Question 1

Which of the following explains why many European countries have unemployment rates that are higher than in the United States?

Accepted Answer

A)  Technological change occurs at a faster rate in Europe, so structural unemployment is higher in Europe. 
B)  European countries offer higher unemployment benefits than the United States. 
C)  Firms in European countries offer employees higher wages and higher benefits than do firms in the United States. 
D)  The minimum wage in Europe is lower than it is in the United States. 
A)  Technological change occurs at a faster rate in Europe, so structural unemployment is higher in Europe. 
B)  European countries offer higher unemployment benefits than the United States. 
C)  Firms in European countries offer employees higher wages and higher benefits than do firms in the United States. 
D)  The minimum wage in Europe is lower than it is in the United States.

Question 2

The labor force is the sum of

Accepted Answer

A)  employed workers and discouraged workers. 
B)  employed workers and unemployed workers. 
C)  employed workers and individuals not looking for work. 
D)  unemployed workers and the working-age population. 
A)  employed workers and discouraged workers. 
B)  employed workers and unemployed workers. 
C)  employed workers and individuals not looking for work. 
D)  unemployed workers and the working-age population.

Question 3

The base period for CPI calculations is generally 1982-84. In 2005, 50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s. This potential for bias in the CPI is referred to as ________ bias and results in ________.

Accepted Answer

A)  outlet; the CPI underestimating the true change in the cost of living 
B)  new product; the CPI overestimating the true change in the cost of living 
C)  outlet; the CPI overestimating the true change in the cost of living 
D)  net product; the CPI underestimating the true change in the cost of living 
A)  outlet; the CPI underestimating the true change in the cost of living 
B)  new product; the CPI overestimating the true change in the cost of living 
C)  outlet; the CPI overestimating the true change in the cost of living 
D)  net product; the CPI underestimating the true change in the cost of living

Question 4

In the modern U.S. economy, the typical unemployed person stays unemployed for

Accepted Answer

A)  a relatively long time, over a year. 
B)  a relatively short time, less than six months. 
C)  a long time during expansions and a short time during recessions. 
D)  an amount of time that is hard to quantify. 
A)  a relatively long time, over a year. 
B)  a relatively short time, less than six months. 
C)  a long time during expansions and a short time during recessions. 
D)  an amount of time that is hard to quantify.

Question 5

Full employment is not considered to be zero unemployment, because

Accepted Answer

A)  some cyclical unemployment always exists. 
B)  some people do not want a job. 
C)  there are not enough jobs for everyone who wants one. 
D)  people do not find jobs instantaneously. 
A)  some cyclical unemployment always exists. 
B)  some people do not want a job. 
C)  there are not enough jobs for everyone who wants one. 
D)  people do not find jobs instantaneously.

Question 6

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness?

Accepted Answer

A)  inflation 
B)  discouraged workers 
C)  counting people as employed who are working part time, although they would prefer to be working full time 
D)  unemployed persons falsely report themselves to be actively looking for a job 
A)  inflation 
B)  discouraged workers 
C)  counting people as employed who are working part time, although they would prefer to be working full time 
D)  unemployed persons falsely report themselves to be actively looking for a job

Question 7

Which of the following causes the unemployment rate to understate the true extent of joblessness?

Accepted Answer

A)  Many full time workers really want to be part time workers. 
B)  Persons who collect unemployment benefits report themselves to be searching for a job. 
C)  Discouraged workers are not counted as unemployed. 
D)  A drug dealer reports herself as unemployed. 
E)  Discouraged workers are counted as unemployed. 
A)  Many full time workers really want to be part time workers. 
B)  Persons who collect unemployment benefits report themselves to be searching for a job. 
C)  Discouraged workers are not counted as unemployed. 
D)  A drug dealer reports herself as unemployed. 
E)  Discouraged workers are counted as unemployed.

Question 8

Unemployment caused by a business cycle recession is called cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 9

Table 20-16
  
-Refer to Table 20-16. Looking at the table above, real wages ________ from 2016 to 2017, and real wages ________ from 2017 to 2018.

Accepted Answer

A)  rose; rose 
B)  rose; fell 
C)  fell; rose 
D)  fell; fell 
A)  rose; rose 
B)  rose; fell 
C)  fell; rose 
D)  fell; fell

Question 10

Table 20-6
  
-Refer to Table 20-6. Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to

Accepted Answer

A)  1.2 percent. 
B)  2.0 percent. 
C)  2.5 percent. 
D)  4.0 percent. 
A)  1.2 percent. 
B)  2.0 percent. 
C)  2.5 percent. 
D)  4.0 percent.

Question 11

The natural rate of unemployment is made up of

Accepted Answer

A)  frictional, cyclical, and structural unemployment. 
B)  frictional and cyclical unemployment. 
C)  cyclical and structural unemployment. 
D)  frictional and structural unemployment. 
E)  seasonal and structural unemployment. 
A)  frictional, cyclical, and structural unemployment. 
B)  frictional and cyclical unemployment. 
C)  cyclical and structural unemployment. 
D)  frictional and structural unemployment. 
E)  seasonal and structural unemployment.

Question 12

Suppose that the labor movement has a revival in the United States and the majority of workers join labor unions. As a result we would expect

Accepted Answer

A)  the labor force participation rate to fall. 
B)  the unemployment rate to fall. 
C)  the unemployment rate to rise. 
D)  no change in the unemployment rate or labor force participation rate. 
A)  the labor force participation rate to fall. 
B)  the unemployment rate to fall. 
C)  the unemployment rate to rise. 
D)  no change in the unemployment rate or labor force participation rate.

Question 13

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal

Accepted Answer

A)  (20/60) × 100. 
B)  (20/80) × 100. 
C)  (30/80) × 100. 
D)  (20/100) × 100. 
A)  (20/60) × 100. 
B)  (20/80) × 100. 
C)  (30/80) × 100. 
D)  (20/100) × 100.

Question 14

Which of the following would most likely suffer the least from the costs of inflation?

Accepted Answer

A)  persons on fixed incomes 
B)  persons whose incomes rise more rapidly than inflation 
C)  firms that have to devote more time and labor to raising prices 
D)  an investor that has to pay higher taxes because of the inflation 
A)  persons on fixed incomes 
B)  persons whose incomes rise more rapidly than inflation 
C)  firms that have to devote more time and labor to raising prices 
D)  an investor that has to pay higher taxes because of the inflation

Question 15

What effect does the payment of government unemployment insurance have on the unemployment rate?

Accepted Answer

The payment of government unemployment i

Question 16

If the nominal interest rate is 6% and the inflation rate is 9%, then the real interest rate is

Accepted Answer

A)  -3%. 
B)  3%. 
C)  6.67%. 
D)  15%. 
A)  -3%. 
B)  3%. 
C)  6.67%. 
D)  15%.

Question 17

If the BLS counted persons that are on active military service in the totals for employment, the labor force, and the working-age population, this would

Accepted Answer

A)  decrease the measured unemployment rate. 
B)  decrease 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)  decrease the measured unemployment rate. 
B)  decrease 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 18

The equilibrium wage in a local labor market is $10 per hour. If a minimum wage of $15 per hour is imposed, which of the following will occur?

Accepted Answer

A)  There will be an increase in unemployment. 
B)  There will be an increase in the quantity of labor demanded by firms. 
C)  There will be a decrease in the quantity of labor supplied by households. 
D)  All of the above will occur. 
A)  There will be an increase in unemployment. 
B)  There will be an increase in the quantity of labor demanded by firms. 
C)  There will be a decrease in the quantity of labor supplied by households. 
D)  All of the above will occur.

Question 19

The consumer price index is the

Accepted Answer

A)  cost of a market basket of goods and services typically consumed in the base year. 
B)  cost of a market basket of goods and services typically consumed in the current period. 
C)  average of the prices of the goods and services purchased by a typical urban family of four. 
D)  average of the prices of new final goods and services produced in the economy over a period of time. 
A)  cost of a market basket of goods and services typically consumed in the base year. 
B)  cost of a market basket of goods and services typically consumed in the current period. 
C)  average of the prices of the goods and services purchased by a typical urban family of four. 
D)  average of the prices of new final goods and services produced in the economy over a period of time.

Question 20

A student who just graduated from college but has not found a job would most likely be

Accepted Answer

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

Exam 20: Unemployment and Inflation

Which of the following explains why many European countries have unemployment rates that are higher than in the United States?

The labor force is the sum of

The base period for CPI calculations is generally 1982-84. In 2005, 50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s. This potential for bias in the CPI is referred to as ________ bias and results in ________.

In the modern U.S. economy, the typical unemployed person stays unemployed for

Full employment is not considered to be zero unemployment, because

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness?

Which of the following causes the unemployment rate to understate the true extent of joblessness?

Unemployment caused by a business cycle recession is called cyclical unemployment.

Table 20-16 -Refer to Table 20-16. Looking at the table above, real wages ________ from 2016 to 2017, and real wages ________ from 2017 to 2018.

Table 20-6 -Refer to Table 20-6. Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to

The natural rate of unemployment is made up of

Suppose that the labor movement has a revival in the United States and the majority of workers join labor unions. As a result we would expect

Which of the following would most likely suffer the least from the costs of inflation?

What effect does the payment of government unemployment insurance have on the unemployment rate?

If the nominal interest rate is 6% and the inflation rate is 9%, then the real interest rate is

If the BLS counted persons that are on active military service in the totals for employment, the labor force, and the working-age population, this would

The equilibrium wage in a local labor market is $10 per hour. If a minimum wage of $15 per hour is imposed, which of the following will occur?

The consumer price index is the

A student who just graduated from college but has not found a job would most likely be

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

The base period for CPI calculations is generally 1982-84. In 2005, 50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s. This potential for bias in the CPI is referred to as bias and results in .

Table 20-16 -Refer to Table 20-16. Looking at the table above, real wages from 2016 to 2017, and real wages from 2017 to 2018.