Question 1

The real rate of interest is the nominal rate of interest times the inflation rate.

Accepted Answer

A) True 
 B)False

Question 2

The labor force is the total:

Accepted Answer

A)  number of people employed. 
B)  population. 
C)  number of people in the population of working age. 
D)  number of people who are employed or unemployed. 
A)  number of people employed. 
B)  population. 
C)  number of people in the population of working age. 
D)  number of people who are employed or unemployed.

Question 3

If the price level decreases, real income will:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  fluctuate randomly. 
A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  fluctuate randomly.

Question 4

A fixed interest rate of _____% with _____% inflation will yield the highest rate of return for a lender.

Accepted Answer

A)  8; 1 
B)  11; 5 
C)  12; 7 
D)  19; 15 
A)  8; 1 
B)  11; 5 
C)  12; 7 
D)  19; 15

Question 5

It is generally accepted that a binding minimum wage does NOT:

Accepted Answer

A)  decrease the quantity of labor demanded. 
B)  increase unemployment. 
C)  increase the amount of labor supplied. 
D)  decrease the amount of labor supplied. 
A)  decrease the quantity of labor demanded. 
B)  increase unemployment. 
C)  increase the amount of labor supplied. 
D)  decrease the amount of labor supplied.

Question 6

Inflation reduces nominal interest rates.

Accepted Answer

A) True 
 B)False

Question 7

Ron quit his job in retail management and moved to Florida with his wife, a physician who opened a new practice there. He was not successful in his job search for the next four months. Ron's unemployment is:

Accepted Answer

A)  structural. 
B)  cyclical. 
C)  frictional. 
D)  seasonal. 
A)  structural. 
B)  cyclical. 
C)  frictional. 
D)  seasonal.

Question 8

You are a college student and NOT working or looking for work. You are:

Accepted Answer

A)  unemployed. 
B)  in the labor force but not employed. 
C)  not part of the labor force. 
D)  counted in the labor force as underemployed. 
A)  unemployed. 
B)  in the labor force but not employed. 
C)  not part of the labor force. 
D)  counted in the labor force as underemployed.

Question 9

Which statement is TRUE?

Accepted Answer

A)  The number of people not working but who have looked for work in the past year is equal to the number of unemployed people. 
B)  The labor force is the total number of people working plus those who are unemployed. 
C)  The unemployment rate is the number of people unemployed expressed as a percentage of the population. 
D)  The labor force is the same as the population. 
A)  The number of people not working but who have looked for work in the past year is equal to the number of unemployed people. 
B)  The labor force is the total number of people working plus those who are unemployed. 
C)  The unemployment rate is the number of people unemployed expressed as a percentage of the population. 
D)  The labor force is the same as the population.

Question 10

Use the following to answer questions:  
-(Table: Labor Force Data) Use Table: Labor Force Data. Suppose the labor force participation rate is 70%. The number of unemployed adults is _____ million.

Accepted Answer

A)  8 
B)  53 
C)  103 
D)  50 
A)  8 
B)  53 
C)  103 
D)  50

Question 11

Unit-of-account costs refer to the:

Accepted Answer

A)  increase in prices during inflation. 
B)  decrease in the value of money during inflation. 
C)  loss of the reliability of money as a relative unit of measurement. 
D)  increased costs of servicing bank accounts during inflation. 
A)  increase in prices during inflation. 
B)  decrease in the value of money during inflation. 
C)  loss of the reliability of money as a relative unit of measurement. 
D)  increased costs of servicing bank accounts during inflation.

Question 12

When inflation rises quickly, borrowers will _____ and lenders will _____.

Accepted Answer

A)  be hurt; benefit 
B)  benefit; be hurt 
C)  be hurt; be hurt 
D)  benefit; benefit 
A)  be hurt; benefit 
B)  benefit; be hurt 
C)  be hurt; be hurt 
D)  benefit; benefit

Question 13

To be officially unemployed, a person must:

Accepted Answer

A)  not have a job and must have looked for work in the past four weeks. 
B)  be under 55 years old. 
C)  be working fewer than 30 hours per week. 
D)  be working fewer than 20 hours per week. 
A)  not have a job and must have looked for work in the past four weeks. 
B)  be under 55 years old. 
C)  be working fewer than 30 hours per week. 
D)  be working fewer than 20 hours per week.

Question 14

The labor demand curve is negatively sloped because:

Accepted Answer

A)  more people are willing to work at low wages than at high wages. 
B)  more people are willing to work at high wages than at low wages. 
C)  employers are willing to hire more people at low wages. 
D)  employers are willing to hire more people at high wages. 
A)  more people are willing to work at low wages than at high wages. 
B)  more people are willing to work at high wages than at low wages. 
C)  employers are willing to hire more people at low wages. 
D)  employers are willing to hire more people at high wages.

Question 15

During rapid price inflation, firms must frequently change prices. The cost of changing listed prices is known as the _____ cost.

Accepted Answer

A)  menu 
B)  real interest rate 
C)  shoe-leather 
D)  unit-of-account 
A)  menu 
B)  real interest rate 
C)  shoe-leather 
D)  unit-of-account

Question 16

Cyclical unemployment is the result of:

Accepted Answer

A)  normal job turnover (job searches). 
B)  discrimination. 
C)  the business cycle. 
D)  the minimum wage. 
A)  normal job turnover (job searches). 
B)  discrimination. 
C)  the business cycle. 
D)  the minimum wage.

Question 17

Use the following to answer questions:  
-(Figure: The Minimum Wage) Use Figure: The Minimum Wage. What is the quantity of labor demanded at a binding minimum wage of P3?

Accepted Answer

A)  Q1 
B)  Q2 
C)  Q3 
D)  Q4 
A)  Q1 
B)  Q2 
C)  Q3 
D)  Q4

Question 18

Efficiency wages are usually set by employers to:

Accepted Answer

A)  reduce unemployment. 
B)  increase employment. 
C)  provide an incentive for better performance. 
D)  increase employment and provide better incentives for performance. 
A)  reduce unemployment. 
B)  increase employment. 
C)  provide an incentive for better performance. 
D)  increase employment and provide better incentives for performance.

Question 19

The inflation rate is the:

Accepted Answer

A)  price level in the current year minus the price level in the previous year. 
B)  price level in the current year plus the price level in the previous year. 
C)  percentage change in the price level from one year to the next. 
D)  price level in the current year multiplied by the price level in the previous year. 
A)  price level in the current year minus the price level in the previous year. 
B)  price level in the current year plus the price level in the previous year. 
C)  percentage change in the price level from one year to the next. 
D)  price level in the current year multiplied by the price level in the previous year.

Question 20

During periods of high inflation, stores that publish catalogs find it necessary to revise prices and publish new catalogs more frequently than they did before. This is an example of menu costs.

Accepted Answer

A) True 
 B)False

The real rate of interest is the nominal rate of interest times the inflation rate.

The labor force is the total:

If the price level decreases, real income will:

A fixed interest rate of _% with _% inflation will yield the highest rate of return for a lender.

It is generally accepted that a binding minimum wage does NOT:

Inflation reduces nominal interest rates.

Ron quit his job in retail management and moved to Florida with his wife, a physician who opened a new practice there. He was not successful in his job search for the next four months. Ron's unemployment is:

You are a college student and NOT working or looking for work. You are:

Which statement is TRUE?

Use the following to answer questions: -(Table: Labor Force Data) Use Table: Labor Force Data. Suppose the labor force participation rate is 70%. The number of unemployed adults is _____ million.

Unit-of-account costs refer to the:

When inflation rises quickly, borrowers will _ and lenders will _.

To be officially unemployed, a person must:

The labor demand curve is negatively sloped because:

During rapid price inflation, firms must frequently change prices. The cost of changing listed prices is known as the _____ cost.

Cyclical unemployment is the result of:

Use the following to answer questions: -(Figure: The Minimum Wage) Use Figure: The Minimum Wage. What is the quantity of labor demanded at a binding minimum wage of P₃?

Efficiency wages are usually set by employers to:

The inflation rate is the:

During periods of high inflation, stores that publish catalogs find it necessary to revise prices and publish new catalogs more frequently than they did before. This is an example of menu costs.

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

The real rate of interest is the nominal rate of interest times the inflation rate.

The labor force is the total:

If the price level decreases, real income will:

A fixed interest rate of _____% with _____% inflation will yield the highest rate of return for a lender.

It is generally accepted that a binding minimum wage does NOT:

Inflation reduces nominal interest rates.

Ron quit his job in retail management and moved to Florida with his wife, a physician who opened a new practice there. He was not successful in his job search for the next four months. Ron's unemployment is:

You are a college student and NOT working or looking for work. You are:

Which statement is TRUE?

Use the following to answer questions: -(Table: Labor Force Data) Use Table: Labor Force Data. Suppose the labor force participation rate is 70%. The number of unemployed adults is _____ million.

Unit-of-account costs refer to the:

When inflation rises quickly, borrowers will _____ and lenders will _____.

To be officially unemployed, a person must:

The labor demand curve is negatively sloped because:

During rapid price inflation, firms must frequently change prices. The cost of changing listed prices is known as the _____ cost.

Cyclical unemployment is the result of:

Use the following to answer questions: -(Figure: The Minimum Wage) Use Figure: The Minimum Wage. What is the quantity of labor demanded at a binding minimum wage of P3?

Efficiency wages are usually set by employers to:

The inflation rate is the:

During periods of high inflation, stores that publish catalogs find it necessary to revise prices and publish new catalogs more frequently than they did before. This is an example of menu costs.

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

A fixed interest rate of _% with _% inflation will yield the highest rate of return for a lender.

When inflation rises quickly, borrowers will _ and lenders will _.

Use the following to answer questions: -(Figure: The Minimum Wage) Use Figure: The Minimum Wage. What is the quantity of labor demanded at a binding minimum wage of P₃?