. 
D)  cyclically unemployed.

Question 4

The CPI in a year is computed based on the prices of all the final goods and services produced during that period.

Accepted Answer

A) True 
 B)False

Question 5

The point at which a recession ends and the expansion begins is called the:

Accepted Answer

A)  trough. 
B)  downturn. 
C)  peak. 
D)  lag. 
A)  trough. 
B)  downturn. 
C)  peak. 
D)  lag.

Question 6

What is structural unemployment? State the various reasons due to which it can arise in an economy.

Accepted Answer

Structural unemployment refers to the lo

Question 7

The substitution bias in the construction of the CPI arises because:

Accepted Answer

A)  consumers alter their buying habits as new products come into being and lifestyles change. 
B)  technological changes have led to improvements in quality and lower production costs over time. 
C)  consumers alter the goods they buy, switching from relatively high priced goods toward lower-priced alternatives. 
D)  consumers shop at both high-priced department stores and lower-priced discount stores. 
A)  consumers alter their buying habits as new products come into being and lifestyles change. 
B)  technological changes have led to improvements in quality and lower production costs over time. 
C)  consumers alter the goods they buy, switching from relatively high priced goods toward lower-priced alternatives. 
D)  consumers shop at both high-priced department stores and lower-priced discount stores.

Question 8

Table 5-8 shows employment data for an economy. Use the table to answer questions .
Table 5-8
  
-Refer to Table 5.8. Calculate the unemployment rate in the economy.

Accepted Answer

A)  7.01% 
B)  5.16% 
C)  4.90% 
D)  7.53% 
A)  7.01% 
B)  5.16% 
C)  4.90% 
D)  7.53%

Question 9

Table 5-6 shows an assistant professor's salary and the respective price indexes for the years 1967 and 1997. Use the table to answer questions .
Table 5-6
  
-Refer to Table 5-6. Calculate the approximate value of real income for an assistant professor in 1997.

Accepted Answer

A)  $9,524 
B)  $9,375 
C)  $40,000 
D)  $42,000 
A)  $9,524 
B)  $9,375 
C)  $40,000 
D)  $42,000

Question 10

In the Case in Point titled "Take Me Out to the Ball Game . . .", the fan price index used to track the costs of going to baseball games uses:

Accepted Answer

A)  a fixed market basket of goods and services, like the consumer price index. 
B)  a varying market basket of goods and services, like the consumer price index. 
C)  a varying market basket of goods and services, like the implicit price deflator. 
D)  a fixed market basket of goods and services, like the implicit price deflator. 
A)  a fixed market basket of goods and services, like the consumer price index. 
B)  a varying market basket of goods and services, like the consumer price index. 
C)  a varying market basket of goods and services, like the implicit price deflator. 
D)  a fixed market basket of goods and services, like the implicit price deflator.

Question 11

Table 5-1 shows data on real GDP and employment for a particular country from the year 1991 to 2000. Use the table to answer questions .
Table 5-1
  
-Refer to Table 5-1. A complete business cycle:

Accepted Answer

A)  commenced in 1994 and ended in 1997. 
B)  commenced in 1991 and ended in 1994. 
C)  commenced in 1994 and ended in 1999. 
D)  commenced in 1991 and ended in 1996. 
A)  commenced in 1994 and ended in 1997. 
B)  commenced in 1991 and ended in 1994. 
C)  commenced in 1994 and ended in 1999. 
D)  commenced in 1991 and ended in 1996.

Question 12

Table 5-2 shows the market basket for a typical college student. Use this data to answer questions .
Table 5-2
  
-Refer to Table 5-2. Suppose the base year is 2007. What is the value of the price index in 2007?

Accepted Answer

A)  0.88 
B)  1.00 
C)  1.14 
D)  3.42 
A)  0.88 
B)  1.00 
C)  1.14 
D)  3.42

Question 13

Even with a constant money wage, a recession can cause a significant decline in real income.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following exemplifies the outlet bias in the computation of the CPI?

