Question 1

An increase in the price of petroleum in the international market is an example of global inflation.

Accepted Answer

A) True 
 B)False

Question 2

Consider the following scenario. In March 2006, 40,000 people are employed, 10,000 people are actively looking for work, and 30,000 people are neither working nor looking for work. In April, 12,000 of the 30,000 people who were not looking for work begin their job search. Holding all else constant, the unemployment rate in April will rise to _____.

Accepted Answer

A)  35.48% 
B)  27.52% 
C)  19.46% 
D)  15.00% 
A)  35.48% 
B)  27.52% 
C)  19.46% 
D)  15.00%

Question 3

What does the phrase "jobless recovery" refer to?

Accepted Answer

A)  It refers to a situation where an economy is moving out of a recession without a significant increase in employment. 
B)  It refers to a situation in which rising productivity has made it possible for firms to reduce their workforce and increase output at the same time. 
C)  It refers to the phenomenon where U.S. firms move their production abroad, thereby destroying jobs in the domestic market and creating new jobs in foreign markets. 
D)  It refers to a situation in which a worker's real wage falls despite increases in productivity. 
A)  It refers to a situation where an economy is moving out of a recession without a significant increase in employment. 
B)  It refers to a situation in which rising productivity has made it possible for firms to reduce their workforce and increase output at the same time. 
C)  It refers to the phenomenon where U.S. firms move their production abroad, thereby destroying jobs in the domestic market and creating new jobs in foreign markets. 
D)  It refers to a situation in which a worker's real wage falls despite increases in productivity.

Question 4

If the cost of a market basket is $200 in 2006 and $230 in 2007, the price index for 2007 using 2006 as the base year is _____.

Accepted Answer

A)  1.00 
B)  1.15 
C)  1.30 
D)  2.00 
A)  1.00 
B)  1.15 
C)  1.30 
D)  2.00

Question 5

Table 5-8 shows employment data for an economy. Use the table to answer questions .
Table 5-8
  
-Refer to Table 5.8. Now suppose 4,000 of the people looking for work get discouraged and give up their job searches. The unemployment rate becomes _____.

Accepted Answer

A)  6.35% 
B)  5.97% 
C)  5.91% 
D)  2.92% 
A)  6.35% 
B)  5.97% 
C)  5.91% 
D)  2.92%

Question 6

If the consumer price index falls from 140 to 135 in a year, what is the deflation rate?

Accepted Answer

A)  5.00% 
B)  3.57% 
C)  9.25% 
D)  10.37% 
A)  5.00% 
B)  3.57% 
C)  9.25% 
D)  10.37%

Question 7

What is a sub-prime mortgage?

Accepted Answer

A)  It is a mortgage loan offered at an interest rate below the prime lending rate. 
B)  It is a mortgage loan made to a homeowner by an insolvent lender. 
C)  It is a mortgage loan made to a buyer whose credit or income would not ordinarily qualify for a mortgage loan. 
D)  It is a mortgage loan made to a buyer whose excellent credit score earns the buyer a preferential interest rate. 
A)  It is a mortgage loan offered at an interest rate below the prime lending rate. 
B)  It is a mortgage loan made to a homeowner by an insolvent lender. 
C)  It is a mortgage loan made to a buyer whose credit or income would not ordinarily qualify for a mortgage loan. 
D)  It is a mortgage loan made to a buyer whose excellent credit score earns the buyer a preferential interest rate.

Question 8

An unemployed person is:

Accepted Answer

A)  one who is eligible to work but chooses not to work. 
B)  one who is physically disabled and is unable to work. 
C)  a person without a job who is actively seeking and available for work. 
D)  a person who is looking for a job that better suits his qualifications than his current job. 
A)  one who is eligible to work but chooses not to work. 
B)  one who is physically disabled and is unable to work. 
C)  a person without a job who is actively seeking and available for work. 
D)  a person who is looking for a job that better suits his qualifications than his current job.

