Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The Bureau of Labor Statistics would categorize a retiree who is not working as

Accepted Answer

A) employed. 
B) unemployed. 
C) a discouraged worker. 
D) out of the labor force. 
A) employed. 
B) unemployed. 
C) a discouraged worker. 
D) out of the labor force.

Question 3

If an economy experiences deflation,the real interest rate

Accepted Answer

A) will be less than the nominal interest rate. 
B) will be negative when the nominal interest rate is positive. 
C) will be greater than the nominal interest rate. 
D) will be equal to the deflation rate, so long as the nominal interest rate is positive. 
A) will be less than the nominal interest rate. 
B) will be negative when the nominal interest rate is positive. 
C) will be greater than the nominal interest rate. 
D) will be equal to the deflation rate, so long as the nominal interest rate is positive.

Question 4

If the CPI rises from 206.7 to 212.7 between two consecutive years,by how much has the cost of living changed between these two years?

Accepted Answer

A) The cost of living has increased by 6%. 
B) The cost of living has increased by 2.9%. 
C) The cost of living has increased by 12.7%. 
D) The cost of living has decreased by 6%. 
A) The cost of living has increased by 6%. 
B) The cost of living has increased by 2.9%. 
C) The cost of living has increased by 12.7%. 
D) The cost of living has decreased by 6%.

Question 5

Jack just received a promotion at work and now works 50 hours per week instead of 35.As a result,

Accepted Answer

A) the unemployment rate increased. 
B) the unemployment rate decreased. 
C) the labor force participation rate increased. 
D) neither the unemployment rate nor the labor force participation rate changed. 
A) the unemployment rate increased. 
B) the unemployment rate decreased. 
C) the labor force participation rate increased. 
D) neither the unemployment rate nor the labor force participation rate changed.

Question 6

The labor force participation rate is defined as

Accepted Answer

A) the percentage of the working-age population that is employed. 
B) the percentage of the working-age population that is unemployed. 
C) the percentage of the labor force that is employed. 
D) the percentage of the labor force that is unemployed. 
E) the percentage of the working-age population in the labor force. 
A) the percentage of the working-age population that is employed. 
B) the percentage of the working-age population that is unemployed. 
C) the percentage of the labor force that is employed. 
D) the percentage of the labor force that is unemployed. 
E) the percentage of the working-age population in the labor force.

Question 7

If the number employed is 190 million,the number unemployed is 10 million,and the working-age population is 250 million,then the labor force participation rate is

Accepted Answer

A) 4%. 
B) 5.2%. 
C) 60%. 
D) 76%. 
E) 80%. 
A) 4%. 
B) 5.2%. 
C) 60%. 
D) 76%. 
E) 80%.

Question 8

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 real average hourly earnings for 1965 in 1982-1984 dollars equal

Accepted Answer

A) $1.28. 
B) $6.49. 
C) $8.28. 
D) $15.45. 
A) $1.28. 
B) $6.49. 
C) $8.28. 
D) $15.45.

Question 9

Which of the following is the smallest portion of the market basket of goods that makes up the CPI?

Accepted Answer

A) housing 
B) food and beverages 
C) transportation 
D) apparel 
A) housing 
B) food and beverages 
C) transportation 
D) apparel

Question 10

The nominal interest rate will be less than the real interest rate when

Accepted Answer

A) the rate of inflation is positive but decreasing. 
B) the rate of inflation is positive and increasing. 
C) the rate of inflation is negative. 
D) the real interest rate is negative. 
A) the rate of inflation is positive but decreasing. 
B) the rate of inflation is positive and increasing. 
C) the rate of inflation is negative. 
D) the real interest rate is negative.

Question 11

If the number of unemployed workers is 19 million,the number in the working-age population is 500 million,and the unemployment rate is 4%,what is the labor force participation rate?

Accepted Answer

A) 4.75% 
B) 7.8% 
C) 95% 
D) 96.2% 
A) 4.75% 
B) 7.8% 
C) 95% 
D) 96.2%

Question 12

If the number employed is 190 million,the working-age population is 230 million,and the number unemployed is 10 million,then the unemployment rate is

Accepted Answer

A) 5%. 
B) 5.2%. 
C) 8%. 
D) 10%. 
E) 50%. 
A) 5%. 
B) 5.2%. 
C) 8%. 
D) 10%. 
E) 50%.

Question 13

The costs to firms of changing prices are called menu costs.

Accepted Answer

A) True 
 B)False

Question 14

What are the three main kinds of unemployment?

Accepted Answer

A) frictional, seasonal, and cyclical 
B) temporary, permanent, and volunteer 
C) cyclical, structural, and temporary 
D) structural, frictional, and cyclical 
A) frictional, seasonal, and cyclical 
B) temporary, permanent, and volunteer 
C) cyclical, structural, and temporary 
D) structural, frictional, and cyclical

Question 15

The most widely used measure of inflation is based on which of the following price indices?

Accepted Answer

A) the producer price index 
B) the consumer price index 
C) the GDP deflator 
D) the wholesale price index 
A) the producer price index 
B) the consumer price index 
C) the GDP deflator 
D) the wholesale price index

Question 16

Which of the following would be a consequence of substitution bias in the CPI?

Accepted Answer

A) Social Security payments would not adequately compensate retired workers for inflation. 
B) Businesses would over-compensate employees for inflation when giving the cost of living rises. 
C) The inflation rate based on the CPI would under-estimate the true level of inflation. 
D) Judges would award child support payments that would not adequately keep up with the true cost of inflation. 
A) Social Security payments would not adequately compensate retired workers for inflation. 
B) Businesses would over-compensate employees for inflation when giving the cost of living rises. 
C) The inflation rate based on the CPI would under-estimate the true level of inflation. 
D) Judges would award child support payments that would not adequately keep up with the true cost of inflation.

Question 17

Suppose you obtain a fixed rate mortgage during a period of relatively high inflation.During the next ten years,inflation falls.Are you a winner or a loser due to inflation? Explain why.

Accepted Answer

You would be a loser under this scenario

Question 18

The deflation of the 1930s impacted the U.S.economy because it led some consumers to ________ and because it ________.

Accepted Answer

A) postpone purchases while they waited for prices to fall even lower; increased the burden on borrowers. 
B) demand higher wages in anticipation of prices eventually rising again; increased manufacturing since firms could afford to hire more labor. 
C) borrow more money since money was now cheap; reduced the amount of money consumers would have to pay back on their outstanding loans. 
D) increase purchases to take advantage of the falling prices; increased the burden on lenders. 
A) postpone purchases while they waited for prices to fall even lower; increased the burden on borrowers. 
B) demand higher wages in anticipation of prices eventually rising again; increased manufacturing since firms could afford to hire more labor. 
C) borrow more money since money was now cheap; reduced the amount of money consumers would have to pay back on their outstanding loans. 
D) increase purchases to take advantage of the falling prices; increased the burden on lenders.

Question 19

Why might firms pay wages that are above the equilibrium wage in a market?

Accepted Answer

A) to increase the productivity of their workers 
B) to reduce the unemployment rate 
C) to encourage workers to form labor unions 
D) to reduce profit 
A) to increase the productivity of their workers 
B) to reduce the unemployment rate 
C) to encourage workers to form labor unions 
D) to reduce profit

Question 20

Most economists believe that labor unions significantly increase the overall unemployment rate in the United States.

Accepted Answer

A) True 
 B)False

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

The Bureau of Labor Statistics would categorize a retiree who is not working as

If an economy experiences deflation,the real interest rate

If the CPI rises from 206.7 to 212.7 between two consecutive years,by how much has the cost of living changed between these two years?

Jack just received a promotion at work and now works 50 hours per week instead of 35.As a result,

The labor force participation rate is defined as

If the number employed is 190 million,the number unemployed is 10 million,and the working-age population is 250 million,then the labor force participation rate is

Which of the following is the smallest portion of the market basket of goods that makes up the CPI?

The nominal interest rate will be less than the real interest rate when

If the number of unemployed workers is 19 million,the number in the working-age population is 500 million,and the unemployment rate is 4%,what is the labor force participation rate?

If the number employed is 190 million,the working-age population is 230 million,and the number unemployed is 10 million,then the unemployment rate is

The costs to firms of changing prices are called menu costs.

What are the three main kinds of unemployment?

The most widely used measure of inflation is based on which of the following price indices?

Which of the following would be a consequence of substitution bias in the CPI?

Suppose you obtain a fixed rate mortgage during a period of relatively high inflation.During the next ten years,inflation falls.Are you a winner or a loser due to inflation? Explain why.

The deflation of the 1930s impacted the U.S.economy because it led some consumers to and because it .

Why might firms pay wages that are above the equilibrium wage in a market?

Most economists believe that labor unions significantly increase the overall unemployment rate in the United States.

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

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

The Bureau of Labor Statistics would categorize a retiree who is not working as

If an economy experiences deflation,the real interest rate

If the CPI rises from 206.7 to 212.7 between two consecutive years,by how much has the cost of living changed between these two years?

Jack just received a promotion at work and now works 50 hours per week instead of 35.As a result,

The labor force participation rate is defined as

If the number employed is 190 million,the number unemployed is 10 million,and the working-age population is 250 million,then the labor force participation rate is

Which of the following is the smallest portion of the market basket of goods that makes up the CPI?

The nominal interest rate will be less than the real interest rate when

If the number of unemployed workers is 19 million,the number in the working-age population is 500 million,and the unemployment rate is 4%,what is the labor force participation rate?

If the number employed is 190 million,the working-age population is 230 million,and the number unemployed is 10 million,then the unemployment rate is

The costs to firms of changing prices are called menu costs.

What are the three main kinds of unemployment?

The most widely used measure of inflation is based on which of the following price indices?

Which of the following would be a consequence of substitution bias in the CPI?

Suppose you obtain a fixed rate mortgage during a period of relatively high inflation.During the next ten years,inflation falls.Are you a winner or a loser due to inflation? Explain why.

The deflation of the 1930s impacted the U.S.economy because it led some consumers to ________ and because it ________.

Why might firms pay wages that are above the equilibrium wage in a market?

Most economists believe that labor unions significantly increase the overall unemployment rate in the United States.

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

The deflation of the 1930s impacted the U.S.economy because it led some consumers to and because it .