Question 1

Which of the following is an example of structural unemployment?

Accepted Answer

A)  An autoworker is temporarily laid off from an automobile company due to a decline in sales 
B)  A geologist is permanently laid off from an oil company due to a new technological advancement 
C)  A worker at a fast-food restaurant quits work to attend college 
D)  A real estate agent leaves a job in Texas and searches for a similar, higher paying job in California 
A)  An autoworker is temporarily laid off from an automobile company due to a decline in sales 
B)  A geologist is permanently laid off from an oil company due to a new technological advancement 
C)  A worker at a fast-food restaurant quits work to attend college 
D)  A real estate agent leaves a job in Texas and searches for a similar, higher paying job in California

Question 2

Which of the following is NOT true of price indexes?

Accepted Answer

A)  They show changes in the general level of prices. 
B)  They are used to estimate the rate of inflation or deflation. 
C)  They are used to convert nominal values to real values, so comparisons can be made across time. 
D)  They are used to compute the growth rate of real output in the economy. 
A)  They show changes in the general level of prices. 
B)  They are used to estimate the rate of inflation or deflation. 
C)  They are used to convert nominal values to real values, so comparisons can be made across time. 
D)  They are used to compute the growth rate of real output in the economy.

Question 3

If the CPI is 120 in 2005 and 150 in 2006, what is the rate of inflation over this period?

Accepted Answer

A)  8% 
B)  20% 
C)  25% 
D)  30% 
A)  8% 
B)  20% 
C)  25% 
D)  30%

Question 4

If the real GDP in 2003 is $12,400 billion and the implicit price deflator is 1.4, what is the approximate value of nominal GDP in 2003?

Accepted Answer

A)  $8,860 billion 
B)  $15,880 billion 
C)  $12,140 billion 
D)  $17,360 billion 
A)  $8,860 billion 
B)  $15,880 billion 
C)  $12,140 billion 
D)  $17,360 billion

Question 5

Which of the following is true of a price index that uses a fixed market basket?

Accepted Answer

A)  It accurately predicts the impact of rising prices when purchases are made at superstores. 
B)  It overstates the importance of items that fall in price. 
C)  It takes into account changes in quality while computing price changes. 
D)  It excludes new goods and services. 
A)  It accurately predicts the impact of rising prices when purchases are made at superstores. 
B)  It overstates the importance of items that fall in price. 
C)  It takes into account changes in quality while computing price changes. 
D)  It excludes new goods and services.

Question 6

Which of the following individuals benefits from inflation?

Accepted Answer

A)  Ben, who borrowed $1,000 from a friend and agreed to pay the same amount one year later 
B)  Mark, who lent his friend $1,000 and agreed to accept repayment of the same amount one year later 
C)  Randall, who lives on a fixed income of $800 per month 
D)  Asuza, who keeps her savings in the form of cash in a safe at home 
A)  Ben, who borrowed $1,000 from a friend and agreed to pay the same amount one year later 
B)  Mark, who lent his friend $1,000 and agreed to accept repayment of the same amount one year later 
C)  Randall, who lives on a fixed income of $800 per month 
D)  Asuza, who keeps her savings in the form of cash in a safe at home

Question 7

Which of the following is NOT a consequence of unanticipated inflation?

Accepted Answer

A)  It increases the purchasing power of money. 
B)  It reduces the value of future obligations. 
C)  It increases uncertainty about the future. 
D)  It reduces the incentives of firms to undertake investments. 
A)  It increases the purchasing power of money. 
B)  It reduces the value of future obligations. 
C)  It increases uncertainty about the future. 
D)  It reduces the incentives of firms to undertake investments.

Question 8

Both unexpected inflation and unexpected deflation create uncertainty about the future.

Accepted Answer

A) True 
 B)False

Question 9

During the financial crisis of 2008, the net exports and government purchases of the U.S. rose.

Accepted Answer

A) True 
 B)False

Question 10

Figure 5-1 shows the path of real GDP growth over time. Use the figure to answer questions .  
-Refer to Figure 5-1. The trough of the business cycle occurs:

Accepted Answer

A)  between t1 and t2. 
B)  at t1. 
C)  between t2 and t3. 
D)  at t2. 
A)  between t1 and t2. 
B)  at t1. 
C)  between t2 and t3. 
D)  at t2.

Question 11

Inflation hurts people with fixed incomes.

Accepted Answer

A) True 
 B)False

Question 12

The main cause of hyperinflation is an unanticipated increase in oil prices.

Accepted Answer

A) True 
 B)False

Question 13

A country's frictional unemployment rate is 3%, the natural unemployment rate is 5.5%, and the cyclical unemployment rate is 2.4%. The structural unemployment rate is _____ and the unemployment rate is _____.

Accepted Answer

A)  3%; 7.9% 
B)  2.5%; 7.9% 
C)  2.5%; 5.4% 
D)  2.4%; 5.4% 
A)  3%; 7.9% 
B)  2.5%; 7.9% 
C)  2.5%; 5.4% 
D)  2.4%; 5.4%

Question 14

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. What has happened to an assistant professor's salary between 1967 and 1997?

Accepted Answer

A)  Although the nominal salary increased 4-fold in the 30-year period, real salary increased by only 3.2 times. 
B)  The purchasing power of an assistant professor's salary has fallen by about 4.76%. 
C)  The purchasing power of an assistant professor's salary has increased by about 5.24%. 
D)  The real salary in 1997 is slightly higher than that in 1967. 
A)  Although the nominal salary increased 4-fold in the 30-year period, real salary increased by only 3.2 times. 
B)  The purchasing power of an assistant professor's salary has fallen by about 4.76%. 
C)  The purchasing power of an assistant professor's salary has increased by about 5.24%. 
D)  The real salary in 1997 is slightly higher than that in 1967.

