Question 1

The quantity and quality of data used to measure inflation varies across countries because of _____

Accepted Answer

A)  the sampling of fewer products and measuring prices outside the capital city. 
B)  the sampling of fewer products and measuring prices only in the capital city. 
C)  the sampling of more products and measuring prices outside the capital city. 
D)  the sampling of more products and measuring prices only in the capital city. 
E)  the fact that inflation is not an important measure in some countries. 
A)  the sampling of fewer products and measuring prices outside the capital city. 
B)  the sampling of fewer products and measuring prices only in the capital city. 
C)  the sampling of more products and measuring prices outside the capital city. 
D)  the sampling of more products and measuring prices only in the capital city. 
E)  the fact that inflation is not an important measure in some countries.

Question 2

Which of the following periods in U.S. economic history was not characterized by inflation?

Accepted Answer

A)  1917-1920 
B)  1929-1933 and 2009 
C)  1947 
D)  1978-1980 
E)  1980-1989 
A)  1917-1920 
B)  1929-1933 and 2009 
C)  1947 
D)  1978-1980 
E)  1980-1989

Question 3

In periods of high inflation, _____

Accepted Answer

A)  people want to hold as much money as possible. 
B)  the purchasing power of money decreases. 
C)  the real interest rate exceeds the nominal interest rate. 
D)  the nominal interest rates are likely to be low. 
E)  the nominal interest rate equals the real interest rate. 
A)  people want to hold as much money as possible. 
B)  the purchasing power of money decreases. 
C)  the real interest rate exceeds the nominal interest rate. 
D)  the nominal interest rates are likely to be low. 
E)  the nominal interest rate equals the real interest rate.

Question 4

Uncertainty about inflation _____

Accepted Answer

A)  shifts the attention of business managers away from exchange rate movements and toward concerns about productivity. 
B)  reduces the difficulty of making international business decisions. 
C)  make suppliers link the selling prices of their goods to the overall inflation rate. 
D)  undermines money's importance as a link between the present and the future. 
E)  makes contracts easier to negotiate. 
A)  shifts the attention of business managers away from exchange rate movements and toward concerns about productivity. 
B)  reduces the difficulty of making international business decisions. 
C)  make suppliers link the selling prices of their goods to the overall inflation rate. 
D)  undermines money's importance as a link between the present and the future. 
E)  makes contracts easier to negotiate.

Question 5

Suppose there is a 5 percent increase in the nominal wages of workers in an economy. The annual rate of inflation in the economy is about 2 percent. Which of the following is true?

Accepted Answer

A)  Real wages would fall by about 10 percent. 
B)  Real wages would increase by about 20 percent. 
C)  Real wages would fall by about 25 percent. 
D)  Real wages would increase by about 50 percent. 
E)  Real wages would increase by about 3 percent. 
A)  Real wages would fall by about 10 percent. 
B)  Real wages would increase by about 20 percent. 
C)  Real wages would fall by about 25 percent. 
D)  Real wages would increase by about 50 percent. 
E)  Real wages would increase by about 3 percent.

Question 6

The consumer price index measures _____

Accepted Answer

A)  the cost of all goods and services produced in the U.S. economy. 
B)  the average change over time in the selling prices received by domestic producers for their output. 
C)  the cost of a fixed market basket of consumer goods and services produced in the U.S. economy. 
D)  the ratio of an economy's nominal GDP to its real GDP. 
E)  the income distribution of an economy. 
A)  the cost of all goods and services produced in the U.S. economy. 
B)  the average change over time in the selling prices received by domestic producers for their output. 
C)  the cost of a fixed market basket of consumer goods and services produced in the U.S. economy. 
D)  the ratio of an economy's nominal GDP to its real GDP. 
E)  the income distribution of an economy.

Question 7

An individual with a Ph.D. in physics who can find employment only in a pizza parlor would be considered _____

Accepted Answer

A)  discouraged. 
B)  underemployed. 
C)  overemployed. 
D)  voluntarily unemployed. 
E)  long-term unemployed. 
A)  discouraged. 
B)  underemployed. 
C)  overemployed. 
D)  voluntarily unemployed. 
E)  long-term unemployed.

Question 8

Which of the following factors makes the official unemployment rate an overstatement of the actual level of unemployment in an economy?

Accepted Answer

A)  inclusion of discouraged workers 
B)  inclusion of those only working part time 
C)  inclusion of those who are overqualified for their current jobs 
D)  inclusion of those who are marginally attached to the labor force 
E)  inclusion of those who pretend to look for work in order to qualify for welfare programs 
A)  inclusion of discouraged workers 
B)  inclusion of those only working part time 
C)  inclusion of those who are overqualified for their current jobs 
D)  inclusion of those who are marginally attached to the labor force 
E)  inclusion of those who pretend to look for work in order to qualify for welfare programs

Question 9

An increase in the demand for loanable funds, other things constant, will increase the interest rate.

Accepted Answer

A) True 
 B)False

Question 10

Since the end of World War II, the U.S. price level has _____

Accepted Answer

A)  increased tenfold. 
B)  increased by an average of 10 percent each year. 
C)  increased and decreased with equal regularity, leaving the price level almost constant. 
D)  increased by 50 percent. 
E)  doubled. 
A)  increased tenfold. 
B)  increased by an average of 10 percent each year. 
C)  increased and decreased with equal regularity, leaving the price level almost constant. 
D)  increased by 50 percent. 
E)  doubled.

Question 11

Since World War II, the consumer price index (CPI) has increased by an average of _____

Accepted Answer

A)  1.4 percent per year. 
B)  2.1 percent per year. 
C)  6.4 percent per year. 
D)  5.6 percent per year. 
E)  3.5 percent per year. 
A)  1.4 percent per year. 
B)  2.1 percent per year. 
C)  6.4 percent per year. 
D)  5.6 percent per year. 
E)  3.5 percent per year.

Question 12

A major cost of unemployment is lost production.

Accepted Answer

A) True 
 B)False

Question 13

A person whose skills do not match available job openings is considered frictionally unemployed.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following people would be counted among the unemployed?

Accepted Answer

A)  a new college graduate selling newspaper advertisements part time while looking for other work 
B)  a new college graduate selling newspaper advertisements full time while looking for other work 
C)  a new college graduate selling newspaper advertisements part time and not looking for other work 
D)  a new college graduate who gets tired of selling newspaper advertisements and takes off on a motorcycle trip to Alaska 
E)  a new college graduate not qualified for any of the jobs available in his small town 
A)  a new college graduate selling newspaper advertisements part time while looking for other work 
B)  a new college graduate selling newspaper advertisements full time while looking for other work 
C)  a new college graduate selling newspaper advertisements part time and not looking for other work 
D)  a new college graduate who gets tired of selling newspaper advertisements and takes off on a motorcycle trip to Alaska 
E)  a new college graduate not qualified for any of the jobs available in his small town

Question 15

A decrease in the interest rate, other things constant, will _____

Accepted Answer

A)  shift the demand for loanable funds curve to the right. 
B)  shift the demand for loanable funds curve to the left. 
C)  increase the quantity of loanable funds demanded. 
D)  increase the quantity of loanable funds supplied. 
E)  shift the supply of loanable funds curve to the right. 
A)  shift the demand for loanable funds curve to the right. 
B)  shift the demand for loanable funds curve to the left. 
C)  increase the quantity of loanable funds demanded. 
D)  increase the quantity of loanable funds supplied. 
E)  shift the supply of loanable funds curve to the right.

Question 16

A worker would be hurt least by inflation when the _____

Accepted Answer

A)  worker anticipates inflation and increases savings at the bank. 
B)  worker is protected by a cost-of-living adjustment clause in an employment contract. 
C)  price level increases but at a decreasing rate. 
D)  worker is protected by fixed annual increases in wages and benefits in an employment contract. 
E)  government increases the level of social security retirement benefits to correct for the effects of unanticipated inflation. 
A)  worker anticipates inflation and increases savings at the bank. 
B)  worker is protected by a cost-of-living adjustment clause in an employment contract. 
C)  price level increases but at a decreasing rate. 
D)  worker is protected by fixed annual increases in wages and benefits in an employment contract. 
E)  government increases the level of social security retirement benefits to correct for the effects of unanticipated inflation.

Question 17

Which of the following decades was characterized by the highest inflation rate in the United States?

Accepted Answer

A)  the 1920s 
B)  the 1930s 
C)  the 1950s 
D)  the 1970s 
E)  the 1960s 
A)  the 1920s 
B)  the 1930s 
C)  the 1950s 
D)  the 1970s 
E)  the 1960s

Question 18

The best example of a frictionally unemployed worker is one who _____

Accepted Answer

A)  has been looking for work for 27 weeks or longer. 
B)  is laid off during a recessionary period in an economy. 
C)  is in the process of voluntarily switching jobs. 
D)  is discouraged and not actively seeking work. 
E)  cannot find a job that matches with his skills. 
A)  has been looking for work for 27 weeks or longer. 
B)  is laid off during a recessionary period in an economy. 
C)  is in the process of voluntarily switching jobs. 
D)  is discouraged and not actively seeking work. 
E)  cannot find a job that matches with his skills.

Question 19

Which of the following does not exist when an economy is operating at full employment?

Accepted Answer

A)  an unemployment rate of 5 percent or 6 percent 
B)  seasonal unemployment 
C)  structural unemployment 
D)  cyclical unemployment 
E)  frictional unemployment 
A)  an unemployment rate of 5 percent or 6 percent 
B)  seasonal unemployment 
C)  structural unemployment 
D)  cyclical unemployment 
E)  frictional unemployment

Question 20

People who are not currently employed but say they want a job are counted as unemployed only if they _____

Accepted Answer

A)  have previously held a job. 
B)  are actively seeking employment. 
C)  are discouraged workers. 
D)  are between 16 and 65 years of age. 
E)  are willing to accept any offer of employment. 
A)  have previously held a job. 
B)  are actively seeking employment. 
C)  are discouraged workers. 
D)  are between 16 and 65 years of age. 
E)  are willing to accept any offer of employment.

The quantity and quality of data used to measure inflation varies across countries because of _____

Which of the following periods in U.S. economic history was not characterized by inflation?

In periods of high inflation, _____

Uncertainty about inflation _____

Suppose there is a 5 percent increase in the nominal wages of workers in an economy. The annual rate of inflation in the economy is about 2 percent. Which of the following is true?

The consumer price index measures _____

An individual with a Ph.D. in physics who can find employment only in a pizza parlor would be considered _____

Which of the following factors makes the official unemployment rate an overstatement of the actual level of unemployment in an economy?

An increase in the demand for loanable funds, other things constant, will increase the interest rate.

Since the end of World War II, the U.S. price level has _____

Since World War II, the consumer price index (CPI) has increased by an average of _____

A major cost of unemployment is lost production.

A person whose skills do not match available job openings is considered frictionally unemployed.

Which of the following people would be counted among the unemployed?

A decrease in the interest rate, other things constant, will _____

A worker would be hurt least by inflation when the _____

Which of the following decades was characterized by the highest inflation rate in the United States?

The best example of a frictionally unemployed worker is one who _____

Which of the following does not exist when an economy is operating at full employment?

People who are not currently employed but say they want a job are counted as unemployed only if they _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 7: Unemployment and Inflation.

The quantity and quality of data used to measure inflation varies across countries because of _____

Which of the following periods in U.S. economic history was not characterized by inflation?

In periods of high inflation, _____

Uncertainty about inflation _____

Suppose there is a 5 percent increase in the nominal wages of workers in an economy. The annual rate of inflation in the economy is about 2 percent. Which of the following is true?

The consumer price index measures _____

An individual with a Ph.D. in physics who can find employment only in a pizza parlor would be considered _____

Which of the following factors makes the official unemployment rate an overstatement of the actual level of unemployment in an economy?

An increase in the demand for loanable funds, other things constant, will increase the interest rate.

Since the end of World War II, the U.S. price level has _____

Since World War II, the consumer price index (CPI) has increased by an average of _____

A major cost of unemployment is lost production.

A person whose skills do not match available job openings is considered frictionally unemployed.

Which of the following people would be counted among the unemployed?

A decrease in the interest rate, other things constant, will _____

A worker would be hurt least by inflation when the _____

Which of the following decades was characterized by the highest inflation rate in the United States?

The best example of a frictionally unemployed worker is one who _____

Which of the following does not exist when an economy is operating at full employment?

People who are not currently employed but say they want a job are counted as unemployed only if they _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters