Question 1

The costs to firms of changing prices are called

Accepted Answer

A)  redistribution costs. 
B)  menu costs. 
C)  anticipation costs. 
D)  money illusion costs. 
A)  redistribution costs. 
B)  menu costs. 
C)  anticipation costs. 
D)  money illusion costs.

Question 2

Currently, the base year for the CPI is the average of prices in the years 1982 to 1984.

Accepted Answer

A) True 
 B)False

Question 3

Table 20-17
  
-Refer to Table 20-17. Looking at the table above, real average hourly earnings in 2017 were

Accepted Answer

A)  $3.67. 
B)  $5.63. 
C)  $10.24. 
D)  $11.37. 
A)  $3.67. 
B)  $5.63. 
C)  $10.24. 
D)  $11.37.

Question 4

Table 20-19
  
-Refer to Table 20-19. Looking at the table above, what is the approximate rate of growth of real average hourly earnings from 2016 to 2017?

Accepted Answer

A)  15% 
B)  4.4% 
C)  -1.5% 
D)  -4.8% 
A)  15% 
B)  4.4% 
C)  -1.5% 
D)  -4.8%

Question 5

When the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called

Accepted Answer

A)  outlet bias. 
B)  increase in quality bias. 
C)  substitution bias. 
D)  discrimination bias. 
A)  outlet bias. 
B)  increase in quality bias. 
C)  substitution bias. 
D)  discrimination bias.

Question 6

In 2017, Boeing announced that it was laying off 1,800 employees in addition to the 7,000 workers it had cut the year before. The laid-off employees who were not able to find jobs at another aircraft manufacturer due to a permanent decline in employee demand in the aircraft industry would be considered

Accepted Answer

A)  structurally unemployed. 
B)  frictionally unemployed. 
C)  seasonally unemployed. 
D)  cyclically unemployed. 
A)  structurally unemployed. 
B)  frictionally unemployed. 
C)  seasonally unemployed. 
D)  cyclically unemployed.

Question 7

An unemployment insurance program has which of the following effects?

Accepted Answer

A)  It decreases the amount of personal income of the unemployed. 
B)  It increases the severity of a recession because it makes it more difficult for the unemployed to find jobs. 
C)  It increases the amount of time spent searching for a job. 
D)  It lowers the overall unemployment rate. 
A)  It decreases the amount of personal income of the unemployed. 
B)  It increases the severity of a recession because it makes it more difficult for the unemployed to find jobs. 
C)  It increases the amount of time spent searching for a job. 
D)  It lowers the overall unemployment rate.

Question 8

The labor force participation rates of women have rapidly increased since 1948.

Accepted Answer

A) True 
 B)False

Question 9

An example of a seasonally unemployed worker would be

Accepted Answer

A)  a software engineer who is laid off because of declining demand for the software he writes. 
B)  a day care provider who quits his job to go back to school. 
C)  a General Motors employee loses her job because the company is downsizing its work force. 
D)  a ski lift operator who loses his job when the snow melts in the spring. 
E)  a mother who quits her job to stay home with her children. 
A)  a software engineer who is laid off because of declining demand for the software he writes. 
B)  a day care provider who quits his job to go back to school. 
C)  a General Motors employee loses her job because the company is downsizing its work force. 
D)  a ski lift operator who loses his job when the snow melts in the spring. 
E)  a mother who quits her job to stay home with her children.

Question 10

Table 20-3
  
-Refer to Table 20-3. Assume the market basket for the consumer price index has three products-Cokes, hamburgers, and CDs-with the following values in 2013 and 2018 for price and quantity: The Consumer Price Index for 2018 equals

Accepted Answer

A)  75. 
B)  93. 
C)  108. 
D)  121. 
A)  75. 
B)  93. 
C)  108. 
D)  121.

Question 11

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflation rate was 7%, what was the real interest rate you paid?

Accepted Answer

A)  17 percent 
B)  10 percent 
C)  7 percent 
D)  3 percent 
A)  17 percent 
B)  10 percent 
C)  7 percent 
D)  3 percent

Question 12

Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would

Accepted Answer

A)  increase the measured unemployment rate. 
B)  increase the measured labor force participation rate. 
C)  decrease the number of persons in the labor force. 
D)  decrease the number of persons in the working-age population. 
A)  increase the measured unemployment rate. 
B)  increase the measured labor force participation rate. 
C)  decrease the number of persons in the labor force. 
D)  decrease the number of persons in the working-age population.

Question 13

The unemployment rate tends to be higher in the European Union as compared to the United States.

Accepted Answer

A) True 
 B)False

Question 14

Suppose your grandfather earned a salary of $12,000 in 1964. If the CPI is 31 in 1964 and 219 in 2018, then the value of your grandfather's salary in 2018 dollars is approximately

Accepted Answer

A)  $84,775. 
B)  $63,830. 
C)  $37,200. 
D)  $26,280. 
A)  $84,775. 
B)  $63,830. 
C)  $37,200. 
D)  $26,280.

Question 15

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time college students. This would cause

Accepted Answer

A)  the unemployment rate to decrease. 
B)  the labor force participation rate to decrease. 
C)  the number of discouraged workers to increase. 
D)  no change in the unemployment rate. 
A)  the unemployment rate to decrease. 
B)  the labor force participation rate to decrease. 
C)  the number of discouraged workers to increase. 
D)  no change in the unemployment rate.

Question 16

Deflation occurs when

Accepted Answer

A)  there is a sustained increase in the price level. 
B)  there is a one-time increase in the price level. 
C)  there is a decline in the price level. 
D)  there is a decrease in the expected rate of inflation. 
A)  there is a sustained increase in the price level. 
B)  there is a one-time increase in the price level. 
C)  there is a decline in the price level. 
D)  there is a decrease in the expected rate of inflation.

Question 17

Which of the following has a tendency to raise the unemployment rate?

Accepted Answer

A)  implementing a minimum wage above the market wage in an economy 
B)  reducing unemployment insurance in an economy 
C)  offering wages at the market-clearing rate 
D)  reducing labor union membership in an economy 
A)  implementing a minimum wage above the market wage in an economy 
B)  reducing unemployment insurance in an economy 
C)  offering wages at the market-clearing rate 
D)  reducing labor union membership in an economy

Question 18

To understand why someone cannot get a job, it helps to know the three types of unemployment. List the three types of unemployment and explain what causes each type. What advice for finding a job would be appropriate for someone in each type of unemployment?

Accepted Answer

Frictional unemployment is the unemploym

Question 19

Due to lowering its prices to compete with its rivals, increased competition from Airbus, and cuts to military spending, Boeing announced it would ________ the number of persons it employed in 2017 and this would ________ the total number of persons unemployed in the economy.

Accepted Answer

A)  decrease; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  increase; increase 
A)  decrease; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  increase; increase

Question 20

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket.

Accepted Answer

A)  change; overestimates 
B)  change; underestimates 
C)  do not change; overestimates 
D)  do not change; underestimates 
A)  change; overestimates 
B)  change; underestimates 
C)  do not change; overestimates 
D)  do not change; underestimates

Exam 20: Unemployment and Inflation

The costs to firms of changing prices are called

Currently, the base year for the CPI is the average of prices in the years 1982 to 1984.

Table 20-17 -Refer to Table 20-17. Looking at the table above, real average hourly earnings in 2017 were

Table 20-19 -Refer to Table 20-19. Looking at the table above, what is the approximate rate of growth of real average hourly earnings from 2016 to 2017?

When the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called

An unemployment insurance program has which of the following effects?

The labor force participation rates of women have rapidly increased since 1948.

An example of a seasonally unemployed worker would be

Table 20-3 -Refer to Table 20-3. Assume the market basket for the consumer price index has three products-Cokes, hamburgers, and CDs-with the following values in 2013 and 2018 for price and quantity: The Consumer Price Index for 2018 equals

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflation rate was 7%, what was the real interest rate you paid?

Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would

The unemployment rate tends to be higher in the European Union as compared to the United States.

Suppose your grandfather earned a salary of $12,000 in 1964. If the CPI is 31 in 1964 and 219 in 2018, then the value of your grandfather's salary in 2018 dollars is approximately

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time college students. This would cause

Deflation occurs when

Which of the following has a tendency to raise the unemployment rate?

To understand why someone cannot get a job, it helps to know the three types of unemployment. List the three types of unemployment and explain what causes each type. What advice for finding a job would be appropriate for someone in each type of unemployment?

Due to lowering its prices to compete with its rivals, increased competition from Airbus, and cuts to military spending, Boeing announced it would ________ the number of persons it employed in 2017 and this would ________ the total number of persons unemployed in the economy.

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Due to lowering its prices to compete with its rivals, increased competition from Airbus, and cuts to military spending, Boeing announced it would the number of persons it employed in 2017 and this would the total number of persons unemployed in the economy.

The substitution bias in the consumer price index refers to the idea that consumers the quantity of products they buy in response to price, and the CPI does not reflect this and the cost of the market basket.