Question 1

-Refer to Table 6.11. If 1999 is the base year, the price index in 1999 is:

Accepted Answer

A)  138.7. 
B)  121.7. 
C)  1998. 
D)  100. 
A)  138.7. 
B)  121.7. 
C)  1998. 
D)  100.

Question 2

If the number of people employed is 150,000 and the labor force is 160,000, the unemployment rate is:

Accepted Answer

A)  2.5%. 
B)  10.25%. 
C)  6.67%. 
D)  6.25%. 
A)  2.5%. 
B)  10.25%. 
C)  6.67%. 
D)  6.25%.

Question 3

A worker who currently is not working, but is not looking for a job is considered as:

Accepted Answer

A)  in the labor force. 
B)  not in the labor force. 
C)  unemployed. 
D)  employed. 
A)  in the labor force. 
B)  not in the labor force. 
C)  unemployed. 
D)  employed.

Question 4

Deflation is a great economic problem because:

Accepted Answer

A)  prices and wages fall but debts remain the same. 
B)  prices fall more slowly than wages. 
C)  lower prices and wages promote unemployment. 
D)  prices and wages fall but interest rates remain the same. 
A)  prices and wages fall but debts remain the same. 
B)  prices fall more slowly than wages. 
C)  lower prices and wages promote unemployment. 
D)  prices and wages fall but interest rates remain the same.

Question 5

Recall Application 4, "The Introduction of Cell Phones and the Bias in the CPI," to answer the following questions:
-Why were cellphones not included in the CPI basket immediately after it was introduced?

Accepted Answer

A)  Only one kind of phone can be included in the CPI basket, and in 1983, they were the landline phones. 
B)  The cell phones were all made in Japan, so they were not included in GDP. 
C)  Most American families did not have cell phones when they were first introduced. 
D)  All of the above are correct. 
A)  Only one kind of phone can be included in the CPI basket, and in 1983, they were the landline phones. 
B)  The cell phones were all made in Japan, so they were not included in GDP. 
C)  Most American families did not have cell phones when they were first introduced. 
D)  All of the above are correct.

Question 6

The number of people classified as employed is 550,000 and the number of people in the labor force is 700,000. The total number of people classified as unemployed is:

Accepted Answer

A)  150,000. 
B)  1.5 million. 
C)  110,000. 
D)  200,000. 
A)  150,000. 
B)  1.5 million. 
C)  110,000. 
D)  200,000.

Question 7

Sally works 10 hours a week, but would not prefer to work more hours. According to the BLS, Sally is classified as:

Accepted Answer

A)  a discouraged worker. 
B)  employed and "an individual working part time for economic reasons." 
C)  unemployed and "an individual working part time for economic reasons." 
D)  employed but not "an individual working part time for economic reasons." 
A)  a discouraged worker. 
B)  employed and "an individual working part time for economic reasons." 
C)  unemployed and "an individual working part time for economic reasons." 
D)  employed but not "an individual working part time for economic reasons."

Question 8

Explain the three different types of unemployment. Give an example of each type.

Accepted Answer

The three different types of unemploymen

Question 9

A "shoe- leather cost" is the cost associated with:

Accepted Answer

A)  buying new shoes when there is inflation. 
B)  designing a new basketball sneakers when there is inflation. 
C)  changing price lists when there is inflation. 
D)  trying to reduce holdings of cash when there is inflation. 
A)  buying new shoes when there is inflation. 
B)  designing a new basketball sneakers when there is inflation. 
C)  changing price lists when there is inflation. 
D)  trying to reduce holdings of cash when there is inflation.

Question 10

Explain why some economists argue that counting discouraged workers as unemployed gives a better picture of the unemployment situation. How would the magnitude of the unemployment rate change if discouraged workers were counted as unemployed?