Accepted Answer

A)  Roxanna refuses to shop at factory outlet stores because she says that the layouts of the stores are too chaotic and therefore is too time-consuming. 
B)  Yu-Jen does most of her shopping at Costco instead of Safeway because the prices at Costco are more competitive. 
C)  Katie prefers to buy her groceries at Whole Foods because they carry a wide selection of organic produce. 
D)  Diana does her holiday shopping at Metro-Foods because she values their excellent customer service. 
A)  Roxanna refuses to shop at factory outlet stores because she says that the layouts of the stores are too chaotic and therefore is too time-consuming. 
B)  Yu-Jen does most of her shopping at Costco instead of Safeway because the prices at Costco are more competitive. 
C)  Katie prefers to buy her groceries at Whole Foods because they carry a wide selection of organic produce. 
D)  Diana does her holiday shopping at Metro-Foods because she values their excellent customer service.

Question 15

Which of the following is true of cyclical unemployment?

Accepted Answer

A)  It occurs even when an economy is producing at a point on its production possibilities frontier. 
B)  It occurs only during a recession. 
C)  It tends to occur when an economy experiences inflation. 
D)  It is a part of the natural rate of unemployment in an economy. 
A)  It occurs even when an economy is producing at a point on its production possibilities frontier. 
B)  It occurs only during a recession. 
C)  It tends to occur when an economy experiences inflation. 
D)  It is a part of the natural rate of unemployment in an economy.

Question 16

Unemployment that results from a mismatch between worker qualifications and the characteristics employers require is called _____ unemployment.

Accepted Answer

A)  cyclical 
B)  frictional 
C)  natural 
D)  structural 
A)  cyclical 
B)  frictional 
C)  natural 
D)  structural

Question 17

Table 5-1 shows data on real GDP and employment for a particular country from the year 1991 to 2000. Use the table to answer questions .
Table 5-1
  
-Refer to Table 5-1. The peak(s) in economic activity occurred:

Accepted Answer

A)  once in the ten-year period, in 1999. 
B)  twice in the ten-year period, in 1998 and in 1999. 
C)  once in the ten-year period, in 1994. 
D)  twice in the ten-year period, in 1994 and in 1999. 
A)  once in the ten-year period, in 1999. 
B)  twice in the ten-year period, in 1998 and in 1999. 
C)  once in the ten-year period, in 1994. 
D)  twice in the ten-year period, in 1994 and in 1999.

Question 18

Table 5-4 shows price and output data for an economy. Assume that 1994 is the base period. Use the table to answer questions .
Table 5-4
  
-Refer to Table 5-4. In _____, nominal GDP increased over the previous year due to an increase in output and not due to a change in prices.

Accepted Answer

A)  1996 
B)  1999 
C)  1998 
D)  1995 and 1999 
A)  1996 
B)  1999 
C)  1998 
D)  1995 and 1999

Question 19

Which of the following would be defined as inflation?

Accepted Answer

A)  An increase in medical care costs 
B)  A rise in the price of real estates 
C)  An increase in the market interest rate 
D)  An increase in the average level of prices 
A)  An increase in medical care costs 
B)  A rise in the price of real estates 
C)  An increase in the market interest rate 
D)  An increase in the average level of prices

Question 20

The formula for calculating a price index is:

Accepted Answer

A)  current cost of basket ÷ base-period cost of basket. 
B)  base-period cost of basket ÷ current cost of basket × 100. 
C)  (base-period cost of basket ÷ current cost of basket) × current nominal value of basket. 
D)  percentage change in current cost of basket ÷ percentage change in base-period cost of basket. 
A)  current cost of basket ÷ base-period cost of basket. 
B)  base-period cost of basket ÷ current cost of basket × 100. 
C)  (base-period cost of basket ÷ current cost of basket) × current nominal value of basket. 
D)  percentage change in current cost of basket ÷ percentage change in base-period cost of basket.

Economic data that are adjusted for price-level changes are said to be expressed in terms of:

The nominal wage divided by a price index provides the value of real wage.

Workers who are in the process of changing jobs are counted as being:

The CPI in a year is computed based on the prices of all the final goods and services produced during that period.

