Question 1

In a recession,typically

Accepted Answer

A) unemployment decreases. 
B) the labour force participation rate increases. 
C) the employment-to-population ratio decreases. 
D) the employment-to-population ratio increases. 
E) none of the above. 
A) unemployment decreases. 
B) the labour force participation rate increases. 
C) the employment-to-population ratio decreases. 
D) the employment-to-population ratio increases. 
E) none of the above.

Question 2

The natural unemployment rate is

Accepted Answer

A) equal to 0 percent. 
B) the same as the cyclical unemployment rate. 
C) the rate at which cyclical unemployment is equal to 6 percent. 
D) the rate at which cyclical unemployment is equal to 0 percent. 
E) none of the above. 
A) equal to 0 percent. 
B) the same as the cyclical unemployment rate. 
C) the rate at which cyclical unemployment is equal to 6 percent. 
D) the rate at which cyclical unemployment is equal to 0 percent. 
E) none of the above.

Question 3

If the economy is at full employment,

Accepted Answer

A) the entire population is employed. 
B) the entire labour force is employed. 
C) the only unemployment is frictional unemployment plus discouraged workers. 
D) real GDP equals potential GDP. 
E) all unemployment is cyclical and structural. 
A) the entire population is employed. 
B) the entire labour force is employed. 
C) the only unemployment is frictional unemployment plus discouraged workers. 
D) real GDP equals potential GDP. 
E) all unemployment is cyclical and structural.

Question 4

Which one of the following people would be counted as unemployed in Canada?

Accepted Answer

A) a part-time worker who repeatedly expresses a desire to become a full-time worker 
B) a person who has been seeking a job for the last six months, but recently gave up looking because he was discouraged by his job prospects 
C) a person who will be starting a new job in 6 months 
D) a person who expects to be laid off by the end of the month before next month's survey can be completed 
E) a person who has been laid off for 10 weeks and is not looking for a job because he is waiting to be called back to his old job 
A) a part-time worker who repeatedly expresses a desire to become a full-time worker 
B) a person who has been seeking a job for the last six months, but recently gave up looking because he was discouraged by his job prospects 
C) a person who will be starting a new job in 6 months 
D) a person who expects to be laid off by the end of the month before next month's survey can be completed 
E) a person who has been laid off for 10 weeks and is not looking for a job because he is waiting to be called back to his old job

Question 5

Comparing the core inflation rate to the Consumer Price Index,the core inflation rate

Accepted Answer

A) controls for the biases of the CPI. 
B) measures all goods produced, not just consumer goods. 
C) uses current period quantities, not base period quantities. 
D) excludes the volatile elements of the CPI. 
E) includes volatile elements not in the CPI. 
A) controls for the biases of the CPI. 
B) measures all goods produced, not just consumer goods. 
C) uses current period quantities, not base period quantities. 
D) excludes the volatile elements of the CPI. 
E) includes volatile elements not in the CPI.

Question 6

The working-age population can be divided into two groups:

Accepted Answer

A) those who are employed and those who are unemployed. 
B) those in the labour force and discouraged workers. 
C) those who work full time and those who work part time. 
D) those in the labour force and those not in the labour force. 
E) those who are over the age of 15 and those who are under the age of 15. 
A) those who are employed and those who are unemployed. 
B) those in the labour force and discouraged workers. 
C) those who work full time and those who work part time. 
D) those in the labour force and those not in the labour force. 
E) those who are over the age of 15 and those who are under the age of 15.

Question 7

Which of the following pieces of information do you need to calculate the labour force participation rate?
I.the number of employed persons
II.the number of unemployed persons
III.the population
IV.the working age population

Accepted Answer

A) I and II 
B) I and III 
C) I, II and III 
D) I, II and IV 
E) all of the above 
A) I and II 
B) I and III 
C) I, II and III 
D) I, II and IV 
E) all of the above

Question 8

Frictional unemployment ________.

Accepted Answer

A) includes discouraged workers 
B) is voluntary part-time unemployment 
C) includes workers who have lost their jobs due to an economic downturn 
D) is unemployment associated with normal labour turnover 
E) occurs when changes in technology change the skills needed to perform jobs 
A) includes discouraged workers 
B) is voluntary part-time unemployment 
C) includes workers who have lost their jobs due to an economic downturn 
D) is unemployment associated with normal labour turnover 
E) occurs when changes in technology change the skills needed to perform jobs

Question 9

If the CPI was 180 at the end of 2011,and 216 at the end of 2012,the inflation rate in 2012 was

Accepted Answer

A) 216 percent. 
B) 36 percent. 
C) 16.67 percent. 
D) 20 percent. 
E) 18 percent. 
A) 216 percent. 
B) 36 percent. 
C) 16.67 percent. 
D) 20 percent. 
E) 18 percent.

Question 10

Choose the incorrect statement.

Accepted Answer

A) The outlet substitution bias injects an upward bias into the CPI. 
B) When the quality of a good improves over time and as a result the price rises, the CPI counts the entire price rise as inflation and so overstates inflation. 
C) When relative prices change and people substitute to the lower priced good, the CPI ignores the substitution and the CPI overstates inflation. 
D) The CPI basket is constantly updated to allow for the introduction of new goods. 
E) All of the above statements are incorrect. 
A) The outlet substitution bias injects an upward bias into the CPI. 
B) When the quality of a good improves over time and as a result the price rises, the CPI counts the entire price rise as inflation and so overstates inflation. 
C) When relative prices change and people substitute to the lower priced good, the CPI ignores the substitution and the CPI overstates inflation. 
D) The CPI basket is constantly updated to allow for the introduction of new goods. 
E) All of the above statements are incorrect.

Question 11

People become unemployed when they

Accepted Answer

A) retire. 
B) are on maternity leave. 
C) quit working to go to university. 
D) leave university and start seeking work. 
E) all of the above. 
A) retire. 
B) are on maternity leave. 
C) quit working to go to university. 
D) leave university and start seeking work. 
E) all of the above.

Question 12

Use the table below to answer the following question.
Table 21.3.2
Data From Southton
  
-Refer to Table 21.3.2.From the data in Table 21.3.2,what is Southton's consumer price index for the current year?

Accepted Answer

A) 112 
B) 105.6 
C) 100.5 
D) 100 
E) 94.7 
A) 112 
B) 105.6 
C) 100.5 
D) 100 
E) 94.7

Question 13

Use the table below to answer the following questions.
Table 21.3.1
Suppose a simple economy produces three goods only.
The price and output data for some selected years are shown below.
  
-Refer to Table 21.3.1.The reference base period is 2002.Which one of the following statements is true?

Accepted Answer

A) From 2002 to 2012, the cost of the market basket rose by 58 percent. 
B) It costs 158 times more in 2012 than it does in 2002 to buy the same market basket. 
C) All prices have risen by the same amount. 
D) The inflation rate in 2012 is greater than the inflation rate in 2002. 
E) The inflation rate in 2002 is greater than the inflation rate in 2012. 
A) From 2002 to 2012, the cost of the market basket rose by 58 percent. 
B) It costs 158 times more in 2012 than it does in 2002 to buy the same market basket. 
C) All prices have risen by the same amount. 
D) The inflation rate in 2012 is greater than the inflation rate in 2002. 
E) The inflation rate in 2002 is greater than the inflation rate in 2012.

Question 14

All of the following are possible sources of bias in using the Consumer Price Index to measure inflation except

Accepted Answer

A) the introduction of new goods. 
B) an improvement in the quality of goods. 
C) commodity substitution. 
D) an increase in the cost of living 
E) Both C and D are exceptions. 
A) the introduction of new goods. 
B) an improvement in the quality of goods. 
C) commodity substitution. 
D) an increase in the cost of living 
E) Both C and D are exceptions.

Question 15

The price indexes that are alternatives to the CPI are ________.

Accepted Answer

A) the GDP deflator and the chained price index for consumption 
B) the chained price index for consumption and the CPI deflator 
C) the core GDP deflator and the CPI deflator 
D) the GDP deflator and the CPI deflator 
E) the unbiased CPI and the unbiased GDP deflator 
A) the GDP deflator and the chained price index for consumption 
B) the chained price index for consumption and the CPI deflator 
C) the core GDP deflator and the CPI deflator 
D) the GDP deflator and the CPI deflator 
E) the unbiased CPI and the unbiased GDP deflator

Question 16

The employment-to-population ratio is

Accepted Answer

A) the percentage of the working-age population who are employed. 
B) the percentage of the labour force who are unemployed or employed. 
C) the percentage of the working-age population who are unemployed or employed. 
D) the percentage of the labour force who are employed. 
E) none of the above. 
A) the percentage of the working-age population who are employed. 
B) the percentage of the labour force who are unemployed or employed. 
C) the percentage of the working-age population who are unemployed or employed. 
D) the percentage of the labour force who are employed. 
E) none of the above.

Question 17

Use the table below to answer the following questions.
Table 21.3.1
Suppose a simple economy produces three goods only.
The price and output data for some selected years are shown below.
  
-Refer to Table 21.3.1.The reference base period is 2002.the CPI in 2002 is

Accepted Answer

A) 1,340. 
B) 158. 
C) 100. 
D) 96. 
E) 63. 
A) 1,340. 
B) 158. 
C) 100. 
D) 96. 
E) 63.

Question 18

If there is a 5 percent increase in the CPI,then there will most likely be

Accepted Answer

A) a 5 percent rise in the cost of living. 
B) a less than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods. 
C) a more than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods. 
D) a less than 5 percent rise in the cost of living because of falling quality of goods over time. 
E) a more than 5 percent rise in the cost of living because of the introduction of new goods. 
A) a 5 percent rise in the cost of living. 
B) a less than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods. 
C) a more than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods. 
D) a less than 5 percent rise in the cost of living because of falling quality of goods over time. 
E) a more than 5 percent rise in the cost of living because of the introduction of new goods.

Question 19

Full employment does not mean that there is zero unemployment because

Accepted Answer

A) some cyclical unemployment is always present. 
B) some frictional and structural unemployment is always present. 
C) business fluctuations are inevitable. 
D) of the existence of discouraged workers. 
E) of unrealistic wage expectations. 
A) some cyclical unemployment is always present. 
B) some frictional and structural unemployment is always present. 
C) business fluctuations are inevitable. 
D) of the existence of discouraged workers. 
E) of unrealistic wage expectations.

Question 20

Michael lost his job as a night security guard because he kept falling asleep at the job.Now he is looking for a new job.Michael is

Accepted Answer

A) frictionally unemployed. 
B) structurally unemployed. 
C) not unemployed. 
D) cyclically unemployed. 
E) none of the above. 
A) frictionally unemployed. 
B) structurally unemployed. 
C) not unemployed. 
D) cyclically unemployed. 
E) none of the above.

Exam 21: Monitoring Jobs and Inflation

In a recession,typically

The natural unemployment rate is

If the economy is at full employment,

Which one of the following people would be counted as unemployed in Canada?

Comparing the core inflation rate to the Consumer Price Index,the core inflation rate

The working-age population can be divided into two groups:

Which of the following pieces of information do you need to calculate the labour force participation rate? I.the number of employed persons II.the number of unemployed persons III.the population IV.the working age population

Frictional unemployment ________.

If the CPI was 180 at the end of 2011,and 216 at the end of 2012,the inflation rate in 2012 was

Choose the incorrect statement.

People become unemployed when they

Use the table below to answer the following question. Table 21.3.2 Data From Southton -Refer to Table 21.3.2.From the data in Table 21.3.2,what is Southton's consumer price index for the current year?

Use the table below to answer the following questions. Table 21.3.1 Suppose a simple economy produces three goods only. The price and output data for some selected years are shown below. -Refer to Table 21.3.1.The reference base period is 2002.Which one of the following statements is true?

All of the following are possible sources of bias in using the Consumer Price Index to measure inflation except

The price indexes that are alternatives to the CPI are ________.

The employment-to-population ratio is

Use the table below to answer the following questions. Table 21.3.1 Suppose a simple economy produces three goods only. The price and output data for some selected years are shown below. -Refer to Table 21.3.1.The reference base period is 2002.the CPI in 2002 is

If there is a 5 percent increase in the CPI,then there will most likely be

Full employment does not mean that there is zero unemployment because

Michael lost his job as a night security guard because he kept falling asleep at the job.Now he is looking for a new job.Michael is

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