Question 1

The source of demand-pull inflation is a:

Accepted Answer

A) lack of expectations. 
B) shortage of demand. 
C) excess of demand. 
D) high cost of production. 
A) lack of expectations. 
B) shortage of demand. 
C) excess of demand. 
D) high cost of production.

Question 2

The civilian labour force consists of:

Accepted Answer

A) all civilians over the age of 16. 
B) the employed plus the unemployed who are not in the military. 
C) only individuals who are actually at work during a given week. 
D) civilians who are not in prisons or mental hospitals. 
A) all civilians over the age of 16. 
B) the employed plus the unemployed who are not in the military. 
C) only individuals who are actually at work during a given week. 
D) civilians who are not in prisons or mental hospitals.

Question 3

Which of the following statements is true?

Accepted Answer

A) Demand-pull inflation is caused by an increase in the cost of production. 
B) Cost-push inflation is caused by an increase in spending. 
C) If nominal interest rates remain the same and the inflation rate falls, real interest rates decrease. 
D) If real interest rates are positive, borrowers incur losses. 
A) Demand-pull inflation is caused by an increase in the cost of production. 
B) Cost-push inflation is caused by an increase in spending. 
C) If nominal interest rates remain the same and the inflation rate falls, real interest rates decrease. 
D) If real interest rates are positive, borrowers incur losses.

Question 4

Unemployment statistics in Australia generally show that:

Accepted Answer

A) all age groups have roughly the same unemployment rate. 
B) women have a higher rate of unemployment than men. 
C) those aged 55 and over have a disproportionately large unemployment rate. 
D) those aged 15-19 have the highest rate of unemployment of any demographic group. 
A) all age groups have roughly the same unemployment rate. 
B) women have a higher rate of unemployment than men. 
C) those aged 55 and over have a disproportionately large unemployment rate. 
D) those aged 15-19 have the highest rate of unemployment of any demographic group.

Question 5

Andrea Burris lost her job in a company layoff five months ago.She would take a job if one was offered,but she has given up looking for work until the economy improves.She is:

Accepted Answer

A) a member of the civilian labour force who is employed. 
B) a member of the civilian labour force who is unemployed. 
C) a member of the civilian labour force who is underemployed. 
D) a discouraged worker who is not a member of the labour force. 
E) now structurally unemployable. 
A) a member of the civilian labour force who is employed. 
B) a member of the civilian labour force who is unemployed. 
C) a member of the civilian labour force who is underemployed. 
D) a discouraged worker who is not a member of the labour force. 
E) now structurally unemployable.

Question 6

Cyclical unemployment can occur:

Accepted Answer

A) when the demand for certain goods and services depends on the current stage of the business cycle. 
B) when the demand for certain goods and services depends on the workers' skill levels. 
C) when the demand for certain goods and services has declined due to the recession. 
D) when the demand for certain goods and services declines over time. 
A) when the demand for certain goods and services depends on the current stage of the business cycle. 
B) when the demand for certain goods and services depends on the workers' skill levels. 
C) when the demand for certain goods and services has declined due to the recession. 
D) when the demand for certain goods and services declines over time.

Question 7

People with fixed incomes fare best in an inflationary period.

Accepted Answer

A) True 
 B)False

Question 8

If the consumer price index (CPI)in 2001 was 200 and the CPI in 2002 was 215,the rate of inflation was:

Accepted Answer

A) 215 per cent. 
B) 15 per cent. 
C) 5 per cent. 
D) 7.5 per cent. 
E) 8 per cent. 
A) 215 per cent. 
B) 15 per cent. 
C) 5 per cent. 
D) 7.5 per cent. 
E) 8 per cent.

Question 9

Inflation in Australia since the early 1990s has been:

Accepted Answer

A) higher than at any time since the 1960s. 
B) more volatile than in the 1970s. 
C) lower than at any time since the 1960s. 
D) higher than it was in the 1980s. 
A) higher than at any time since the 1960s. 
B) more volatile than in the 1970s. 
C) lower than at any time since the 1960s. 
D) higher than it was in the 1980s.

Question 10

Cost-push inflation is due to:

Accepted Answer

A) 'too much money chasing too few goods'. 
B) the economy operating at full employment. 
C) significant increases in production costs. 
D) a decrease in production costs. 
A) 'too much money chasing too few goods'. 
B) the economy operating at full employment. 
C) significant increases in production costs. 
D) a decrease in production costs.

