Question 1

Brian Vargo,an auto repair mechanic who remains unemployed because he refuses to work for less than $1,000 an hour,is

Accepted Answer

A) counted as part of the labor force. 
B) considered frictionally unemployed. 
C) an underemployed worker. 
D) not counted as part of the labor force. 
E) considered as productively active. 
A) counted as part of the labor force. 
B) considered frictionally unemployed. 
C) an underemployed worker. 
D) not counted as part of the labor force. 
E) considered as productively active.

Question 2

Which of the following is not a way to become officially unemployed?

Accepted Answer

A) quit your job to look for a better job in another part of the country 
B) be fired from your job 
C) look for a job after being out of the labor force for five years 
D) retire 
E) look for a job only for the period in the summer that you are out of school 
A) quit your job to look for a better job in another part of the country 
B) be fired from your job 
C) look for a job after being out of the labor force for five years 
D) retire 
E) look for a job only for the period in the summer that you are out of school

Question 3

The labor force participation rate is defined as the number of

Accepted Answer

A) unemployed individuals plus employed individuals divided by the number of individuals in the working-age population. 
B) employed individuals divided by the number of individuals in the working-age population. 
C) unemployed individuals plus employed individuals divided by the number of employed individuals. 
D) employed individuals divided by the number of individuals employed plus the number of unemployed individuals. 
A) unemployed individuals plus employed individuals divided by the number of individuals in the working-age population. 
B) employed individuals divided by the number of individuals in the working-age population. 
C) unemployed individuals plus employed individuals divided by the number of employed individuals. 
D) employed individuals divided by the number of individuals employed plus the number of unemployed individuals.

Question 4

Which scenario will most likely happen as employers and employees increase their usage of the Internet in the job search process?

Accepted Answer

A) Job-related information will become more costly and cyclical unemployment will go up. 
B) Job-related information will become less costly and frictional unemployment will go up. 
C) Job-related information will become more costly and structural unemployment will go down. 
D) Job-related information will become less costly and frictional unemployment will go down. 
A) Job-related information will become more costly and cyclical unemployment will go up. 
B) Job-related information will become less costly and frictional unemployment will go up. 
C) Job-related information will become more costly and structural unemployment will go down. 
D) Job-related information will become less costly and frictional unemployment will go down.

Question 5

The unemployment rate is defined as the number of

Accepted Answer

A) unemployed individuals divided by the number of employed individuals. 
B) employed individuals divided by the number of individuals in the working-age population. 
C) unemployed individuals divided by the number of individuals in the working-age population. 
D) unemployed individuals divided by the number of individuals employed plus the number of unemployed. 
A) unemployed individuals divided by the number of employed individuals. 
B) employed individuals divided by the number of individuals in the working-age population. 
C) unemployed individuals divided by the number of individuals in the working-age population. 
D) unemployed individuals divided by the number of individuals employed plus the number of unemployed.

Question 6

Full employment is the rate of employment that results when

Accepted Answer

A) all the labor resources of the economy are employed full time. 
B) cyclical unemployment has reached its maximum. 
C) everybody who wants a job can find one. 
D) only frictional and structural unemployment are present. 
A) all the labor resources of the economy are employed full time. 
B) cyclical unemployment has reached its maximum. 
C) everybody who wants a job can find one. 
D) only frictional and structural unemployment are present.

Question 7

The natural rate of unemployment

Accepted Answer

A) is fixed;it cannot be changed with public policy. 
B) fluctuates substantially over the business cycle. 
C) is associated with the economy's maximum sustainable output rate. 
D) declines when youthful workers (under age 25)become a larger proportion of the labor force. 
A) is fixed;it cannot be changed with public policy. 
B) fluctuates substantially over the business cycle. 
C) is associated with the economy's maximum sustainable output rate. 
D) declines when youthful workers (under age 25)become a larger proportion of the labor force.

Question 8

At the beginning of a year,decision makers expect the general level of prices to increase at a 3 percent annual rate.The CPI increases from 150 to 154.5 during the year;this is an example of

Accepted Answer

A) an inflation rate that is equal to 4.5 percent. 
B) an unanticipated increase in the general level of prices. 
C) an increase in the general level of prices that was accurately anticipated. 
D) an inflation rate that is less than what people anticipated. 
A) an inflation rate that is equal to 4.5 percent. 
B) an unanticipated increase in the general level of prices. 
C) an increase in the general level of prices that was accurately anticipated. 
D) an inflation rate that is less than what people anticipated.

Question 9

Sean would like to work as an accountant full time.A full-time position is not available,however,so he must accept a part-time job working 15 hours per week.The Bureau of Labor Statistics would categorize Sean as

Accepted Answer

A) employed. 
B) unemployed. 
C) both employed and unemployed. 
D) not in the labor force. 
A) employed. 
B) unemployed. 
C) both employed and unemployed. 
D) not in the labor force.

Question 10

Which of the following is a true statement?

Accepted Answer

A) The concept of potential output might be thought of as the maximum sustainable output of the economy under normal circumstances. 
B) Actual output cannot exceed potential output,even during a boom. 
C) When the actual rate of unemployment exceeds the natural rate,the actual output of the economy will rise above its potential. 
D) Potential output represents the absolute maximum level of production. 
A) The concept of potential output might be thought of as the maximum sustainable output of the economy under normal circumstances. 
B) Actual output cannot exceed potential output,even during a boom. 
C) When the actual rate of unemployment exceeds the natural rate,the actual output of the economy will rise above its potential. 
D) Potential output represents the absolute maximum level of production.

Question 11

Which of the following is true?

Accepted Answer

A) High benefit payments to unemployed workers will tend to increase the rate of unemployment. 
B) If a system of personal savings accounts replaced the current unemployment benefit system,the unemployment rate would fall to zero. 
C) The rate of unemployment in the large European economies has been persistently lower than that of the United States due to their more generous unemployment benefits. 
D) Under the current unemployment insurance system,benefits replace about 90 percent of the typical worker's prior pretax earnings. 
A) High benefit payments to unemployed workers will tend to increase the rate of unemployment. 
B) If a system of personal savings accounts replaced the current unemployment benefit system,the unemployment rate would fall to zero. 
C) The rate of unemployment in the large European economies has been persistently lower than that of the United States due to their more generous unemployment benefits. 
D) Under the current unemployment insurance system,benefits replace about 90 percent of the typical worker's prior pretax earnings.

Question 12

A country with a civilian population of 120,000 (all over age 16)has 100,000 employed and 10,000 unemployed persons,of which 5,000 are frictionally unemployed and another 3,000 structurally unemployed.
a.What is the size of the labor force?
b.What is the actual unemployment rate?
c.What is the labor force participation rate?
d.What is the employment/population ratio?
e.What is the natural rate of unemployment?
f.Is this economy in a recession or a boom? Explain.

Accepted Answer

a.110,000
b.9.09 percent
c.91.

Question 13

Describe two ways that public policy could reduce the natural rate of unemployment.

Accepted Answer

Since one source of unemployment is the

Question 14

During periods when the inflation rate fluctuates widely,

Accepted Answer

A) all relative prices increase at the same rate,leaving money prices constant 
B) economic efficiency increases because decision makers pay closer attention to changes in money prices 
C) uncertainty about changes in relative prices causes a decrease in economic efficiency 
D) all money prices increase at the same rate,leaving relative prices constant 
A) all relative prices increase at the same rate,leaving money prices constant 
B) economic efficiency increases because decision makers pay closer attention to changes in money prices 
C) uncertainty about changes in relative prices causes a decrease in economic efficiency 
D) all money prices increase at the same rate,leaving relative prices constant

Question 15

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980,while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2011,then

Accepted Answer

A) real rates were higher in 2011. 
B) real rates were higher in 1980. 
C) credit was more expensive in 1980. 
D) credit was cheaper in 2011 because the nominal rate was lower. 
A) real rates were higher in 2011. 
B) real rates were higher in 1980. 
C) credit was more expensive in 1980. 
D) credit was cheaper in 2011 because the nominal rate was lower.

Question 16

The natural rate of unemployment equals

Accepted Answer

A) the sum of frictional and structural unemployment. 
B) frictional unemployment. 
C) full employment minus all those unemployed. 
D) the sum of frictional and cyclical unemployment. 
A) the sum of frictional and structural unemployment. 
B) frictional unemployment. 
C) full employment minus all those unemployed. 
D) the sum of frictional and cyclical unemployment.

Question 17

The economy is considered to be at full employment when

Accepted Answer

A) the actual rate of unemployment is less than the natural rate. 
B) the leading economic indicators are unchanged for two consecutive quarters. 
C) structural unemployment is zero. 
D) frictional plus structural unemployment is less than the natural rate. 
E) the rate of cyclical unemployment is zero. 
A) the actual rate of unemployment is less than the natural rate. 
B) the leading economic indicators are unchanged for two consecutive quarters. 
C) structural unemployment is zero. 
D) frictional plus structural unemployment is less than the natural rate. 
E) the rate of cyclical unemployment is zero.

Question 18

Actual GDP

Accepted Answer

A) is greater than potential GDP during recessions. 
B) is less than potential GDP during recessions. 
C) and potential GDP have identical meanings. 
D) is equal to potential GDP during economic booms. 
A) is greater than potential GDP during recessions. 
B) is less than potential GDP during recessions. 
C) and potential GDP have identical meanings. 
D) is equal to potential GDP during economic booms.

Question 19

The actual rate of unemployment will generally

Accepted Answer

A) increase as an economy enters a recession. 
B) decrease as an economy enters a recession. 
C) fall below the natural rate of unemployment during a recession. 
D) do both a and c. 
A) increase as an economy enters a recession. 
B) decrease as an economy enters a recession. 
C) fall below the natural rate of unemployment during a recession. 
D) do both a and c.

Question 20

If the economy were at its potential output level,which of the following is not true?

Accepted Answer

A) The actual unemployment rate would equal the natural rate. 
B) There would be some cyclical unemployment. 
C) There would be some frictional unemployment. 
D) There would be some structural unemployment. 
A) The actual unemployment rate would equal the natural rate. 
B) There would be some cyclical unemployment. 
C) There would be some frictional unemployment. 
D) There would be some structural unemployment.

Exam 8: Economic Fluctuations, unemployment, and Inflation

Brian Vargo,an auto repair mechanic who remains unemployed because he refuses to work for less than $1,000 an hour,is

Which of the following is not a way to become officially unemployed?

The labor force participation rate is defined as the number of

Which scenario will most likely happen as employers and employees increase their usage of the Internet in the job search process?

The unemployment rate is defined as the number of

Full employment is the rate of employment that results when

The natural rate of unemployment

At the beginning of a year,decision makers expect the general level of prices to increase at a 3 percent annual rate.The CPI increases from 150 to 154.5 during the year;this is an example of

Sean would like to work as an accountant full time.A full-time position is not available,however,so he must accept a part-time job working 15 hours per week.The Bureau of Labor Statistics would categorize Sean as

Which of the following is a true statement?

Which of the following is true?

Describe two ways that public policy could reduce the natural rate of unemployment.

During periods when the inflation rate fluctuates widely,

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980,while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2011,then

The natural rate of unemployment equals

The economy is considered to be at full employment when

Actual GDP

The actual rate of unemployment will generally

If the economy were at its potential output level,which of the following is not true?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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