Exam 20: Unemployment and Inflation

Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid?

Discuss the likely impact of each of the following on the unemployment rate: a. The length of time workers are eligible to receive unemployment insurance payments is cut in half. b. The government passes a law making labor unions illegal. c. The minimum wage is raised by 50 percent. d. The government funds an Internet site where companies can post job openings at no charge.

Fill in the missing values in the table of data collected in the household survey for November, 2009. The working-age population, employment, unemployment, and labor force are measured in thousands. Show your work.

Structural unemployment is the result of

If the price level rose in three consecutive years from 100 to 120 to 140, then the annual inflation rate over those years would

The increase in quality bias in the consumer price index refers to the idea that price increases in the CPI reflect pure inflation, but ________ quality increases. This causes the CPI to ________ the cost of the market basket.

The average price of goods and services in the economy is also known as

If the number of unemployed workers is 19 million, the number in the working-age population is 500 million, and the unemployment rate is 4%, what is the labor force participation rate?

Jack just told his boss that he thinks his boss is an idiot. It is likely that Jack will be experiencing ________ unemployment in the near future.

With the exception of during recessions, workers in Canada are eligible for unemployment benefits for about twice as long a period of time as workers in the United States. As a result

A lumberjack loses his job because timber cutting restrictions were imposed by the EPA to protect the spotted owl habitat. This lumberjack would be

Which of the following would increase the unemployment rate?

Article Summary According to the President's Council of Economic Advisors, the labor force participation rate has significantly declined since the year 2000, due primarily to retiring baby boomers and the severity of the 2007-2009 recession. However, over the past couple of years, the labor force participation rate has held fairly steady, indicating that previously discouraged workers may be reentering the labor market. In June 2017, the labor force participation rate was 62.8%, roughly the same as it was a month earlier. -Refer to the Article Summary. What is the labor force participation rate? What are discouraged workers? Explain how discouraged workers reentering the labor market would stop the decline of the labor force participation rate.

In 2006, before the start of the recession, the employment-population ratio was 63.4 percent. In April 2017, more than six years after the end of the recession, the ratio

If inflation is higher than expected, this helps borrowers (by reducing the real interest rate they pay) and hurts lenders (by reducing the real interest rate they receive).

Jack was unemployed two weeks ago but just started a new job. As a result of this increase in the number of employed workers, which of the following occurred?

The real wage equals the nominal wage ________ the CPI, all times 100.

The "new product bias" in the consumer price index refers to the idea that

A consumer price index of 160 in 1996 with a base year of 1982-1984 would mean that the cost of the market basket

Describe the three types of unemployment.