Question 1

Eliminating frictional unemployment would be good for the economy.

Accepted Answer

A) True 
 B)False

Question 2

The nominal interest rate equals the real interest rate ________ the inflation rate.

Accepted Answer

A) times 
B) divided by 
C) plus 
D) minus 
A) times 
B) divided by 
C) plus 
D) minus

Question 3

Nominal income is equal to real income if the CPI is less than 100.

Accepted Answer

A) True 
 B)False

Question 4

Describe the three types of unemployment.

Accepted Answer

Frictional unemployment is short-term un

Question 5

The GDP deflator is the best measure that reflects the prices of goods and services purchased by the typical household.

Accepted Answer

A) True 
 B)False

Question 6

Discuss the likely impact of each of the following on the unemployment rate:
a.The length of time workers are eligible to receive unemployment insurance payments is cut in half.
b.The government passes a law making labor unions illegal.
c.The minimum wage is raised by 50 percent.
d.The government funds an Internet site where companies can post job openings at no charge.

Accepted Answer

a. The unemployment rate will likely dec

Question 7

Minimum wage laws cause unemployment because the legal minimum wage is set

Accepted Answer

A) below the market wage, causing labor demand to be greater than labor supply. 
B) below the market wage, causing labor demand to be less than labor supply. 
C) above the market wage, causing labor demand to be greater than labor supply. 
D) above the market wage, causing labor demand to be less than labor supply. 
E) too low. 
A) below the market wage, causing labor demand to be greater than labor supply. 
B) below the market wage, causing labor demand to be less than labor supply. 
C) above the market wage, causing labor demand to be greater than labor supply. 
D) above the market wage, causing labor demand to be less than labor supply. 
E) too low.

Question 8

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed,the BLS estimates the unemployment rate in September 2011 would have ________ compared to the measured unemployment rate.

Accepted Answer

A) increased by more than 7 percentage points 
B) more than doubled 
C) decreased by less than 1 percentage point 
D) barely changed 
A) increased by more than 7 percentage points 
B) more than doubled 
C) decreased by less than 1 percentage point 
D) barely changed

Question 9

What is the natural rate of unemployment,and what types of unemployment constitute the natural rate of unemployment?

Accepted Answer

The natural rate of unemployment is the

Question 10

If inflation is completely anticipated

Accepted Answer

A) no one loses in the economy. 
B) borrowers lose in the economy. 
C) lenders lose in the economy. 
D) firms lose because they incur menu costs. 
A) no one loses in the economy. 
B) borrowers lose in the economy. 
C) lenders lose in the economy. 
D) firms lose because they incur menu costs.

Question 11

Workers laid off as a result of a recession suffer

Accepted Answer

A) frictional unemployment. 
B) structural unemployment. 
C) cyclical unemployment. 
D) seasonal unemployment. 
E) natural unemployment. 
A) frictional unemployment. 
B) structural unemployment. 
C) cyclical unemployment. 
D) seasonal unemployment. 
E) natural unemployment.

Question 12

If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket,then

Accepted Answer

A) changes in the CPI accurately reflect the true rate of inflation. 
B) changes in the CPI understate the true rate of inflation. 
C) changes in the CPI overstate the true rate of inflation. 
D) changes in the CPI are unrelated to the true rate of inflation. 
A) changes in the CPI accurately reflect the true rate of inflation. 
B) changes in the CPI understate the true rate of inflation. 
C) changes in the CPI overstate the true rate of inflation. 
D) changes in the CPI are unrelated to the true rate of inflation.

Question 13

Efficiency wage is another name for the minimum wage.

Accepted Answer

A) True 
 B)False

Question 14

Suppose you lend $1,000 at an interest rate of 10 percent over the next year.If the expected real interest rate at the beginning of the loan contract is 4 percent,then what rate of inflation over the upcoming year would be most beneficial to you as the lender? An inflation rate

Accepted Answer

A) equal to 0 percent. 
B) greater than 6 percent. 
C) equal to 6 percent. 
D) equal to 4 percent. 
A) equal to 0 percent. 
B) greater than 6 percent. 
C) equal to 6 percent. 
D) equal to 4 percent.

Question 15

Labor unions cause unemployment because the union contract wage is set

Accepted Answer

A) below the market wage, causing a shortage of labor. 
B) below the market wage, causing a surplus of labor. 
C) above the market wage, causing a surplus of labor. 
D) above the market wage, causing a shortage of labor. 
A) below the market wage, causing a shortage of labor. 
B) below the market wage, causing a surplus of labor. 
C) above the market wage, causing a surplus of labor. 
D) above the market wage, causing a shortage of labor.

Question 16

Which of the following is true about the consumer price index?

Accepted Answer

A) It accounts for people switching to goods whose prices have fallen. 
B) It assumes that consumers purchase the same amount of each product in the market basket each month. 
C) It frequently updates the price changes of new products added to the market basket, as these have a tendency to fall. 
D) It filters out the part of price increases that occurs because of quality improvements in products. 
A) It accounts for people switching to goods whose prices have fallen. 
B) It assumes that consumers purchase the same amount of each product in the market basket each month. 
C) It frequently updates the price changes of new products added to the market basket, as these have a tendency to fall. 
D) It filters out the part of price increases that occurs because of quality improvements in products.