Question 15

Which of the following is the most broad-based price index available?

Accepted Answer

A)  The consumer price index 
B)  The producer price index 
C)  The implicit price deflator 
D)  The personal consumption expenditures price index 
A)  The consumer price index 
B)  The producer price index 
C)  The implicit price deflator 
D)  The personal consumption expenditures price index

Question 16

If the nominal GDP in 2002 is $8,000 billion and the implicit price deflator is 1.4, what is the approximate value of real GDP in 2002?

Accepted Answer

A)  $6,796 billion 
B)  $5,714 billion 
C)  $8,276 billion 
D)  $6,238 billion 
A)  $6,796 billion 
B)  $5,714 billion 
C)  $8,276 billion 
D)  $6,238 billion

Question 17

According to the Bureau of Labor Statistics, a person who is not working and is not looking for work is:

Accepted Answer

A)  considered unemployed. 
B)  considered underemployed. 
C)  not considered a part of the working-age population. 
D)  not a member of the labor force. 
A)  considered unemployed. 
B)  considered underemployed. 
C)  not considered a part of the working-age population. 
D)  not a member of the labor force.

Question 18

Deflation occurs when the rate of inflation falls over a period of time.

Accepted Answer

A) True 
 B)False

Question 19

A sustained period of falling real GDP is a(n)

Accepted Answer

A)  peak. 
B)  trough. 
C)  expansion. 
D)  recession. 
A)  peak. 
B)  trough. 
C)  expansion. 
D)  recession.

Question 20

The economy in a particular country is booming. Real GDP is growing at a rate of 6% per year, well above the average growth rate. Under these circumstances, which of the following types of unemployment is most likely to be the lowest?

Accepted Answer

A)  Frictional unemployment 
B)  Cyclical unemployment 
C)  Structural unemployment 
D)  Involuntary unemployment 
A)  Frictional unemployment 
B)  Cyclical unemployment 
C)  Structural unemployment 
D)  Involuntary unemployment

Which of the following is an example of structural unemployment?

Which of the following is NOT true of price indexes?

If the CPI is 120 in 2005 and 150 in 2006, what is the rate of inflation over this period?

If the real GDP in 2003 is $12,400 billion and the implicit price deflator is 1.4, what is the approximate value of nominal GDP in 2003?

Which of the following is true of a price index that uses a fixed market basket?

Which of the following individuals benefits from inflation?

Which of the following is NOT a consequence of unanticipated inflation?

Both unexpected inflation and unexpected deflation create uncertainty about the future.

During the financial crisis of 2008, the net exports and government purchases of the U.S. rose.

Figure 5-1 shows the path of real GDP growth over time. Use the figure to answer questions . -Refer to Figure 5-1. The trough of the business cycle occurs:

Inflation hurts people with fixed incomes.

The main cause of hyperinflation is an unanticipated increase in oil prices.

A country's frictional unemployment rate is 3%, the natural unemployment rate is 5.5%, and the cyclical unemployment rate is 2.4%. The structural unemployment rate is _ and the unemployment rate is _.

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. What has happened to an assistant professor's salary between 1967 and 1997?

Which of the following is the most broad-based price index available?

If the nominal GDP in 2002 is $8,000 billion and the implicit price deflator is 1.4, what is the approximate value of real GDP in 2002?

According to the Bureau of Labor Statistics, a person who is not working and is not looking for work is:

Deflation occurs when the rate of inflation falls over a period of time.

A sustained period of falling real GDP is a(n)

The economy in a particular country is booming. Real GDP is growing at a rate of 6% per year, well above the average growth rate. Under these circumstances, which of the following types of unemployment is most likely to be the lowest?

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

Which of the following is an example of structural unemployment?

Which of the following is NOT true of price indexes?

If the CPI is 120 in 2005 and 150 in 2006, what is the rate of inflation over this period?

If the real GDP in 2003 is $12,400 billion and the implicit price deflator is 1.4, what is the approximate value of nominal GDP in 2003?

Which of the following is true of a price index that uses a fixed market basket?

Which of the following individuals benefits from inflation?

Which of the following is NOT a consequence of unanticipated inflation?

Both unexpected inflation and unexpected deflation create uncertainty about the future.

During the financial crisis of 2008, the net exports and government purchases of the U.S. rose.

Figure 5-1 shows the path of real GDP growth over time. Use the figure to answer questions . -Refer to Figure 5-1. The trough of the business cycle occurs:

Inflation hurts people with fixed incomes.

The main cause of hyperinflation is an unanticipated increase in oil prices.

A country's frictional unemployment rate is 3%, the natural unemployment rate is 5.5%, and the cyclical unemployment rate is 2.4%. The structural unemployment rate is _____ and the unemployment rate is _____.

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. What has happened to an assistant professor's salary between 1967 and 1997?

Which of the following is the most broad-based price index available?

If the nominal GDP in 2002 is $8,000 billion and the implicit price deflator is 1.4, what is the approximate value of real GDP in 2002?

According to the Bureau of Labor Statistics, a person who is not working and is not looking for work is:

Deflation occurs when the rate of inflation falls over a period of time.

A sustained period of falling real GDP is a(n)

The economy in a particular country is booming. Real GDP is growing at a rate of 6% per year, well above the average growth rate. Under these circumstances, which of the following types of unemployment is most likely to be the lowest?

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

A country's frictional unemployment rate is 3%, the natural unemployment rate is 5.5%, and the cyclical unemployment rate is 2.4%. The structural unemployment rate is _ and the unemployment rate is _.