Question 9

The terms inflation and deflation refer to changes in:

Accepted Answer

A)  the average level of prices. 
B)  the average output level. 
C)  the prices of goods supplied by the government. 
D)  the prices in black markets. 
A)  the average level of prices. 
B)  the average output level. 
C)  the prices of goods supplied by the government. 
D)  the prices in black markets.

Question 10

Unanticipated inflation helps lenders and hurts borrowers.

Accepted Answer

A) True 
 B)False

Question 11

Deflation is defined as:

Accepted Answer

A)  a decrease in the inflation rate. 
B)  a fall in the average price level. 
C)  a period during which the average price level is low. 
D)  a low rate of change in average prices. 
A)  a decrease in the inflation rate. 
B)  a fall in the average price level. 
C)  a period during which the average price level is low. 
D)  a low rate of change in average prices.

Question 12

Based on the Case in Point titled "Take Me Out to the Ball Game . . .", suppose the average price of the baseball fan market basket was $121.36 in 1998, compared to $197.35 (for the same basket) in 2011. Calculate the inflation rate experienced by a typical baseball fan over this period.

Accepted Answer

A)  16.88% 
B)  38.51% 
C)  62.62% 
D)  71.03% 
A)  16.88% 
B)  38.51% 
C)  62.62% 
D)  71.03%

Question 13

Table 5-7 shows a mechanic's hourly wage and the respective price indexes for the years 1975 and 2005. Use the table to answer questions .
Table 5-7
  
-Refer to Table 5-7. Calculate a mechanic's real wage in 1975.

Accepted Answer

A)  $25 
B)  $30 
C)  $31.2 
D)  $36 
A)  $25 
B)  $30 
C)  $31.2 
D)  $36

Question 14

Table 5-5 gives data on the consumer price index for a particular city. The base year is 2002. Use the table to answer questions .
Table 5-5
  
-Refer to Table 5-5. What is the inflation rate in 2004?

Accepted Answer

A)  20.8% 
B)  22% 
C)  31.5% 
D)  30% 
A)  20.8% 
B)  22% 
C)  31.5% 
D)  30%

Question 15

Typically, an economy is said to be in a recession when the nominal GDP drops for at least four consecutive quarters.

Accepted Answer

A) True 
 B)False

Question 16

Table 5-5 gives data on the consumer price index for a particular city. The base year is 2002. Use the table to answer questions .
Table 5-5
  
-Refer to Table 5-5. Which of the following statements is true?

Accepted Answer

A)  The rate of inflation was highest in 2005 as compared to 2004 prices. 
B)  Inflation in 2005 compared to 2004 prices was more than that in 2002 compared to 2001 prices. 
C)  The deflation rate was 5% in the year 2005. 
D)  The inflation rate fell between 2004 and 2005. 
A)  The rate of inflation was highest in 2005 as compared to 2004 prices. 
B)  Inflation in 2005 compared to 2004 prices was more than that in 2002 compared to 2001 prices. 
C)  The deflation rate was 5% in the year 2005. 
D)  The inflation rate fell between 2004 and 2005.

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 trough(s) in economic activity occurred:

Accepted Answer

A)  once in the ten-year period, in 1996. 
B)  twice in the ten-year period, in 1996 and in 2000. 
C)  once in the ten-year period, in 1991. 
D)  thrice in the ten-year period, in 1991, in 1996, and in 2000. 
A)  once in the ten-year period, in 1996. 
B)  twice in the ten-year period, in 1996 and in 2000. 
C)  once in the ten-year period, in 1991. 
D)  thrice in the ten-year period, in 1991, in 1996, and in 2000.

Question 18

If the cost of a market basket is $150 in 2004 and $200 in 2005, the price index for 2004 using 2005 as the base year is _____.

Accepted Answer

A)  0.75 
B)  1.00 
C)  1.33 
D)  1.50 
A)  0.75 
B)  1.00 
C)  1.33 
D)  1.50

Question 19

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 real income for an assistant professor in 1967.

Accepted Answer

A)  $2,381 
B)  $9,524 
C)  $10,000 
D)  $42,000 
A)  $2,381 
B)  $9,524 
C)  $10,000 
D)  $42,000

Question 20

Explain how a new-product bias is created while computing certain price indexes.