The point at which a recession ends and the expansion begins is called the:

What is structural unemployment? State the various reasons due to which it can arise in an economy.

The substitution bias in the construction of the CPI arises because:

Table 5-8 shows employment data for an economy. Use the table to answer questions . Table 5-8 -Refer to Table 5.8. Calculate the unemployment rate in the economy.

Table 5-6 shows an assistant professor's salary and the respective price indexes for the years 1967 and 1997. Use the table to answer questions . Table 5-6 -Refer to Table 5-6. Calculate the approximate value of real income for an assistant professor in 1997.

In the Case in Point titled "Take Me Out to the Ball Game . . .", the fan price index used to track the costs of going to baseball games uses:

Table 5-1 shows data on real GDP and employment for a particular country from the year 1991 to 2000. Use the table to answer questions . Table 5-1 -Refer to Table 5-1. A complete business cycle:

Table 5-2 shows the market basket for a typical college student. Use this data to answer questions . Table 5-2 -Refer to Table 5-2. Suppose the base year is 2007. What is the value of the price index in 2007?

Even with a constant money wage, a recession can cause a significant decline in real income.

Which of the following exemplifies the outlet bias in the computation of the CPI?

Which of the following is true of cyclical unemployment?

Unemployment that results from a mismatch between worker qualifications and the characteristics employers require is called _____ unemployment.

Table 5-1 shows data on real GDP and employment for a particular country from the year 1991 to 2000. Use the table to answer questions . Table 5-1 -Refer to Table 5-1. The peak(s) in economic activity occurred:

Table 5-4 shows price and output data for an economy. Assume that 1994 is the base period. Use the table to answer questions . Table 5-4 -Refer to Table 5-4. In _____, nominal GDP increased over the previous year due to an increase in output and not due to a change in prices.

Which of the following would be defined as inflation?

The formula for calculating a price index is:

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Exam 5: Macroeconomics: the Big Picture

Economic data that are adjusted for price-level changes are said to be expressed in terms of:

The nominal wage divided by a price index provides the value of real wage.

Workers who are in the process of changing jobs are counted as being:

The CPI in a year is computed based on the prices of all the final goods and services produced during that period.

The point at which a recession ends and the expansion begins is called the:

What is structural unemployment? State the various reasons due to which it can arise in an economy.

The substitution bias in the construction of the CPI arises because:

Table 5-8 shows employment data for an economy. Use the table to answer questions . Table 5-8 -Refer to Table 5.8. Calculate the unemployment rate in the economy.

Table 5-6 shows an assistant professor's salary and the respective price indexes for the years 1967 and 1997. Use the table to answer questions . Table 5-6 -Refer to Table 5-6. Calculate the approximate value of real income for an assistant professor in 1997.

In the Case in Point titled "Take Me Out to the Ball Game . . .", the fan price index used to track the costs of going to baseball games uses:

Table 5-1 shows data on real GDP and employment for a particular country from the year 1991 to 2000. Use the table to answer questions . Table 5-1 -Refer to Table 5-1. A complete business cycle:

Table 5-2 shows the market basket for a typical college student. Use this data to answer questions . Table 5-2 -Refer to Table 5-2. Suppose the base year is 2007. What is the value of the price index in 2007?

Even with a constant money wage, a recession can cause a significant decline in real income.

Which of the following exemplifies the outlet bias in the computation of the CPI?

Which of the following is true of cyclical unemployment?

Unemployment that results from a mismatch between worker qualifications and the characteristics employers require is called _____ unemployment.

Table 5-1 shows data on real GDP and employment for a particular country from the year 1991 to 2000. Use the table to answer questions . Table 5-1 -Refer to Table 5-1. The peak(s) in economic activity occurred:

Table 5-4 shows price and output data for an economy. Assume that 1994 is the base period. Use the table to answer questions . Table 5-4 -Refer to Table 5-4. In _____, nominal GDP increased over the previous year due to an increase in output and not due to a change in prices.

Which of the following would be defined as inflation?

The formula for calculating a price index is:

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters