Question 1

The point in the business cycle at which a recession begins is known as the trough.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions .
Exhibit: Nominal and Real Income
  
-(Exhibit: Nominal and Real Income) 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 4

The costs of the market basket in the current period will be compared against the costs of the market basket in _____ when computing a price index.

Accepted Answer

A)  the expansion period 
B)  the recession period 
C)  the adjustment period 
D)  the base period 
A)  the expansion period 
B)  the recession period 
C)  the adjustment period 
D)  the base period

Question 5

The total labor force comprises:

Accepted Answer

A)  all individuals who are employed. 
B)  those who are employed plus those who are unemployed. 
C)  the population of a nation, aged 16 years and above. 
D)  all individuals who are working and those who are not working. 
A)  all individuals who are employed. 
B)  those who are employed plus those who are unemployed. 
C)  the population of a nation, aged 16 years and above. 
D)  all individuals who are working and those who are not working.

Question 6

Real GDP is multiplied by _____ to get nominal GDP.

Accepted Answer

A)  the quantity of money supply 
B)  the price index 
C)  the exchange rate 
D)  the nominal interest rate 
A)  the quantity of money supply 
B)  the price index 
C)  the exchange rate 
D)  the nominal interest rate

Question 7

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 8

Use the following to answer questions .
Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005
  
-(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) 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 9

A newspaper article recently stated that there are 45.06 million people over the age of 16 who have completed college education. Of this number, 36.21 million are in the labor force and 35.44 million are employed. What is the unemployment rate for this group of people above the age of 16?

Accepted Answer

A)  2.44% 
B)  2.17% 
C)  2.13% 
D)  1.71% 
A)  2.44% 
B)  2.17% 
C)  2.13% 
D)  1.71%

Question 10

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 11

Use the following to answer questions .
Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005
  
-(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) Which of the following statements is true?

Accepted Answer

A)  Although the nominal wage increased, the real wage fell. 
B)  Both the nominal and the real wage rose. 
C)  Based on the values of the price index, real hourly wage doubled over the 30-year period. 
D)  The purchasing power of the mechanic has slowly diminished over the years. 
A)  Although the nominal wage increased, the real wage fell. 
B)  Both the nominal and the real wage rose. 
C)  Based on the values of the price index, real hourly wage doubled over the 30-year period. 
D)  The purchasing power of the mechanic has slowly diminished over the years.

Question 12

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 13

Use the following to answer questions .
Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005
  
-(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) What has happened to a mechanic's real hourly wage between 1975 and 2005?

Accepted Answer

A)  It rose by 180%. 
B)  It fell by 18%. 
C)  It rose by 5%. 
D)  It fell by about 64%. 
A)  It rose by 180%. 
B)  It fell by 18%. 
C)  It rose by 5%. 
D)  It fell by about 64%.

Question 14

Immediately after the recession of 2007-08, the unemployment level among college graduates soared, but the average salary also increased.

Accepted Answer

A) True 
 B)False

Question 15

If the value of the price index in the current year is equal to 1, this means the current price of a particular market basket is the same as the price of that particular basket in the base period.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Use the following to answer questions .
Exhibit: Market Basket for a Typical College Student
  
-(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2008. What is the value of the price index in 2007?

Accepted Answer

A)  0.88 
B)  1.14 
C)  3.42 
D)  3.90 
A)  0.88 
B)  1.14 
C)  3.42 
D)  3.90

Question 18

The price index for 2007 is 1.28. What does this mean?

Accepted Answer

A)  It means that the average price level has increased by 128 percent over 2006. 
B)  It means that the average price level has increased by 1.28 percent over the base year. 
C)  It means that the average price level of the base year was 128 percent less than that in 2007. 
D)  It means that the average price level has increased by 28 percent over the base year. 
A)  It means that the average price level has increased by 128 percent over 2006. 
B)  It means that the average price level has increased by 1.28 percent over the base year. 
C)  It means that the average price level of the base year was 128 percent less than that in 2007. 
D)  It means that the average price level has increased by 28 percent over the base year.

Question 19

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 20

Use the following to answer questions .
Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005
  
-(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) Calculate a mechanic's real wage in 2005.

Accepted Answer

A)  $26.25 
B)  $40 
C)  $70 
D)  $100.80 
A)  $26.25 
B)  $40 
C)  $70 
D)  $100.80

The point in the business cycle at which a recession begins is known as the trough.

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

Use the following to answer questions . Exhibit: Nominal and Real Income -(Exhibit: Nominal and Real Income) Calculate the approximate value of real income for an assistant professor in 1997.

The costs of the market basket in the current period will be compared against the costs of the market basket in _____ when computing a price index.

The total labor force comprises:

Real GDP is multiplied by _____ to get nominal GDP.

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

Use the following to answer questions . Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005 -(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) Calculate a mechanic's real wage in 1975.

A newspaper article recently stated that there are 45.06 million people over the age of 16 who have completed college education. Of this number, 36.21 million are in the labor force and 35.44 million are employed. What is the unemployment rate for this group of people above the age of 16?

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

Use the following to answer questions . Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005 -(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) Which of the following statements is true?

An unemployed person is:

Use the following to answer questions . Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005 -(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) What has happened to a mechanic's real hourly wage between 1975 and 2005?

Immediately after the recession of 2007-08, the unemployment level among college graduates soared, but the average salary also increased.

If the value of the price index in the current year is equal to 1, this means the current price of a particular market basket is the same as the price of that particular basket in the base period.

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

Use the following to answer questions . Exhibit: Market Basket for a Typical College Student -(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2008. What is the value of the price index in 2007?

The price index for 2007 is 1.28. What does this mean?

Use the following to answer questions . Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005 -(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) Calculate a mechanic's real wage in 2005.

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters

Exam 5: Macroeconomics: the Big Picture

The point in the business cycle at which a recession begins is known as the trough.

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

Use the following to answer questions . Exhibit: Nominal and Real Income -(Exhibit: Nominal and Real Income) Calculate the approximate value of real income for an assistant professor in 1997.

The costs of the market basket in the current period will be compared against the costs of the market basket in _____ when computing a price index.

The total labor force comprises:

Real GDP is multiplied by _____ to get nominal GDP.

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

Use the following to answer questions . Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005 -(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) Calculate a mechanic's real wage in 1975.

A newspaper article recently stated that there are 45.06 million people over the age of 16 who have completed college education. Of this number, 36.21 million are in the labor force and 35.44 million are employed. What is the unemployment rate for this group of people above the age of 16?

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

Use the following to answer questions . Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005 -(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) Which of the following statements is true?

An unemployed person is:

Use the following to answer questions . Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005 -(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) What has happened to a mechanic's real hourly wage between 1975 and 2005?

Immediately after the recession of 2007-08, the unemployment level among college graduates soared, but the average salary also increased.

If the value of the price index in the current year is equal to 1, this means the current price of a particular market basket is the same as the price of that particular basket in the base period.

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

Use the following to answer questions . Exhibit: Market Basket for a Typical College Student -(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2008. What is the value of the price index in 2007?

The price index for 2007 is 1.28. What does this mean?

Use the following to answer questions . Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005 -(Exhibit: Mechanics Hourly Wage and Price Indexes for 1975 and 2005) Calculate a mechanic's real wage in 2005.

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters