Question 1

The increase in unemployment that occurs during recessions and depressions is called:

Accepted Answer

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

Question 2

In 1999, the U.S. population 16 years old or older was 207.8 million, the number employed was 133.5 million, the number unemployed was 5.9 million, and the labor force was 139.4 million. The unemployment rate in 1999 was _______%.

Accepted Answer

A)  5.9 
B)  4.5 
C)  4.2 
D)  3.2 
A)  5.9 
B)  4.5 
C)  4.2 
D)  3.2

Question 3

Which of the following statements is false?

Accepted Answer

A)  The consumer price index understates changes in the cost of living. 
B)  The chain index for GDP overstates actual changes in prices. 
C)  The best overall indicator of inflationary pressures in the economy is the GDP price index. 
D)  One problem with any fixed- bundle index as a measure of the cost of living is that it does not account for substitutions that consumers might make in response to price changes. 
A)  The consumer price index understates changes in the cost of living. 
B)  The chain index for GDP overstates actual changes in prices. 
C)  The best overall indicator of inflationary pressures in the economy is the GDP price index. 
D)  One problem with any fixed- bundle index as a measure of the cost of living is that it does not account for substitutions that consumers might make in response to price changes.

Question 4

Many economists believe that each year inflation is overestimated by between:

Accepted Answer

A)  2.5% and 3.5%. 
B)  0.5% and 1.5%. 
C)  0.1% and 0.5%. 
D)  1.5% and 2.5%. 
A)  2.5% and 3.5%. 
B)  0.5% and 1.5%. 
C)  0.1% and 0.5%. 
D)  1.5% and 2.5%.

Question 5

Suppose that the CPI in 2000 was 102 and the CPI in 2001 was 104. The rate of inflation between 2000 and 2001 was:

Accepted Answer

A)  2.24%. 
B)  1.96%. 
C)  2.42%. 
D)  4.22%. 
A)  2.24%. 
B)  1.96%. 
C)  2.42%. 
D)  4.22%.

Question 6

A 100% increase in the price of salt changes the CPI more than a 10% increase in rent.

Accepted Answer

A) True 
 B)False

Question 7

-Refer to Table 6.12. If 1998 is the base year, the highest inflation rate is between the years:

Accepted Answer

A)  1999 and 2000. 
B)  1998 and 1999. 
C)  2000 and 2001. 
D)  cannot be determined from the given information 
A)  1999 and 2000. 
B)  1998 and 1999. 
C)  2000 and 2001. 
D)  cannot be determined from the given information

Question 8

-Refer to Table 6.12. If 1998 is the base year, the inflation rate between 1998 and 1999 is _______%, and the inflation rate between 1998 and 2000 is _______%.

Accepted Answer

A)  24.1; 8.4 
B)  20.5; 10.5 
C)  18.3; 20 
D)  12.7; 5.9 
A)  24.1; 8.4 
B)  20.5; 10.5 
C)  18.3; 20 
D)  12.7; 5.9

Question 9

-Refer to Table 6.2. The total number of people employed is:

Accepted Answer

A)  129.67 million. 
B)  73.5 million. 
C)  128.92 million. 
D)  199.5 million. 
A)  129.67 million. 
B)  73.5 million. 
C)  128.92 million. 
D)  199.5 million.

Question 10

Both the CPI and the chain index for GDP overstate actual changes in cost of living due to:

Accepted Answer

A)  the income effect. 
B)  the difficulty of keeping track of the price of imports. 
C)  the difficulty of measuring quality improvements. 
D)  the difficulty of keeping track of changing consumer preferences. 
A)  the income effect. 
B)  the difficulty of keeping track of the price of imports. 
C)  the difficulty of measuring quality improvements. 
D)  the difficulty of keeping track of changing consumer preferences.

Question 11

You are an employee of the Bureau of Labor Statistics involved in the monthly survey of households used to estimate the unemployment rate. In each of the following cases, classify the individual as employed, unemployed, or not in the labor force. Explain your classification.
(a) During the entire week containing the 12th of the month, Rosie the Riveter misses work simply because she didn't feel like going in to work.
(b) Jenny Wren is a volunteer 20 hours a week on a Rape Crisis telephone hotline. She feels she makes an important contribution to society and would not accept a paying job if one was offered to her.
(c) McCauley Culkin is a hugely successful film star, age 12, who has earned over
$5,000,000 each year for the past five years. Currently, McCauley is filming a new movie on location in Tenerife.
(d) Maxwell Edison, a full- time Ph.D. student, is involved in groundbreaking research in fiber optics. His dissertation advisor has already claimed that Maxwell's work will revolutionize telecommunications.
(e) Maggie Madd, 84, works 10 hours a week doing cleaning services for her son, Norman Neurotic. He pays her minimum wage.

Accepted Answer

(a) Rosie is employed. If Rosie is tempo

Question 12

-Answer parts (a) through (e) using Table 6.9 and the following information. Arboc has a population (ages 16 and older) of 2,000,000. The labor- force participation rate is 90%.
(a) Based on the information, calculate the number of workers in the labor force.
(b) Based on the information, calculate the number of workers unemployed in 1997
(c) Based on the information, calculate the number of workers employed in 1999.

Accepted Answer

(a) Labor force = [labor- force particip

Question 13

As a result of the deflation experienced by Japan in the 1990s:

Accepted Answer

A)  many borrowers including large corporations defaulted on their debts. 
B)  the U.S. government borrowed more from the Chinese government. 
C)  the Japanese government defaulted on their debts. 
D)  banks made lots of profits from their loans. 
A)  many borrowers including large corporations defaulted on their debts. 
B)  the U.S. government borrowed more from the Chinese government. 
C)  the Japanese government defaulted on their debts. 
D)  banks made lots of profits from their loans.

Question 14

-Refer to Table 6.11. If 1999 is the base year, then the inflation rate (i.e., the growth rate of the price index) between 1999 and 2000 is:

Accepted Answer

A)  17.8 percent. 
B)  zero percent. 
C)  121.7 percent. 
D)  2.17 percent. 
A)  17.8 percent. 
B)  zero percent. 
C)  121.7 percent. 
D)  2.17 percent.

Question 15

If the number of unemployed increases by the same number as the number of people in the labor force, then:

Accepted Answer

A)  the unemployment rate will decrease. 
B)  the population growth rate will increase. 
C)  the unemployment rate will increase. 
D)  the labor force participation rate will decrease. 
A)  the unemployment rate will decrease. 
B)  the population growth rate will increase. 
C)  the unemployment rate will increase. 
D)  the labor force participation rate will decrease.

Question 16

The costs of unemployment are limited to only financial costs.

Accepted Answer

A) True 
 B)False

Question 17

Suppose the unemployment rate is currently at 5 percent. If the number of unemployed increases by the same number as the number of people unemployed, then:

Accepted Answer

A)  the labor force participation rate will decrease. 
B)  the unemployment rate will decrease. 
C)  the unemployment rate will increase. 
D)  the population growth rate will increase. 
A)  the labor force participation rate will decrease. 
B)  the unemployment rate will decrease. 
C)  the unemployment rate will increase. 
D)  the population growth rate will increase.

Question 18

An increase in search costs will decrease structural unemployment.

Accepted Answer

A) True 
 B)False

Question 19

When the economy's unemployment rate equals the natural rate, which type of unemployment is assumed to be zero?

Accepted Answer

A)  frictional and structural unemployment 
B)  structural unemployment 
C)  cyclical unemployment 
D)  frictional unemployment 
A)  frictional and structural unemployment 
B)  structural unemployment 
C)  cyclical unemployment 
D)  frictional unemployment

Question 20

-Refer to Table 6.1. The unemployment rate is:

Accepted Answer

A)  9.09%. 
B)  15.2%. 
C)  18.5%. 
D)  22.7%. 
A)  9.09%. 
B)  15.2%. 
C)  18.5%. 
D)  22.7%.

The increase in unemployment that occurs during recessions and depressions is called:

In 1999, the U.S. population 16 years old or older was 207.8 million, the number employed was 133.5 million, the number unemployed was 5.9 million, and the labor force was 139.4 million. The unemployment rate in 1999 was _______%.

Which of the following statements is false?

Many economists believe that each year inflation is overestimated by between:

Suppose that the CPI in 2000 was 102 and the CPI in 2001 was 104. The rate of inflation between 2000 and 2001 was:

A 100% increase in the price of salt changes the CPI more than a 10% increase in rent.

-Refer to Table 6.12. If 1998 is the base year, the highest inflation rate is between the years:

-Refer to Table 6.12. If 1998 is the base year, the inflation rate between 1998 and 1999 is _%, and the inflation rate between 1998 and 2000 is _%.

-Refer to Table 6.2. The total number of people employed is:

Both the CPI and the chain index for GDP overstate actual changes in cost of living due to:

As a result of the deflation experienced by Japan in the 1990s:

-Refer to Table 6.11. If 1999 is the base year, then the inflation rate (i.e., the growth rate of the price index) between 1999 and 2000 is:

If the number of unemployed increases by the same number as the number of people in the labor force, then:

The costs of unemployment are limited to only financial costs.

Suppose the unemployment rate is currently at 5 percent. If the number of unemployed increases by the same number as the number of people unemployed, then:

An increase in search costs will decrease structural unemployment.

When the economy's unemployment rate equals the natural rate, which type of unemployment is assumed to be zero?

-Refer to Table 6.1. The unemployment rate is:

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

The increase in unemployment that occurs during recessions and depressions is called:

In 1999, the U.S. population 16 years old or older was 207.8 million, the number employed was 133.5 million, the number unemployed was 5.9 million, and the labor force was 139.4 million. The unemployment rate in 1999 was _______%.

Which of the following statements is false?

Many economists believe that each year inflation is overestimated by between:

Suppose that the CPI in 2000 was 102 and the CPI in 2001 was 104. The rate of inflation between 2000 and 2001 was:

A 100% increase in the price of salt changes the CPI more than a 10% increase in rent.

-Refer to Table 6.12. If 1998 is the base year, the highest inflation rate is between the years:

-Refer to Table 6.12. If 1998 is the base year, the inflation rate between 1998 and 1999 is _______%, and the inflation rate between 1998 and 2000 is _______%.

-Refer to Table 6.2. The total number of people employed is:

Both the CPI and the chain index for GDP overstate actual changes in cost of living due to:

As a result of the deflation experienced by Japan in the 1990s:

-Refer to Table 6.11. If 1999 is the base year, then the inflation rate (i.e., the growth rate of the price index) between 1999 and 2000 is:

If the number of unemployed increases by the same number as the number of people in the labor force, then:

The costs of unemployment are limited to only financial costs.

Suppose the unemployment rate is currently at 5 percent. If the number of unemployed increases by the same number as the number of people unemployed, then:

An increase in search costs will decrease structural unemployment.

When the economy's unemployment rate equals the natural rate, which type of unemployment is assumed to be zero?

-Refer to Table 6.1. The unemployment rate is:

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

-Refer to Table 6.12. If 1998 is the base year, the inflation rate between 1998 and 1999 is _%, and the inflation rate between 1998 and 2000 is _%.