Question 1

The natural rate of unemployment consists of frictional unemployment plus structural unemployment.

Accepted Answer

A) True 
 B)False

Question 2

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

Accepted Answer

A) True 
 B)False

Question 3

An efficiency wage

Accepted Answer

A) is higher than the market wage and tends to increase productivity. 
B) is lower than the market wage and tends to increase productivity. 
C) is higher than the market wage and tends to decrease productivity. 
D) is lower than the market wage and tends to decrease productivity. 
A) is higher than the market wage and tends to increase productivity. 
B) is lower than the market wage and tends to increase productivity. 
C) is higher than the market wage and tends to decrease productivity. 
D) is lower than the market wage and tends to decrease productivity.

Question 4

The "new product bias" in the consumer price index refers to the idea that

Accepted Answer

A) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers. 
B) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers. 
C) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers. 
D) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers. 
A) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers. 
B) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers. 
C) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers. 
D) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers.

Question 5

Table 13-22
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal Average Hourly } \
\text { Earnings }
\end{array} & \begin{array} { c } 
\text { CPI } \
( \mathbf { 1 9 8 2 - 1 9 8 4 } = \mathbf { 1 0 0 } )
\end{array} \
\hline 2011 & \$ 10 & 100 \
\hline 2012 & 11 & 105 \
\hline 2013 & 12 & 110 \
\hline
\end{array}$$
-Refer to Table 13-22.Using the above table,calculate real average hourly earnings for 2011,2012,and 2013.Calculate the rate of growth of real average hourly earnings from 2012 to 2013.

Accepted Answer

Real average hourly earnings in 2011 are

Question 6

Table 13-5
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \text { CPI } \
\hline 2012 & 207 \
\hline 2013 & 215 \
\hline
\end{array}$$
-Refer to Table 13-5.Consider the following values of the consumer price index for 2012 and 2013.The inflation rate for 2013 was equal to

Accepted Answer

A) 215 percent. 
B) 21.5 percent. 
C) 8.0 percent. 
D) 3.9 percent. 
A) 215 percent. 
B) 21.5 percent. 
C) 8.0 percent. 
D) 3.9 percent.

Question 7

Which of the following describes actual trends in the U.S.labor force participation rate?

Accepted Answer

A) The labor force participation rate of adult men has risen since 1950. 
B) The labor force participation rate of adult women has fallen since 1950. 
C) The labor force participation rate of adult men not in school, but too young to retire has risen since 1950. 
D) The labor force participation rate of adult women has risen since 1950. 
E) The labor force participation rate of all adults has fallen since 1950. 
A) The labor force participation rate of adult men has risen since 1950. 
B) The labor force participation rate of adult women has fallen since 1950. 
C) The labor force participation rate of adult men not in school, but too young to retire has risen since 1950. 
D) The labor force participation rate of adult women has risen since 1950. 
E) The labor force participation rate of all adults has fallen since 1950.

Question 8

Table 13-19
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal Average Hourly } \
\text { Earnings }
\end{array} & \begin{array} { c } 
\text { CPI } \
( \mathbf { 1 9 8 2 - 1 9 8 4 } = \mathbf { 1 0 0 } )
\end{array} \
\hline 2011 & \$ 10 & 100 \
\hline 2012 & 10 & 105 \
\hline 2013 & 12 & 110\
\hline
\end{array}$$
-Refer to Table 13-19.Looking at the table above,what is the approximate rate of growth of real average hourly earnings from 2011 to 2012?

Accepted Answer

A) 15% 
B) 4.4% 
C) -1.5% 
D) -4.8% 
A) 15% 
B) 4.4% 
C) -1.5% 
D) -4.8%

Question 9

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment,but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment.The official unemployment rate as calculated by the U.S.Bureau of Labor would equal

Accepted Answer

A) (20/60)× 100. 
B) (20/80)× 100. 
C) (30/80)× 100. 
D) (20/100)× 100. 
A) (20/60)× 100. 
B) (20/80)× 100. 
C) (30/80)× 100. 
D) (20/100)× 100.

