Question 1

Suppose that banks are issuing personal loans at 9%. If expected inflation is 3%, then the nominal interest rate is _____% and the real interest rate is _____%.

Accepted Answer

A)  6; 9 
B)  9; 6 
C)  9; 3 
D)  6; 12 
A)  6; 9 
B)  9; 6 
C)  9; 3 
D)  6; 12

Question 2

Efficiency wages are:

Accepted Answer

A)  market equilibrium wages. 
B)  set above equilibrium wages to act as an incentive for better performance. 
C)  set below the equilibrium wage to increase profits. 
D)  allowed to be below minimum wage. 
A)  market equilibrium wages. 
B)  set above equilibrium wages to act as an incentive for better performance. 
C)  set below the equilibrium wage to increase profits. 
D)  allowed to be below minimum wage.

Question 3

The inflation rate for the current year is the percentage change in the price level from the previous year.

Accepted Answer

A) True 
 B)False

Question 4

The official unemployment rate ignores:

Accepted Answer

A)  people with professional jobs. 
B)  people who work on commission. 
C)  discouraged workers. 
D)  people with professional jobs, people who work on commission, and discouraged workers. 
A)  people with professional jobs. 
B)  people who work on commission. 
C)  discouraged workers. 
D)  people with professional jobs, people who work on commission, and discouraged workers.

Question 5

Use the following to answer questions:  
-(Table: Labor Force Distribution) Use Table: Labor Force Distribution. The total population is _____ million.

Accepted Answer

A)  486 
B)  253 
C)  278 
D)  283 
A)  486 
B)  253 
C)  278 
D)  283

Question 6

The statistics and data on unemployment are gathered and reported:

Accepted Answer

A)  daily. 
B)  weekly. 
C)  monthly. 
D)  yearly. 
A)  daily. 
B)  weekly. 
C)  monthly. 
D)  yearly.

Question 7

Underemployed people are counted as employed, even though they are not fully using their skills.

Accepted Answer

A) True 
 B)False

Question 8

When hyperinflation forces Emily to visit her bank very frequently to keep her cash holdings to a minimum, economists say that Emily has a:

Accepted Answer

A)  shoe-leather cost. 
B)  menu cost. 
C)  unit-of-account cost. 
D)  Fisher effect. 
A)  shoe-leather cost. 
B)  menu cost. 
C)  unit-of-account cost. 
D)  Fisher effect.

Question 9

The unemployment rate is the ratio of all of the people:

Accepted Answer

A)  out of work to the total population. 
B)  out of work to those over age 16. 
C)  unemployed to those looking for work. 
D)  unemployed to those in the labor force. 
A)  out of work to the total population. 
B)  out of work to those over age 16. 
C)  unemployed to those looking for work. 
D)  unemployed to those in the labor force.

Question 10

Unanticipated inflation:

Accepted Answer

A)  reduces the value of money. 
B)  increases the value of future obligations. 
C)  increases certainty about the future. 
D)  helps lenders. 
A)  reduces the value of money. 
B)  increases the value of future obligations. 
C)  increases certainty about the future. 
D)  helps lenders.

Question 11

A survey reveals that, on a small island, initially 100 people have jobs, 25 people don't have jobs but are looking for jobs, and 45 people are neither working nor looking for work. Suppose that 15 of the 45 people who weren't looking for work now begin looking for work. There are now 40 people looking for work and 100 people working. The unemployment rate:

Accepted Answer

A)  falls to 20%. 
B)  rises to 28.6%. 
C)  rises to 50%. 
D)  Nothing happens to the unemployment rate because these people weren't working before and they aren't working now. 
A)  falls to 20%. 
B)  rises to 28.6%. 
C)  rises to 50%. 
D)  Nothing happens to the unemployment rate because these people weren't working before and they aren't working now.

Question 12

When the unemployment rate is high, there is political demand to increase the benefit period for unemployment compensation. In a standard analysis, doing so will lead to:

Accepted Answer

A)  reductions in unemployment. 
B)  increases in the unemployment rate. 
C)  more job creation. 
D)  more job destruction. 
A)  reductions in unemployment. 
B)  increases in the unemployment rate. 
C)  more job creation. 
D)  more job destruction.

Question 13

Unit-of-account costs may be especially important in the tax system when inflation distorts the measures of income on which taxes are collected.

Accepted Answer

A) True 
 B)False

Question 14

Shoe-leather costs may be especially important in the tax system when inflation distorts the measures of income on which taxes are collected.

Accepted Answer

A) True 
 B)False

Question 15

For most of U.S. modern economic history, when the unemployment rate is _____, real GDP is _____.

Accepted Answer

A)  falling; rising 
B)  falling; falling 
C)  rising; unchanged 
D)  rising; rising 
A)  falling; rising 
B)  falling; falling 
C)  rising; unchanged 
D)  rising; rising

Question 16

A survey reveals that, on a small island, 1,000 people have jobs, 250 people are unemployed and looking for jobs, and 450 people are neither working nor looking for work. The unemployment rate on the island is _____%.

Accepted Answer

A)  20 
B)  25 
C)  45 
D)  15.6 
A)  20 
B)  25 
C)  45 
D)  15.6

Question 17

If 99 million people are working and 1 million are unemployed but actively seeking work, then the unemployment rate is _____%.

Accepted Answer

A)  1 
B)  5 
C)  10 
D)  100 
A)  1 
B)  5 
C)  10 
D)  100

Question 18

Which statement is FALSE?

Accepted Answer

A)  Both frictional and structural unemployment can occur, even if unemployment is at its natural level. 
B)  Cyclical unemployment is unemployment in excess of the natural rate. 
C)  A new college graduate looking for that first professional job may be frictionally unemployed. 
D)  Efficiency wages may cause frictional unemployment. 
A)  Both frictional and structural unemployment can occur, even if unemployment is at its natural level. 
B)  Cyclical unemployment is unemployment in excess of the natural rate. 
C)  A new college graduate looking for that first professional job may be frictionally unemployed. 
D)  Efficiency wages may cause frictional unemployment.

Question 19

According to official statistics, discouraged workers are:

Accepted Answer

A)  included in the employment statistics. 
B)  included in the labor force. 
C)  not included in the labor force. 
D)  treated just like the underemployed. 
A)  included in the employment statistics. 
B)  included in the labor force. 
C)  not included in the labor force. 
D)  treated just like the underemployed.

Question 20

Since 1960 in the United States, the price level has:

Accepted Answer

A)  fluctuated randomly by large amounts. 
B)  remained the same. 
C)  decreased. 
D)  increased. 
A)  fluctuated randomly by large amounts. 
B)  remained the same. 
C)  decreased. 
D)  increased.

Suppose that banks are issuing personal loans at 9%. If expected inflation is 3%, then the nominal interest rate is _% and the real interest rate is _%.

Efficiency wages are:

The inflation rate for the current year is the percentage change in the price level from the previous year.

The official unemployment rate ignores:

Use the following to answer questions: -(Table: Labor Force Distribution) Use Table: Labor Force Distribution. The total population is _____ million.

The statistics and data on unemployment are gathered and reported:

Underemployed people are counted as employed, even though they are not fully using their skills.

When hyperinflation forces Emily to visit her bank very frequently to keep her cash holdings to a minimum, economists say that Emily has a:

The unemployment rate is the ratio of all of the people:

Unanticipated inflation:

When the unemployment rate is high, there is political demand to increase the benefit period for unemployment compensation. In a standard analysis, doing so will lead to:

Unit-of-account costs may be especially important in the tax system when inflation distorts the measures of income on which taxes are collected.

Shoe-leather costs may be especially important in the tax system when inflation distorts the measures of income on which taxes are collected.

For most of U.S. modern economic history, when the unemployment rate is _, real GDP is _.

A survey reveals that, on a small island, 1,000 people have jobs, 250 people are unemployed and looking for jobs, and 450 people are neither working nor looking for work. The unemployment rate on the island is _____%.

If 99 million people are working and 1 million are unemployed but actively seeking work, then the unemployment rate is _____%.

Which statement is FALSE?

According to official statistics, discouraged workers are:

Since 1960 in the United States, the price level has:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 8: Unemployment and Inflation

Suppose that banks are issuing personal loans at 9%. If expected inflation is 3%, then the nominal interest rate is _____% and the real interest rate is _____%.

Efficiency wages are:

The inflation rate for the current year is the percentage change in the price level from the previous year.

The official unemployment rate ignores:

Use the following to answer questions: -(Table: Labor Force Distribution) Use Table: Labor Force Distribution. The total population is _____ million.

The statistics and data on unemployment are gathered and reported:

Underemployed people are counted as employed, even though they are not fully using their skills.

When hyperinflation forces Emily to visit her bank very frequently to keep her cash holdings to a minimum, economists say that Emily has a:

The unemployment rate is the ratio of all of the people:

Unanticipated inflation:

When the unemployment rate is high, there is political demand to increase the benefit period for unemployment compensation. In a standard analysis, doing so will lead to:

Unit-of-account costs may be especially important in the tax system when inflation distorts the measures of income on which taxes are collected.

Shoe-leather costs may be especially important in the tax system when inflation distorts the measures of income on which taxes are collected.

For most of U.S. modern economic history, when the unemployment rate is _____, real GDP is _____.

A survey reveals that, on a small island, 1,000 people have jobs, 250 people are unemployed and looking for jobs, and 450 people are neither working nor looking for work. The unemployment rate on the island is _____%.

If 99 million people are working and 1 million are unemployed but actively seeking work, then the unemployment rate is _____%.

Which statement is FALSE?

According to official statistics, discouraged workers are:

Since 1960 in the United States, the price level has:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Suppose that banks are issuing personal loans at 9%. If expected inflation is 3%, then the nominal interest rate is _% and the real interest rate is _%.

For most of U.S. modern economic history, when the unemployment rate is _, real GDP is _.