Accepted Answer

A new-product bias is created while comp

An increase in the price of petroleum in the international market is an example of global inflation.

What does the phrase "jobless recovery" refer to?

If the cost of a market basket is $200 in 2006 and $230 in 2007, the price index for 2007 using 2006 as the base year is _____.

Table 5-8 shows employment data for an economy. Use the table to answer questions . Table 5-8 -Refer to Table 5.8. Now suppose 4,000 of the people looking for work get discouraged and give up their job searches. The unemployment rate becomes _____.

If the consumer price index falls from 140 to 135 in a year, what is the deflation rate?

What is a sub-prime mortgage?

An unemployed person is:

The terms inflation and deflation refer to changes in:

Unanticipated inflation helps lenders and hurts borrowers.

Deflation is defined as:

Based on the Case in Point titled "Take Me Out to the Ball Game . . .", suppose the average price of the baseball fan market basket was $121.36 in 1998, compared to $197.35 (for the same basket) in 2011. Calculate the inflation rate experienced by a typical baseball fan over this period.

Table 5-7 shows a mechanic's hourly wage and the respective price indexes for the years 1975 and 2005. Use the table to answer questions . Table 5-7 -Refer to Table 5-7. Calculate a mechanic's real wage in 1975.

Table 5-5 gives data on the consumer price index for a particular city. The base year is 2002. Use the table to answer questions . Table 5-5 -Refer to Table 5-5. What is the inflation rate in 2004?

Typically, an economy is said to be in a recession when the nominal GDP drops for at least four consecutive quarters.

Table 5-5 gives data on the consumer price index for a particular city. The base year is 2002. Use the table to answer questions . Table 5-5 -Refer to Table 5-5. Which of the following statements is true?

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 trough(s) in economic activity occurred:

If the cost of a market basket is $150 in 2004 and $200 in 2005, the price index for 2004 using 2005 as the base year 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. Calculate the real income for an assistant professor in 1967.

Explain how a new-product bias is created while computing certain price indexes.

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

An increase in the price of petroleum in the international market is an example of global inflation.

What does the phrase "jobless recovery" refer to?

If the cost of a market basket is $200 in 2006 and $230 in 2007, the price index for 2007 using 2006 as the base year is _____.

Table 5-8 shows employment data for an economy. Use the table to answer questions . Table 5-8 -Refer to Table 5.8. Now suppose 4,000 of the people looking for work get discouraged and give up their job searches. The unemployment rate becomes _____.

If the consumer price index falls from 140 to 135 in a year, what is the deflation rate?

What is a sub-prime mortgage?

An unemployed person is:

The terms inflation and deflation refer to changes in:

Unanticipated inflation helps lenders and hurts borrowers.

Deflation is defined as:

Based on the Case in Point titled "Take Me Out to the Ball Game . . .", suppose the average price of the baseball fan market basket was $121.36 in 1998, compared to $197.35 (for the same basket) in 2011. Calculate the inflation rate experienced by a typical baseball fan over this period.

Table 5-7 shows a mechanic's hourly wage and the respective price indexes for the years 1975 and 2005. Use the table to answer questions . Table 5-7 -Refer to Table 5-7. Calculate a mechanic's real wage in 1975.

Table 5-5 gives data on the consumer price index for a particular city. The base year is 2002. Use the table to answer questions . Table 5-5 -Refer to Table 5-5. What is the inflation rate in 2004?

Typically, an economy is said to be in a recession when the nominal GDP drops for at least four consecutive quarters.

Table 5-5 gives data on the consumer price index for a particular city. The base year is 2002. Use the table to answer questions . Table 5-5 -Refer to Table 5-5. Which of the following statements is true?

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 trough(s) in economic activity occurred:

If the cost of a market basket is $150 in 2004 and $200 in 2005, the price index for 2004 using 2005 as the base year 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. Calculate the real income for an assistant professor in 1967.

Explain how a new-product bias is created while computing certain price indexes.

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