Question 10

Suppose your grandfather earned a salary of $12,000 in 1964.If the CPI is 31 in 1964 and 219 in 2013,then the value of your grandfather's salary in 2013 dollars is approximately

Accepted Answer

A) $84,775. 
B) $63,830. 
C) $37,200. 
D) $26,280. 
A) $84,775. 
B) $63,830. 
C) $37,200. 
D) $26,280.

Question 11

The increased generosity of unemployment insurance programs in Canada as compared to the United States should

Accepted Answer

A) decrease the duration of unemployment in Canada as compared to the United States. 
B) increase the duration of unemployment in Canada as compared to the United States. 
C) have no impact on the duration of unemployment in Canada. 
D) raise the duration of unemployment in the United States. 
A) decrease the duration of unemployment in Canada as compared to the United States. 
B) increase the duration of unemployment in Canada as compared to the United States. 
C) have no impact on the duration of unemployment in Canada. 
D) raise the duration of unemployment in the United States.

Question 12

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

Accepted Answer

A) unemployment rate 
B) discouraged-worker ratio 
C) labor force participation rate 
D) the ratio of minimum wage to inflation 
A) unemployment rate 
B) discouraged-worker ratio 
C) labor force participation rate 
D) the ratio of minimum wage to inflation

Question 13

The real interest rate equals the nominal 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 14

Figure 13-1
  
-Refer to Figure 13-1.Based on the graph of the labor market above,if a minimum wage is set at $5 per hour,which of the following will occur?

Accepted Answer

A) The unemployment rate will rise. 
B) The unemployment rate will fall. 
C) The level of unemployment will rise, but the percentage of the labor force unemployed will not change. 
D) None of the above will occur. 
A) The unemployment rate will rise. 
B) The unemployment rate will fall. 
C) The level of unemployment will rise, but the percentage of the labor force unemployed will not change. 
D) None of the above will occur.

Question 15

The U.S.unemployment insurance program

Accepted Answer

A) increases the amount of time the unemployed spend searching for a job. 
B) decreases the level of frictional unemployment. 
C) pays the unemployed a benefit equal to twice the average wage. 
D) eliminates structural unemployment. 
A) increases the amount of time the unemployed spend searching for a job. 
B) decreases the level of frictional unemployment. 
C) pays the unemployed a benefit equal to twice the average wage. 
D) eliminates structural unemployment.

Question 16

Table 13-14
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal Average } \
\text { Hourly Earnings }
\end{array} & \begin{array} { c } 
\text { CPI } ( \mathbf { 1 9 8 2 - 1 9 8 4 } = \
\mathbf { 1 0 0 } )
\end{array} \
\hline 1965 & \$ 2.65 & 32 \
\hline 2010 & 22.59 & 219 \
\hline
\end{array}$$ 
The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 13-14.The percentage change in real average earnings from 1965 to 2010 equals

Accepted Answer

A) 2.0 percent 
B) 19.7 percent. 
C) 24.5 percent. 
D) 80.3 percent. 
A) 2.0 percent 
B) 19.7 percent. 
C) 24.5 percent. 
D) 80.3 percent.

Question 17

If cyclical unemployment is eliminated in the economy,then

Accepted Answer

A) the economy is considered to be at full employment. 
B) the unemployment rate is below the natural rate of unemployment. 
C) the unemployment rate is above the natural rate of unemployment. 
D) the economy is at less than full employment. 
A) the economy is considered to be at full employment. 
B) the unemployment rate is below the natural rate of unemployment. 
C) the unemployment rate is above the natural rate of unemployment. 
D) the economy is at less than full employment.

Question 18

If you have trouble finding a job because of a slowdown in the overall economy,we would say that you are

Accepted Answer

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

Question 19

According to the text,economists consider full employment to occur when

Accepted Answer

A) everyone who wants a job has a job. 
B) frictional unemployment equals zero. 
C) the sum of frictional unemployment and structural unemployment equals zero. 
D) the unemployment rate consists of only frictional and structural unemployment. 
A) everyone who wants a job has a job. 
B) frictional unemployment equals zero. 
C) the sum of frictional unemployment and structural unemployment equals zero. 
D) the unemployment rate consists of only frictional and structural unemployment.

Question 20

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2013.You know that average prices have risen steadily since 1961.You earn

Accepted Answer

A) 5 times as much as your grandfather in terms of real income. 
B) more than 5 times as much as your grandfather in terms of real income. 
C) less than 5 times as much as your grandfather in terms of real income. 
D) less than 5 times as much as your grandfather in terms of nominal income. 
A) 5 times as much as your grandfather in terms of real income. 
B) more than 5 times as much as your grandfather in terms of real income. 
C) less than 5 times as much as your grandfather in terms of real income. 
D) less than 5 times as much as your grandfather in terms of nominal income.

The natural rate of unemployment consists of frictional unemployment plus structural unemployment.

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

An efficiency wage

The "new product bias" in the consumer price index refers to the idea that

Table 13-22 Year Nominal Average Hourly Earnings CPI (=) 2011 \ 10 100 2012 11 105 2013 12 110 -Refer to Table 13-22.Using the above table,calculate real average hourly earnings for 2011,2012,and 2013.Calculate the rate of growth of real average hourly earnings from 2012 to 2013.

Table 13-5 Year CPI 2012 207 2013 215 -Refer to Table 13-5.Consider the following values of the consumer price index for 2012 and 2013.The inflation rate for 2013 was equal to

Which of the following describes actual trends in the U.S.labor force participation rate?

Table 13-19 Year Nominal Average Hourly Earnings CPI (=) 2011 \ 10 100 2012 10 105 2013 12 110 -Refer to Table 13-19.Looking at the table above,what is the approximate rate of growth of real average hourly earnings from 2011 to 2012?

Suppose your grandfather earned a salary of $12,000 in 1964.If the CPI is 31 in 1964 and 219 in 2013,then the value of your grandfather's salary in 2013 dollars is approximately

The increased generosity of unemployment insurance programs in Canada as compared to the United States should

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

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

Figure 13-1 -Refer to Figure 13-1.Based on the graph of the labor market above,if a minimum wage is set at $5 per hour,which of the following will occur?

The U.S.unemployment insurance program

If cyclical unemployment is eliminated in the economy,then

If you have trouble finding a job because of a slowdown in the overall economy,we would say that you are

According to the text,economists consider full employment to occur when

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2013.You know that average prices have risen steadily since 1961.You earn

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

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Exam 13: Unemployment and Inflation

The natural rate of unemployment consists of frictional unemployment plus structural unemployment.

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

An efficiency wage

The "new product bias" in the consumer price index refers to the idea that

Table 13-22 Year Nominal Average Hourly Earnings CPI (=) 2011 \ 10 100 2012 11 105 2013 12 110 -Refer to Table 13-22.Using the above table,calculate real average hourly earnings for 2011,2012,and 2013.Calculate the rate of growth of real average hourly earnings from 2012 to 2013.

Table 13-5 Year CPI 2012 207 2013 215 -Refer to Table 13-5.Consider the following values of the consumer price index for 2012 and 2013.The inflation rate for 2013 was equal to

Which of the following describes actual trends in the U.S.labor force participation rate?

Table 13-19 Year Nominal Average Hourly Earnings CPI (=) 2011 \ 10 100 2012 10 105 2013 12 110 -Refer to Table 13-19.Looking at the table above,what is the approximate rate of growth of real average hourly earnings from 2011 to 2012?

Suppose your grandfather earned a salary of $12,000 in 1964.If the CPI is 31 in 1964 and 219 in 2013,then the value of your grandfather's salary in 2013 dollars is approximately

The increased generosity of unemployment insurance programs in Canada as compared to the United States should

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

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

Figure 13-1 -Refer to Figure 13-1.Based on the graph of the labor market above,if a minimum wage is set at $5 per hour,which of the following will occur?

The U.S.unemployment insurance program

If cyclical unemployment is eliminated in the economy,then

If you have trouble finding a job because of a slowdown in the overall economy,we would say that you are

According to the text,economists consider full employment to occur when

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2013.You know that average prices have risen steadily since 1961.You earn

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