Question 11

Some economists claim that the natural rate of unemployment has increased over the past 30 years because:

Accepted Answer

A) of a decrease in the participation rate of women in the workforce. 
B) of hypocrites. 
C) the long-term unemployed gain valuable skills while they are out of work. 
D) unemployment benefits are high enough to create incentives not to work. 
A) of a decrease in the participation rate of women in the workforce. 
B) of hypocrites. 
C) the long-term unemployed gain valuable skills while they are out of work. 
D) unemployment benefits are high enough to create incentives not to work.

Question 12

Hysteresis occurs when:

Accepted Answer

A) people get agitated over the level of unemployment. 
B) people become easier to employ because of a variety of skilled labour available. 
C) the full-employment rate of unemployment increases as the actual unemployment rate increases. 
D) unemployment falls quickly after a recession. 
A) people get agitated over the level of unemployment. 
B) people become easier to employ because of a variety of skilled labour available. 
C) the full-employment rate of unemployment increases as the actual unemployment rate increases. 
D) unemployment falls quickly after a recession.

Question 13

A person pays cash for a house in 1990 for $200 000 and sells it in 2000 for $400 000.Over the same period the CPI has risen from its base index to 200.In terms of this asset,the purchasing power of this person:

Accepted Answer

A) has increased 
B) has decreased 
C) has remained unchanged 
D) is indeterminate. 
E) depends on his/her spending habits. 
A) has increased 
B) has decreased 
C) has remained unchanged 
D) is indeterminate. 
E) depends on his/her spending habits.

Question 14

The civilian labour force is:

Accepted Answer

A) the number of people (including students) aged 15 and over who are unemployed. 
B) the number of people (including students) aged 15 and over who are either employed or unemployed. 
C) the number of people (including students) aged 15 and over who are either employed or unemployed, excluding people in hospitals. 
D) the number of people (excluding students) aged 15 and over who are either employed or unemployed, excluding members of the armed forces and certain categories of people. 
A) the number of people (including students) aged 15 and over who are unemployed. 
B) the number of people (including students) aged 15 and over who are either employed or unemployed. 
C) the number of people (including students) aged 15 and over who are either employed or unemployed, excluding people in hospitals. 
D) the number of people (excluding students) aged 15 and over who are either employed or unemployed, excluding members of the armed forces and certain categories of people.

Question 15

One way the consumer price index (CPI)differs from the GDP chain price index is that the CPI:

Accepted Answer

A) uses current-year quantities of goods and services. 
B) includes separate market baskets of goods and services for both base and current years. 
C) includes only goods and services bought by typical urban consumers. 
D) is bias-free. 
A) uses current-year quantities of goods and services. 
B) includes separate market baskets of goods and services for both base and current years. 
C) includes only goods and services bought by typical urban consumers. 
D) is bias-free.

Question 16

When the rate of unemployment is equal to the sum of seasonal,frictional and structural unemployment rates then:

Accepted Answer

A) the natural rate of unemployment must also be zero. 
B) the rate of frictional unemployment must be negative. 
C) the economy must have entered a recessionary stage. 
D) the Keynesian aggregate supply curve must be horizontal. 
E) the economy is considered to be at full employment. 
A) the natural rate of unemployment must also be zero. 
B) the rate of frictional unemployment must be negative. 
C) the economy must have entered a recessionary stage. 
D) the Keynesian aggregate supply curve must be horizontal. 
E) the economy is considered to be at full employment.

Question 17

Suppose a market basket of goods and services costs $400 in the base year and the consumer price index (CPI)is currently 125.This indicates the price of the market basket of goods is now:

Accepted Answer

A) $275. 
B) $425. 
C) $500. 
D) $525. 
A) $275. 
B) $425. 
C) $500. 
D) $525.

Question 18

During the 1970s,inflation in Australia:

Accepted Answer

A) reached its lowest rate (0.2 per cent) since the end of the Second World War. 
B) approached hyperinflation proportions. 
C) declined to 0.5 per cent as a result of the first oil price shock. 
D) reached a peak of 16 per cent in 1976, then subsided during the 1980s. 
A) reached its lowest rate (0.2 per cent) since the end of the Second World War. 
B) approached hyperinflation proportions. 
C) declined to 0.5 per cent as a result of the first oil price shock. 
D) reached a peak of 16 per cent in 1976, then subsided during the 1980s.

Question 19

Which of the following statements is true?

Accepted Answer

A) The four phases of the business cycle, in order, are: peak, recovery, trough, recession. 
B) When unemployment is rising then real GDP is rising. 
C) The economic problem typically associated with a recovery is rising unemployment. 
D) Full employment exists in an economy when the unemployment rate equals the sum of frictional, seasonal and structural unemployment rates. 
A) The four phases of the business cycle, in order, are: peak, recovery, trough, recession. 
B) When unemployment is rising then real GDP is rising. 
C) The economic problem typically associated with a recovery is rising unemployment. 
D) Full employment exists in an economy when the unemployment rate equals the sum of frictional, seasonal and structural unemployment rates.

Question 20

Suppose you deposit $10 000 in a bank that yields a nominal interest rate of 8 per cent.If you expect inflation to be 6 per cent or lower,then you are expecting to earn a real interest rate of at least:

Accepted Answer

A) 1.6 per cent. 
B) 2 per cent. 
C) 4 per cent. 
D) 5 per cent. 
A) 1.6 per cent. 
B) 2 per cent. 
C) 4 per cent. 
D) 5 per cent.

The source of demand-pull inflation is a:

The civilian labour force consists of:

Which of the following statements is true?

Unemployment statistics in Australia generally show that:

Andrea Burris lost her job in a company layoff five months ago.She would take a job if one was offered,but she has given up looking for work until the economy improves.She is:

Cyclical unemployment can occur:

People with fixed incomes fare best in an inflationary period.

If the consumer price index (CPI)in 2001 was 200 and the CPI in 2002 was 215,the rate of inflation was:

Inflation in Australia since the early 1990s has been:

Cost-push inflation is due to:

Some economists claim that the natural rate of unemployment has increased over the past 30 years because:

Hysteresis occurs when:

A person pays cash for a house in 1990 for $200 000 and sells it in 2000 for $400 000.Over the same period the CPI has risen from its base index to 200.In terms of this asset,the purchasing power of this person:

The civilian labour force is:

One way the consumer price index (CPI)differs from the GDP chain price index is that the CPI:

When the rate of unemployment is equal to the sum of seasonal,frictional and structural unemployment rates then:

Suppose a market basket of goods and services costs $400 in the base year and the consumer price index (CPI)is currently 125.This indicates the price of the market basket of goods is now:

During the 1970s,inflation in Australia:

Which of the following statements is true?

Suppose you deposit $10 000 in a bank that yields a nominal interest rate of 8 per cent.If you expect inflation to be 6 per cent or lower,then you are expecting to earn a real interest rate of at least:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 13: Inflation and unemployment

The source of demand-pull inflation is a:

The civilian labour force consists of:

Which of the following statements is true?

Unemployment statistics in Australia generally show that:

Andrea Burris lost her job in a company layoff five months ago.She would take a job if one was offered,but she has given up looking for work until the economy improves.She is:

Cyclical unemployment can occur:

People with fixed incomes fare best in an inflationary period.

If the consumer price index (CPI)in 2001 was 200 and the CPI in 2002 was 215,the rate of inflation was:

Inflation in Australia since the early 1990s has been:

Cost-push inflation is due to:

Some economists claim that the natural rate of unemployment has increased over the past 30 years because:

Hysteresis occurs when:

A person pays cash for a house in 1990 for $200 000 and sells it in 2000 for $400 000.Over the same period the CPI has risen from its base index to 200.In terms of this asset,the purchasing power of this person:

The civilian labour force is:

One way the consumer price index (CPI)differs from the GDP chain price index is that the CPI:

When the rate of unemployment is equal to the sum of seasonal,frictional and structural unemployment rates then:

Suppose a market basket of goods and services costs $400 in the base year and the consumer price index (CPI)is currently 125.This indicates the price of the market basket of goods is now:

During the 1970s,inflation in Australia:

Which of the following statements is true?

Suppose you deposit $10 000 in a bank that yields a nominal interest rate of 8 per cent.If you expect inflation to be 6 per cent or lower,then you are expecting to earn a real interest rate of at least:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters