Question 1

During the 1990s,which of the following countries had the highest unemployment rate?

Accepted Answer

A) The United States. 
B) Japan. 
C) Australia. 
D) Canada. 
E) France. 
A) The United States. 
B) Japan. 
C) Australia. 
D) Canada. 
E) France.

Question 2

Which of the following can create demand-pull inflation?

Accepted Answer

A) Excessive aggregate spending. 
B) Sharply rising oil prices. 
C) Higher labour costs. 
D) Recessions and depressions. 
A) Excessive aggregate spending. 
B) Sharply rising oil prices. 
C) Higher labour costs. 
D) Recessions and depressions.

Question 3

Demand-pull inflation:

Accepted Answer

A) is a shortage in demand. 
B) is a lack of demand for local goods. 
C) is an excess in nominal demand across many markets. 
D) is an oversupply of imported goods. 
A) is a shortage in demand. 
B) is a lack of demand for local goods. 
C) is an excess in nominal demand across many markets. 
D) is an oversupply of imported goods.

Question 4

Which of the following formulas is correct?

Accepted Answer

A) Cyclical unemployment + seasonal unemployment + structural unemployment = full employment. 
B) Cyclical unemployment + structural unemployment + frictional unemployment = full employment. 
C) Structural unemployment + seasonal unemployment + frictional unemployment = full employment. 
D) Structural unemployment + frictional unemployment + cyclical unemployment = full employment. 
A) Cyclical unemployment + seasonal unemployment + structural unemployment = full employment. 
B) Cyclical unemployment + structural unemployment + frictional unemployment = full employment. 
C) Structural unemployment + seasonal unemployment + frictional unemployment = full employment. 
D) Structural unemployment + frictional unemployment + cyclical unemployment = full employment.

Question 5

Unemployment is:

Accepted Answer

A) only an economic problem because it represents a loss of potential output. 
B) not a problem because people always find a job, eventually. 
C) a big problem because it can reduce a person's self-respect. 
D) not a problem because we have unemployment benefits as a safety net. 
E) not a problem because over 80 per cent of people find a job within four weeks of becoming unemployed. 
A) only an economic problem because it represents a loss of potential output. 
B) not a problem because people always find a job, eventually. 
C) a big problem because it can reduce a person's self-respect. 
D) not a problem because we have unemployment benefits as a safety net. 
E) not a problem because over 80 per cent of people find a job within four weeks of becoming unemployed.

Question 6

When inflation is relatively high and unstable,firms tend to invest more in _____ and less in _____.

Accepted Answer

A) productive assets; real estate 
B) shares; real estate 
C) real estate; productive assets 
D) real estate; consumption 
A) productive assets; real estate 
B) shares; real estate 
C) real estate; productive assets 
D) real estate; consumption

Question 7

Price indexes like the CPI are calculated using a base year.The term 'base year' refers to:

Accepted Answer

A) the first year that price data are available. 
B) any year in which inflation was higher than 5 per cent. 
C) the most recent year in which the business cycle hit the trough. 
D) an arbitrarily chosen reference year. 
E) the year in which inflation was at its minimum. 
A) the first year that price data are available. 
B) any year in which inflation was higher than 5 per cent. 
C) the most recent year in which the business cycle hit the trough. 
D) an arbitrarily chosen reference year. 
E) the year in which inflation was at its minimum.

Question 8

Which of the following would understate the consumer price index?

Accepted Answer

A) Substitution bias. 
B) Deteriorating quality of products. 
C) Improving quality of products. 
D) Law of demand bias. 
A) Substitution bias. 
B) Deteriorating quality of products. 
C) Improving quality of products. 
D) Law of demand bias.

Question 9

According to the Australian Bureau of Statistics (ABS),any person who claims on an ABS survey that she/he is performing only unpaid household duties is:

Accepted Answer

A) retired. 
B) unemployed. 
C) re-employable. 
D) not a member of the labour force. 
A) retired. 
B) unemployed. 
C) re-employable. 
D) not a member of the labour force.

Question 10

When inflation is low and stable,firms:

Accepted Answer

A) can easily make judgments about relative real rates of return on alternative investments. 
B) can easily make judgments about relative nominal rates of return on alternative investments. 
C) tend to invest more in real estate. 
D) tend to invest more in tax effective investments 
A) can easily make judgments about relative real rates of return on alternative investments. 
B) can easily make judgments about relative nominal rates of return on alternative investments. 
C) tend to invest more in real estate. 
D) tend to invest more in tax effective investments

Question 11

The consumer price index is also called:

Accepted Answer

A) the price of living index. 
B) the cost of surviving index. 
C) the cost of living index. 
D) the price of underemployment. 
A) the price of living index. 
B) the cost of surviving index. 
C) the cost of living index. 
D) the price of underemployment.

Question 12

Deflation is defined as a decrease in:

Accepted Answer

A) the real wages of workers. 
B) real GDP compared with the CPI. 
C) the average price level of goods and services in the economy. 
D) the price of all consumer products. 
A) the real wages of workers. 
B) real GDP compared with the CPI. 
C) the average price level of goods and services in the economy. 
D) the price of all consumer products.

Question 13

Suppose the inflation rate is 10 per cent and that you deposit $10 000 in the bank that yields 8 per cent nominal interest rate.Your real interest rate is:

Accepted Answer

A) 0% 
B) 2% 
C) -2% 
D) 8% 
A) 0% 
B) 2% 
C) -2% 
D) 8%

Question 14

Hyperinflation can result in a shift in investment away from foreign currency and real estate.

Accepted Answer

A) True 
 B)False

Question 15

Hyperinflation causes:

Accepted Answer

A) nominal interest rates to fall, leading to unproductive investment decisions by firms. 
B) real interest rates to fluctuate, leading to uncertainty in investment decisions. 
C) nominal interest rates to rise, but leaves the real interest rate constant. 
D) nominal interest rates to fluctuate, leading to lower nominal wages. 
A) nominal interest rates to fall, leading to unproductive investment decisions by firms. 
B) real interest rates to fluctuate, leading to uncertainty in investment decisions. 
C) nominal interest rates to rise, but leaves the real interest rate constant. 
D) nominal interest rates to fluctuate, leading to lower nominal wages.

Question 16

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 250.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. 
A) has increased. 
B) has decreased. 
C) has remained unchanged. 
D) is indeterminate.

Question 17

During the 1970s,the Organization of Petroleum Exporting Countries (OPEC)sharply increased the price of oil which triggered higher inflation rates in Australia.This type of inflation is best classified as:

Accepted Answer

A) pseudo-inflation. 
B) demand-pull inflation. 
C) cost-push inflation. 
D) hyperinflation. 
A) pseudo-inflation. 
B) demand-pull inflation. 
C) cost-push inflation. 
D) hyperinflation.

Question 18

Part-time workers who want full-time work are counted as only partially employed in the official unemployment statistics.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 13-1 Consumer price index
  
-As shown in Exhibit 13-1,the rate of inflation for Year 4 is:

Accepted Answer

A) 5 per cent. 
B) 10 per cent. 
C) 19 per cent. 
D) 20 per cent. 
E) 25 per cent. 
A) 5 per cent. 
B) 10 per cent. 
C) 19 per cent. 
D) 20 per cent. 
E) 25 per cent.

Question 20

A worker who wants to work,but who has given up searching for work because he/she believes there will be no offer is called:

Accepted Answer

A) a depressed worker. 
B) a retired worker. 
C) a discouraged worker. 
D) an upset worker. 
A) a depressed worker. 
B) a retired worker. 
C) a discouraged worker. 
D) an upset worker.

During the 1990s,which of the following countries had the highest unemployment rate?

Which of the following can create demand-pull inflation?

Demand-pull inflation:

Which of the following formulas is correct?

Unemployment is:

When inflation is relatively high and unstable,firms tend to invest more in _ and less in _.

Price indexes like the CPI are calculated using a base year.The term 'base year' refers to:

Which of the following would understate the consumer price index?

According to the Australian Bureau of Statistics (ABS),any person who claims on an ABS survey that she/he is performing only unpaid household duties is:

When inflation is low and stable,firms:

The consumer price index is also called:

Deflation is defined as a decrease in:

Suppose the inflation rate is 10 per cent and that you deposit $10 000 in the bank that yields 8 per cent nominal interest rate.Your real interest rate is:

Hyperinflation can result in a shift in investment away from foreign currency and real estate.

Hyperinflation causes:

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 250.In terms of this asset,the purchasing power of this person:

During the 1970s,the Organization of Petroleum Exporting Countries (OPEC)sharply increased the price of oil which triggered higher inflation rates in Australia.This type of inflation is best classified as:

Part-time workers who want full-time work are counted as only partially employed in the official unemployment statistics.

Exhibit 13-1 Consumer price index -As shown in Exhibit 13-1,the rate of inflation for Year 4 is:

A worker who wants to work,but who has given up searching for work because he/she believes there will be no offer is called:

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

During the 1990s,which of the following countries had the highest unemployment rate?

Which of the following can create demand-pull inflation?

Demand-pull inflation:

Which of the following formulas is correct?

Unemployment is:

When inflation is relatively high and unstable,firms tend to invest more in _____ and less in _____.

Price indexes like the CPI are calculated using a base year.The term 'base year' refers to:

Which of the following would understate the consumer price index?

According to the Australian Bureau of Statistics (ABS),any person who claims on an ABS survey that she/he is performing only unpaid household duties is:

When inflation is low and stable,firms:

The consumer price index is also called:

Deflation is defined as a decrease in:

Suppose the inflation rate is 10 per cent and that you deposit $10 000 in the bank that yields 8 per cent nominal interest rate.Your real interest rate is:

Hyperinflation can result in a shift in investment away from foreign currency and real estate.

Hyperinflation causes:

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 250.In terms of this asset,the purchasing power of this person:

During the 1970s,the Organization of Petroleum Exporting Countries (OPEC)sharply increased the price of oil which triggered higher inflation rates in Australia.This type of inflation is best classified as:

Part-time workers who want full-time work are counted as only partially employed in the official unemployment statistics.

Exhibit 13-1 Consumer price index -As shown in Exhibit 13-1,the rate of inflation for Year 4 is:

A worker who wants to work,but who has given up searching for work because he/she believes there will be no offer is called:

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

When inflation is relatively high and unstable,firms tend to invest more in _ and less in _.