Accepted Answer

Some argue that discouraged wo

Question 11

During the early 1990s, companies started downsizing. One of the results of this downsizing was the permanent reduction in the number of middle management positions. This change in the way businesses operate would have:

Accepted Answer

A)  not affected the natural rate of unemployment. 
B)  increased the natural rate of unemployment. 
C)  decreased the natural rate of unemployment. 
D)  either increased or decreased the natural rate of unemployment. 
A)  not affected the natural rate of unemployment. 
B)  increased the natural rate of unemployment. 
C)  decreased the natural rate of unemployment. 
D)  either increased or decreased the natural rate of unemployment.

Question 12

Among all age groups, workers 16- 19 years old have the highest unemployment rate.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that the CPI in Year 1 is 250 and the CPI in Year 2 is 100. The rate of inflation between Year 1 and Year 2 is:

Accepted Answer

A)  14.28%. 
B)  40%. 
C)  - 150%. 
D)  - 60%. 
A)  14.28%. 
B)  40%. 
C)  - 150%. 
D)  - 60%.

Question 14

Which of the following statements about discouraged workers is correct?

Accepted Answer

A)  Because of the existence of discouraged workers, the reported unemployment rate generally understates the true level of unemployment in an economy. 
B)  The unemployment rate rises when those no longer looking for work are no longer counted as unemployed. 
C)  People who are still looking for work and have been unemployed for longer than four weeks are classified as having dropped out of the labor force rather than as being unemployed. 
D)  None of the above statements is correct. 
A)  Because of the existence of discouraged workers, the reported unemployment rate generally understates the true level of unemployment in an economy. 
B)  The unemployment rate rises when those no longer looking for work are no longer counted as unemployed. 
C)  People who are still looking for work and have been unemployed for longer than four weeks are classified as having dropped out of the labor force rather than as being unemployed. 
D)  None of the above statements is correct.

Question 15

-Based on the information in Table 6.14, calculate the inflation rate for 2004, 2005, 2006, and 2007.

Accepted Answer

For 2004, the inflation rate = [(105.00-

Question 16

The cost of unanticipated inflation is arbitrary redistribution of income and wealth.

Accepted Answer

A) True 
 B)False

Question 17

During a press conference, the Secretary of Employment notes that the unemployment rate is 7.0%. As a political opponent, how might you criticize this figure as an underestimate? In rebuttal, how might the Secretary argue that the reported rate is an overestimate of unemployment?

Accepted Answer

The unemployment rate given by the secre

Question 18

Suppose that the inflation rate measured by changes in the Consumer Price Index is 5%. Does this mean that every individual's cost of living has increased by 5%? Explain.

Accepted Answer

No. Everyone will not experience a 5% in

Question 19

What is the difference between the CPI and the GDP chain index?

Accepted Answer

A)  The CPI does not include capital goods but the chain index does. 
B)  The CPI basket includes fewer goods and services than the GDP chain index basket. 
C)  The CPI basket includes imported goods while the GDP chain index does not. 
D)  All of the above are correct. 
A)  The CPI does not include capital goods but the chain index does. 
B)  The CPI basket includes fewer goods and services than the GDP chain index basket. 
C)  The CPI basket includes imported goods while the GDP chain index does not. 
D)  All of the above are correct.

Question 20

If 1999 is the base year and the inflation rate between 1999 and 2000 is 7%, the price index in 2000 must be equal to:

Accepted Answer

A)  170. 
B)  107. 
C)  70. 
D)  cannot be determined from this information because the index in the base year is not given 
A)  170. 
B)  107. 
C)  70. 
D)  cannot be determined from this information because the index in the base year is not given

-Refer to Table 6.11. If 1999 is the base year, the price index in 1999 is:

If the number of people employed is 150,000 and the labor force is 160,000, the unemployment rate is:

A worker who currently is not working, but is not looking for a job is considered as:

Deflation is a great economic problem because:

Recall Application 4, "The Introduction of Cell Phones and the Bias in the CPI," to answer the following questions: -Why were cellphones not included in the CPI basket immediately after it was introduced?

