Question 1

The labor force participation rates of men have gradually increased since 1948.

Accepted Answer

A) True 
 B)False

Question 2

Why might firms pay wages that are above the equilibrium wage in a market?

Accepted Answer

A)  to increase the productivity of their workers 
B)  to reduce the unemployment rate 
C)  to encourage workers to form labor unions 
D)  to reduce profit 
A)  to increase the productivity of their workers 
B)  to reduce the unemployment rate 
C)  to encourage workers to form labor unions 
D)  to reduce profit

Question 3

The labor force equals the number of people

Accepted Answer

A)  employed. 
B)  unemployed. 
C)  employed plus unemployed. 
D)  in the working-age population. 
A)  employed. 
B)  unemployed. 
C)  employed plus unemployed. 
D)  in the working-age population.

Question 4

The broadest measure of the price level that includes all final goods and services is

Accepted Answer

A)  the producer price index . 
B)  the consumer price index. 
C)  the GDP deflator. 
D)  the wholesale price index. 
A)  the producer price index . 
B)  the consumer price index. 
C)  the GDP deflator. 
D)  the wholesale price index.

Question 5

Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  not change in a way that can be predicted. 
A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  not change in a way that can be predicted.

Question 6

If your nominal wage rises faster than the price level, we can say your real wage has ________ and the purchasing power of your income has ________.

Accepted Answer

A)  fallen; fallen 
B)  fallen; risen 
C)  risen; risen 
D)  risen; fallen 
A)  fallen; fallen 
B)  fallen; risen 
C)  risen; risen 
D)  risen; fallen

Question 7

Suppose you obtain a fixed rate mortgage during a period of relatively high inflation. During the next ten years, inflation falls. Did you gain or lose from the lower inflation rate? Explain why.

Accepted Answer

You would lose under this scenario. Your

Question 8

Suppose that at the beginning of a loan contract, the real interest rate is 4% and expected inflation is currently 6%. If actual inflation turns out to be 7% over the loan contract period, then

Accepted Answer

A)  borrowers gain 1% of the loan value. 
B)  lenders gain 1% of the loan value. 
C)  borrowers lose 3% of the loan value. 
D)  lenders gain 3% of the loan value. 
A)  borrowers gain 1% of the loan value. 
B)  lenders gain 1% of the loan value. 
C)  borrowers lose 3% of the loan value. 
D)  lenders gain 3% of the loan value.

Question 9

Which of the following policies would reduce structural unemployment?

Accepted Answer

A)  an increase in the minimum wage 
B)  a job retraining program 
C)  implementing an unemployment insurance policy 
D)  building an online job database that helps workers find jobs 
A)  an increase in the minimum wage 
B)  a job retraining program 
C)  implementing an unemployment insurance policy 
D)  building an online job database that helps workers find jobs

Question 10

The CPI in 2010 was 218, while the CPI in 1980 was 82. If you had $5,000 in 1980, its equivalent purchasing power in 2010 would be $10,850.

Accepted Answer

A) True 
 B)False

Question 11

Table 20-8
  
-Refer to Table 20-8. Suppose that the data in the table above reflect the price levels in the economy. What is the inflation rate in between 2017 and 2018?

Accepted Answer

A)  2% 
B)  5% 
C)  10% 
D)  12% 
E)  20% 
A)  2% 
B)  5% 
C)  10% 
D)  12% 
E)  20%

Question 12

Jack lost his job six months ago, and he's been actively looking for a new job ever since. The Bureau of Labor Statistics would classify Jack as

Accepted Answer

A)  unemployed. 
B)  out of the labor force. 
C)  a discouraged worker. 
D)  all of the above. 
A)  unemployed. 
B)  out of the labor force. 
C)  a discouraged worker. 
D)  all of the above.

Question 13

Table 20-13
  
-Refer to Table 20-13. Consider a simple economy that produces only three products: tacos, earplugs, and toothbrushes. Use the information in the table to calculate the inflation rate for 2018, as measured by the consumer price index.

Accepted Answer

Total expenditures for 2001 = (5 × $1.50

Question 14

The producer price index measures the prices that firms

Accepted Answer

A)  pay for imported natural resources that go into the production process. 
B)  receive for the goods and services they export. 
C)  receive for the goods and services they use at all stages of production. 
D)  pay for labor, whether or not the labor is foreign or domestic. 
A)  pay for imported natural resources that go into the production process. 
B)  receive for the goods and services they export. 
C)  receive for the goods and services they use at all stages of production. 
D)  pay for labor, whether or not the labor is foreign or domestic.

Question 15

If firms pay what are called "efficiency wages," they pay wages that

Accepted Answer

A)  motivate workers to increase their productivity. 
B)  are lower than average to ensure maximum profit. 
C)  will eventually lower the unemployment rate. 
D)  are mandated by the government. 
A)  motivate workers to increase their productivity. 
B)  are lower than average to ensure maximum profit. 
C)  will eventually lower the unemployment rate. 
D)  are mandated by the government.

Question 16

The stated interest rate on a loan is the

Accepted Answer

A)  real interest rate. 
B)  nominal interest rate. 
C)  actual inflation rate. 
D)  expected inflation rate. 
A)  real interest rate. 
B)  nominal interest rate. 
C)  actual inflation rate. 
D)  expected inflation rate.

Question 17

An advantage of the establishment survey over the household survey of the labor market is that the establishment survey

Accepted Answer

A)  is based on actual payrolls, rather than on unverified answers. 
B)  includes the number of self-employed persons. 
C)  includes persons employed at newly opened firms. 
D)  provides an estimate of the number of persons unemployed. 
A)  is based on actual payrolls, rather than on unverified answers. 
B)  includes the number of self-employed persons. 
C)  includes persons employed at newly opened firms. 
D)  provides an estimate of the number of persons unemployed.

Question 18

Which of the following describes the accuracy of the Consumer Price Index?

Accepted Answer

A)  Changes in the CPI accurately reflect the true rate of inflation. 
B)  Changes in the CPI understate the true rate of inflation. 
C)  Changes in the CPI overstate the true rate of inflation. 
D)  Changes in the CPI are unrelated to the true rate of inflation. 
A)  Changes in the CPI accurately reflect the true rate of inflation. 
B)  Changes in the CPI understate the true rate of inflation. 
C)  Changes in the CPI overstate the true rate of inflation. 
D)  Changes in the CPI are unrelated to the true rate of inflation.

Question 19

Discouraged workers are

Accepted Answer

A)  workers who have a part time job but want a full time job. 
B)  workers who find their current jobs unfulfilling and are considering a job change. 
C)  workers who have consistently been looking for work for more than 4 weeks. 
D)  workers who have stopped looking for work because they believe there are no jobs for them. 
A)  workers who have a part time job but want a full time job. 
B)  workers who find their current jobs unfulfilling and are considering a job change. 
C)  workers who have consistently been looking for work for more than 4 weeks. 
D)  workers who have stopped looking for work because they believe there are no jobs for them.

Question 20

If the CPI rises from 206.7 to 212.7 between two consecutive years, by how much has the cost of living changed between these two years?

Accepted Answer

A)  The cost of living has increased by 6%. 
B)  The cost of living has increased by 2.9%. 
C)  The cost of living has increased by 12.7%. 
D)  The cost of living has decreased by 6%. 
A)  The cost of living has increased by 6%. 
B)  The cost of living has increased by 2.9%. 
C)  The cost of living has increased by 12.7%. 
D)  The cost of living has decreased by 6%.

Exam 20: Unemployment and Inflation

The labor force participation rates of men have gradually increased since 1948.

Why might firms pay wages that are above the equilibrium wage in a market?

The labor force equals the number of people

The broadest measure of the price level that includes all final goods and services is

Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will

If your nominal wage rises faster than the price level, we can say your real wage has ________ and the purchasing power of your income has ________.

Suppose you obtain a fixed rate mortgage during a period of relatively high inflation. During the next ten years, inflation falls. Did you gain or lose from the lower inflation rate? Explain why.

Suppose that at the beginning of a loan contract, the real interest rate is 4% and expected inflation is currently 6%. If actual inflation turns out to be 7% over the loan contract period, then

Which of the following policies would reduce structural unemployment?

The CPI in 2010 was 218, while the CPI in 1980 was 82. If you had $5,000 in 1980, its equivalent purchasing power in 2010 would be $10,850.

Table 20-8 -Refer to Table 20-8. Suppose that the data in the table above reflect the price levels in the economy. What is the inflation rate in between 2017 and 2018?

Jack lost his job six months ago, and he's been actively looking for a new job ever since. The Bureau of Labor Statistics would classify Jack as

Table 20-13 -Refer to Table 20-13. Consider a simple economy that produces only three products: tacos, earplugs, and toothbrushes. Use the information in the table to calculate the inflation rate for 2018, as measured by the consumer price index.

The producer price index measures the prices that firms

If firms pay what are called "efficiency wages," they pay wages that

The stated interest rate on a loan is the

An advantage of the establishment survey over the household survey of the labor market is that the establishment survey

Which of the following describes the accuracy of the Consumer Price Index?

Discouraged workers are

If the CPI rises from 206.7 to 212.7 between two consecutive years, by how much has the cost of living changed between these two years?

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

If your nominal wage rises faster than the price level, we can say your real wage has and the purchasing power of your income has .