Question 17

Table 13-11
 $$\begin{array} { | l | r | r | c | c | c | } 
\hline \text { Product } & \begin{array} { c } 
\text { Quantity } \
\text { (2005) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (2005) }
\end{array} & \begin{array} { c } 
\text { Expenditure } \
\text { (2005) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (2013) }
\end{array} & \begin{array} { c } 
\text { Expenditure (on } \
\text { base year } \
\text { quantities) (2013) }
\end{array} \
\hline \text { Hair cuts } & 6 & \$ 50 & \$ 300 & \$ 70 & \$ 420 \
\hline \text { Backpacks } & 4 & 25 & 100 & 30 & 120 \
\hline \text { Tacos } & 100 & 1 & 100 & 5 & 500 \
\hline \text { Total } & & & \$ 500 & & \$ 1,040 \
\hline
\end{array}$$
-Refer to Table 13-11.Suppose an economy has only three goods and the typical family purchases the amounts given in the table above.If 2005 is the base year,then what is the CPI for 2013?

Accepted Answer

A) 40.08 
B) 100 
C) 180 
D) 208 
A) 40.08 
B) 100 
C) 180 
D) 208

Question 18

Why would a firm pay efficiency wages?

Accepted Answer

An efficiency wage is a wage that is hig

Question 19

The Bureau of Labor Statistics has taken several steps to reduce the bias in the consumer price index.Which of the following is not one of the steps taken to reduce the bias?

Accepted Answer

A) using statistical methods to reduce the size of the quality bias 
B) updating the market basket every two years, rather than every 10 years 
C) incorporating substitutions by consumers when prices of specific products rise rapidly 
D) conducting a point-of-purchase survey to track where consumers actually make their purchases 
A) using statistical methods to reduce the size of the quality bias 
B) updating the market basket every two years, rather than every 10 years 
C) incorporating substitutions by consumers when prices of specific products rise rapidly 
D) conducting a point-of-purchase survey to track where consumers actually make their purchases

Question 20

Which of the following is an example of a worker experiencing cyclical unemployment?

Accepted Answer

A) A worker that changes jobs to move closer her family. 
B) An assembly line worker who loses his job because of automation. 
C) A freightliner employee that got laid off because of the recession of 2007-2009. 
D) A lifeguard who was hired during the summer season is laid off after summer is over. 
E) A worker quits his job because he does not get along with his boss. 
A) A worker that changes jobs to move closer her family. 
B) An assembly line worker who loses his job because of automation. 
C) A freightliner employee that got laid off because of the recession of 2007-2009. 
D) A lifeguard who was hired during the summer season is laid off after summer is over. 
E) A worker quits his job because he does not get along with his boss.

Eliminating frictional unemployment would be good for the economy.

The nominal interest rate equals the real interest rate ________ the inflation rate.

Nominal income is equal to real income if the CPI is less than 100.

Describe the three types of unemployment.

The GDP deflator is the best measure that reflects the prices of goods and services purchased by the typical household.

Minimum wage laws cause unemployment because the legal minimum wage is set

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed,the BLS estimates the unemployment rate in September 2011 would have ________ compared to the measured unemployment rate.

What is the natural rate of unemployment,and what types of unemployment constitute the natural rate of unemployment?

If inflation is completely anticipated

Workers laid off as a result of a recession suffer

If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket,then

Efficiency wage is another name for the minimum wage.

Suppose you lend $1,000 at an interest rate of 10 percent over the next year.If the expected real interest rate at the beginning of the loan contract is 4 percent,then what rate of inflation over the upcoming year would be most beneficial to you as the lender? An inflation rate

Labor unions cause unemployment because the union contract wage is set

Which of the following is true about the consumer price index?

Why would a firm pay efficiency wages?

The Bureau of Labor Statistics has taken several steps to reduce the bias in the consumer price index.Which of the following is not one of the steps taken to reduce the bias?

Which of the following is an example of a worker experiencing cyclical unemployment?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 13: Unemployment and Inflation

Eliminating frictional unemployment would be good for the economy.

The nominal interest rate equals the real interest rate ________ the inflation rate.

Nominal income is equal to real income if the CPI is less than 100.

Describe the three types of unemployment.

The GDP deflator is the best measure that reflects the prices of goods and services purchased by the typical household.

Minimum wage laws cause unemployment because the legal minimum wage is set

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed,the BLS estimates the unemployment rate in September 2011 would have ________ compared to the measured unemployment rate.

What is the natural rate of unemployment,and what types of unemployment constitute the natural rate of unemployment?

If inflation is completely anticipated

Workers laid off as a result of a recession suffer

If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket,then

Efficiency wage is another name for the minimum wage.

Suppose you lend $1,000 at an interest rate of 10 percent over the next year.If the expected real interest rate at the beginning of the loan contract is 4 percent,then what rate of inflation over the upcoming year would be most beneficial to you as the lender? An inflation rate

Labor unions cause unemployment because the union contract wage is set

Which of the following is true about the consumer price index?

Why would a firm pay efficiency wages?

The Bureau of Labor Statistics has taken several steps to reduce the bias in the consumer price index.Which of the following is not one of the steps taken to reduce the bias?

Which of the following is an example of a worker experiencing cyclical unemployment?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters