Question 1

Suppose the consumer price index (CPI)stands at 250 this year.If the inflation rate is 10 per cent,then next year's CPI will equal:

Accepted Answer

A) 250. 
B) 260. 
C) 275. 
D) 500. 
A) 250. 
B) 260. 
C) 275. 
D) 500.

Question 2

The spending patterns over the last 50 to 60 years:

Accepted Answer

A) are the same. 
B) have changed significantly. 
C) have decreased. 
D) have increased. 
A) are the same. 
B) have changed significantly. 
C) have decreased. 
D) have increased.

Question 3

To be counted as unemployed,a person must be retired.

Accepted Answer

A) True 
 B)False

Question 4

Demand-pull inflation is not influenced by the expectations of buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following measures real purchasing power?

Accepted Answer

A) Real income. 
B) Nominal income. 
C) Increase in income. 
D) Stable income. 
A) Real income. 
B) Nominal income. 
C) Increase in income. 
D) Stable income.

Question 6

Exclusion of which of the following tends to understate the true level of unemployment in the economy?

Accepted Answer

A) Children. 
B) Retired persons. 
C) Students. 
D) People who do not want to work. 
E) Discouraged workers. 
A) Children. 
B) Retired persons. 
C) Students. 
D) People who do not want to work. 
E) Discouraged workers.

Question 7

Real income is the purchasing power of nominal (money)income.

Accepted Answer

A) True 
 B)False

Question 8

The CPI is called:

Accepted Answer

A) a variable price of living index. 
B) a price of living index. 
C) a fixed-cost index. 
D) a variable-price index. 
E) a fixed-weight price index. 
A) a variable price of living index. 
B) a price of living index. 
C) a fixed-cost index. 
D) a variable-price index. 
E) a fixed-weight price index.

Question 9

Consider an economy with only two goods: bread and wine.In 1982,the typical family bought four loaves of bread at 50¢ per loaf and two bottles of wine for $9 per bottle.In 2002,bread cost 75¢ per loaf and wine cost $10 per bottle.The CPI for 2002 (using a 1982 base year)is:

Accepted Answer

A) 100. 
B) 115. 
C) 126. 
D) 130. 
A) 100. 
B) 115. 
C) 126. 
D) 130.

Question 10

Suppose your nominal income this year is 5 per cent higher than last year.If the inflation rate for the period was 3 per cent,then your real income:

Accepted Answer

A) increased by 1.67 per cent. 
B) increased by 2 per cent. 
C) increased by 8 per cent. 
D) declined by 0.6 per cent. 
A) increased by 1.67 per cent. 
B) increased by 2 per cent. 
C) increased by 8 per cent. 
D) declined by 0.6 per cent.

Question 11

Jan is an engineer working for the roads department in a small town in New South Wales.When the government cut spending,Jan and 99 others were laid off.The only other business in the town is growing grapes to be made into raisins,but the growers refuse to hire laid-off engineers,knowing they will leave at the first opportunity.The unemployment Jan is experiencing is:

Accepted Answer

A) cyclical. 
B) structural. 
C) permanent. 
D) frictional. 
E) voluntary. 
A) cyclical. 
B) structural. 
C) permanent. 
D) frictional. 
E) voluntary.

Question 12

Full employment,which is always expected to occur,consists of the seasonally,frictionally and cyclically unemployed.

Accepted Answer

A) True 
 B)False

Question 13

When actual real GDP output is below full-employment real GDP,the GDP measures the cost of cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 14

As the price of petrol rose during the 1970s,consumers cut back on their use of petrol relative to other consumer goods.This situation contributed to which bias in the consumer price index?

Accepted Answer

A) Substitution bias. 
B) Transportation bias. 
C) Quality bias. 
D) Indexing bias. 
A) Substitution bias. 
B) Transportation bias. 
C) Quality bias. 
D) Indexing bias.

Question 15

'I've worked as a Santa Claus at Myer for 20 years but on 26 December every year I become:

Accepted Answer

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

Question 16

Assume that the real rate of interest is 5 per cent and a lender charges a nominal interest rate of 15 per cent.If a borrower expects that the rate of inflation next year will be 10 per cent and the actual rate of inflation next year is 12 per cent:

Accepted Answer

A) neither the borrower nor the lender benefits from inflation. 
B) both the borrower and the lender lose from inflation. 
C) the borrower benefits from inflation, while the lender loses from inflation. 
D) the lender benefits from inflation, while the borrower loses from inflation. 
E) it is not possible to determine who gains or loses. 
A) neither the borrower nor the lender benefits from inflation. 
B) both the borrower and the lender lose from inflation. 
C) the borrower benefits from inflation, while the lender loses from inflation. 
D) the lender benefits from inflation, while the borrower loses from inflation. 
E) it is not possible to determine who gains or loses.

Question 17

If the rate of inflation in a given time period turns out to be higher than lenders and borrowers anticipated,then the effect will be:

Accepted Answer

A) a redistribution of wealth from borrowers to lenders. 
B) a net gain in purchasing power for lenders relative to borrowers. 
C) no change in the distribution of wealth between lenders and borrowers. 
D) that the borrow will be a winner. 
A) a redistribution of wealth from borrowers to lenders. 
B) a net gain in purchasing power for lenders relative to borrowers. 
C) no change in the distribution of wealth between lenders and borrowers. 
D) that the borrow will be a winner.

Question 18

Suppose buyers expect prices to rise dramatically in the near future.If they decide to purchase items today before the price rise,the possible result can be:

Accepted Answer

A) cost-push inflation. 
B) demand-pull inflation. 
C) deflation. 
D) diminishing returns. 
E) demand-push inflation. 
A) cost-push inflation. 
B) demand-pull inflation. 
C) deflation. 
D) diminishing returns. 
E) demand-push inflation.

Question 19

Find the size of the civilian labour force from the following data: frictional unemployment = 150,structural unemployment = 200,cyclical unemployment = 225,discouraged workers = 25,underemployed workers = 75,fully employed workers = 850,total population = 2000.

Accepted Answer

A) 1425. 
B) 1450. 
C) 1500. 
D) 1525. 
E) 2000. 
A) 1425. 
B) 1450. 
C) 1500. 
D) 1525. 
E) 2000.

Question 20

The costs of hyperinflation on an economy are:

Accepted Answer

A) that people enjoy buying and reselling at higher prices. 
B) that it can equate wealth between lenders and borrowers. 
C) that it creates a continuous spending-price spiral. 
D) that life insurance policies are jeopardised. 
A) that people enjoy buying and reselling at higher prices. 
B) that it can equate wealth between lenders and borrowers. 
C) that it creates a continuous spending-price spiral. 
D) that life insurance policies are jeopardised.

Suppose the consumer price index (CPI)stands at 250 this year.If the inflation rate is 10 per cent,then next year's CPI will equal:

The spending patterns over the last 50 to 60 years:

To be counted as unemployed,a person must be retired.

Demand-pull inflation is not influenced by the expectations of buyers and sellers.

Which of the following measures real purchasing power?

Exclusion of which of the following tends to understate the true level of unemployment in the economy?

Real income is the purchasing power of nominal (money)income.

The CPI is called:

Consider an economy with only two goods: bread and wine.In 1982,the typical family bought four loaves of bread at 50¢ per loaf and two bottles of wine for $9 per bottle.In 2002,bread cost 75¢ per loaf and wine cost $10 per bottle.The CPI for 2002 (using a 1982 base year)is:

Suppose your nominal income this year is 5 per cent higher than last year.If the inflation rate for the period was 3 per cent,then your real income:

Full employment,which is always expected to occur,consists of the seasonally,frictionally and cyclically unemployed.

When actual real GDP output is below full-employment real GDP,the GDP measures the cost of cyclical unemployment.

As the price of petrol rose during the 1970s,consumers cut back on their use of petrol relative to other consumer goods.This situation contributed to which bias in the consumer price index?

'I've worked as a Santa Claus at Myer for 20 years but on 26 December every year I become:

Assume that the real rate of interest is 5 per cent and a lender charges a nominal interest rate of 15 per cent.If a borrower expects that the rate of inflation next year will be 10 per cent and the actual rate of inflation next year is 12 per cent:

If the rate of inflation in a given time period turns out to be higher than lenders and borrowers anticipated,then the effect will be:

Suppose buyers expect prices to rise dramatically in the near future.If they decide to purchase items today before the price rise,the possible result can be:

Find the size of the civilian labour force from the following data: frictional unemployment = 150,structural unemployment = 200,cyclical unemployment = 225,discouraged workers = 25,underemployed workers = 75,fully employed workers = 850,total population = 2000.

The costs of hyperinflation on an economy are:

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

Suppose the consumer price index (CPI)stands at 250 this year.If the inflation rate is 10 per cent,then next year's CPI will equal:

The spending patterns over the last 50 to 60 years:

To be counted as unemployed,a person must be retired.

Demand-pull inflation is not influenced by the expectations of buyers and sellers.

Which of the following measures real purchasing power?

Exclusion of which of the following tends to understate the true level of unemployment in the economy?

Real income is the purchasing power of nominal (money)income.

The CPI is called:

Consider an economy with only two goods: bread and wine.In 1982,the typical family bought four loaves of bread at 50¢ per loaf and two bottles of wine for $9 per bottle.In 2002,bread cost 75¢ per loaf and wine cost $10 per bottle.The CPI for 2002 (using a 1982 base year)is:

Suppose your nominal income this year is 5 per cent higher than last year.If the inflation rate for the period was 3 per cent,then your real income:

Full employment,which is always expected to occur,consists of the seasonally,frictionally and cyclically unemployed.

When actual real GDP output is below full-employment real GDP,the GDP measures the cost of cyclical unemployment.

As the price of petrol rose during the 1970s,consumers cut back on their use of petrol relative to other consumer goods.This situation contributed to which bias in the consumer price index?

'I've worked as a Santa Claus at Myer for 20 years but on 26 December every year I become:

Assume that the real rate of interest is 5 per cent and a lender charges a nominal interest rate of 15 per cent.If a borrower expects that the rate of inflation next year will be 10 per cent and the actual rate of inflation next year is 12 per cent:

If the rate of inflation in a given time period turns out to be higher than lenders and borrowers anticipated,then the effect will be:

Suppose buyers expect prices to rise dramatically in the near future.If they decide to purchase items today before the price rise,the possible result can be:

Find the size of the civilian labour force from the following data: frictional unemployment = 150,structural unemployment = 200,cyclical unemployment = 225,discouraged workers = 25,underemployed workers = 75,fully employed workers = 850,total population = 2000.

The costs of hyperinflation on an economy are:

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