The number of people classified as employed is 550,000 and the number of people in the labor force is 700,000. The total number of people classified as unemployed is:

Sally works 10 hours a week, but would not prefer to work more hours. According to the BLS, Sally is classified as:

Explain the three different types of unemployment. Give an example of each type.

A "shoe- leather cost" is the cost associated with:

Explain why some economists argue that counting discouraged workers as unemployed gives a better picture of the unemployment situation. How would the magnitude of the unemployment rate change if discouraged workers were counted as unemployed?

During the early 1990s, companies started downsizing. One of the results of this downsizing was the permanent reduction in the number of middle management positions. This change in the way businesses operate would have:

Among all age groups, workers 16- 19 years old have the highest unemployment rate.

Suppose that the CPI in Year 1 is 250 and the CPI in Year 2 is 100. The rate of inflation between Year 1 and Year 2 is:

Which of the following statements about discouraged workers is correct?

-Based on the information in Table 6.14, calculate the inflation rate for 2004, 2005, 2006, and 2007.

The cost of unanticipated inflation is arbitrary redistribution of income and wealth.

During a press conference, the Secretary of Employment notes that the unemployment rate is 7.0%. As a political opponent, how might you criticize this figure as an underestimate? In rebuttal, how might the Secretary argue that the reported rate is an overestimate of unemployment?

Suppose that the inflation rate measured by changes in the Consumer Price Index is 5%. Does this mean that every individual's cost of living has increased by 5%? Explain.

What is the difference between the CPI and the GDP chain index?

If 1999 is the base year and the inflation rate between 1999 and 2000 is 7%, the price index in 2000 must be equal to:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 6: Unemployment and Inflation

-Refer to Table 6.11. If 1999 is the base year, the price index in 1999 is:

If the number of people employed is 150,000 and the labor force is 160,000, the unemployment rate is:

A worker who currently is not working, but is not looking for a job is considered as:

Deflation is a great economic problem because:

Recall Application 4, "The Introduction of Cell Phones and the Bias in the CPI," to answer the following questions: -Why were cellphones not included in the CPI basket immediately after it was introduced?

The number of people classified as employed is 550,000 and the number of people in the labor force is 700,000. The total number of people classified as unemployed is:

Sally works 10 hours a week, but would not prefer to work more hours. According to the BLS, Sally is classified as:

Explain the three different types of unemployment. Give an example of each type.

A "shoe- leather cost" is the cost associated with:

Explain why some economists argue that counting discouraged workers as unemployed gives a better picture of the unemployment situation. How would the magnitude of the unemployment rate change if discouraged workers were counted as unemployed?

During the early 1990s, companies started downsizing. One of the results of this downsizing was the permanent reduction in the number of middle management positions. This change in the way businesses operate would have:

Among all age groups, workers 16- 19 years old have the highest unemployment rate.

Suppose that the CPI in Year 1 is 250 and the CPI in Year 2 is 100. The rate of inflation between Year 1 and Year 2 is:

Which of the following statements about discouraged workers is correct?

-Based on the information in Table 6.14, calculate the inflation rate for 2004, 2005, 2006, and 2007.

The cost of unanticipated inflation is arbitrary redistribution of income and wealth.

During a press conference, the Secretary of Employment notes that the unemployment rate is 7.0%. As a political opponent, how might you criticize this figure as an underestimate? In rebuttal, how might the Secretary argue that the reported rate is an overestimate of unemployment?

Suppose that the inflation rate measured by changes in the Consumer Price Index is 5%. Does this mean that every individual's cost of living has increased by 5%? Explain.

What is the difference between the CPI and the GDP chain index?

If 1999 is the base year and the inflation rate between 1999 and 2000 is 7%, the price index in 2000 must be equal to:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nations Production and Income

The Economy at Full Employment

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Income-Expenditure Model

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters