Question 1

When an economy is at its natural rate of unemployment,which of the following will be true?

Accepted Answer

A) The unemployment rate will be 0%. 
B) The labor force participation rate will be 100%. 
C) The unemployment rate will be greater than 0%. 
D) Only structural unemployment as a result of technological change will exist in the economy. 
A) The unemployment rate will be 0%. 
B) The labor force participation rate will be 100%. 
C) The unemployment rate will be greater than 0%. 
D) Only structural unemployment as a result of technological change will exist in the economy.

Question 2

In 2013,Caterpillar laid off employees who produced mining machinery at its South Milwaukee plant.The laid-off employees who were not able to find jobs at another factory due to a permanent decline in demand in the mining industry would be considered

Accepted Answer

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

Question 3

If inflation is anticipated,some effects of inflation on the redistribution of income can be avoided.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) A worker quits his job at the Post Office to find more interesting work. 
B) A computer programmer loses her job because it is outsourced to India. 
C) An employee is laid off because the economy is suffering a recession. 
D) A United Airlines pilot loses her job because of lack of demand for air travel. 
A) A worker quits his job at the Post Office to find more interesting work. 
B) A computer programmer loses her job because it is outsourced to India. 
C) An employee is laid off because the economy is suffering a recession. 
D) A United Airlines pilot loses her job because of lack of demand for air travel.

Question 5

Deflation occurs when

Accepted Answer

A) there is a sustained increase in the price level. 
B) there is a one-time increase in the price level. 
C) there is a decline in the price level. 
D) there is a decrease in the expected rate of inflation. 
A) there is a sustained increase in the price level. 
B) there is a one-time increase in the price level. 
C) there is a decline in the price level. 
D) there is a decrease in the expected rate of inflation.

Question 6

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 rate of growth of the average price level from 2011 to 2012?

Accepted Answer

A) 1% 
B) 2% 
C) 3% 
D) 4% 
E) 5% 
A) 1% 
B) 2% 
C) 3% 
D) 4% 
E) 5%

Question 7

What effect does the payment of government unemployment insurance have on the unemployment rate?

Accepted Answer

The payment of government unemployment i

Question 8

Table 13-10
 $$\begin{array} { | l | r | r | c | c | c | } 
\hline \text { Product } & \begin{array} { c } 
\text { Quantity } \
\text { (2006) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (2006) }
\end{array} & \begin{array} { c } 
\text { Expenditure } \
\text { (2006) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (2013) }
\end{array} & \begin{array} { c } 
\text { Expenditure (on } \
\text { base year } \
\text { quantities) (2013) }
\end{array} \
\hline \text { Computers } & 1 & \$ 1,200 & \$ 1,200 & \$ 900 & \$ 900 \
\hline \text { Books } & 10 & 25 & 250 & 30 & 300 \
\hline \text { Burgers } & 50 & 3 & 150 & 4 & 200 \
\hline \text { Total } & & & \$ 1,600 & & \$ 1,400 \
\hline
\end{array}$$
-Refer to Table 13-10.Suppose an economy has only three goods and the typical family purchases the amounts given in the table above.If 2006 is the base year,then what is the CPI for 2013?

Accepted Answer

A) 14.3 
B) 87.5 
C) 114.3 
D) 160 
A) 14.3 
B) 87.5 
C) 114.3 
D) 160

Question 9

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would be the best measure of the cost of living?

Accepted Answer

A) real GDP 
B) real GDP per person 
C) GDP deflator 
D) consumer price index 
A) real GDP 
B) real GDP per person 
C) GDP deflator 
D) consumer price index

Question 11

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

Accepted Answer

A) True 
 B)False

Question 12

With the exception of during recessions,workers in Canada are eligible for unemployment benefits for about twice as long a period of time as workers in the United States.As a result,

Accepted Answer

A) the average duration of unemployment is longer in the United States than in Canada. 
B) the unemployment rate in Canada is usually higher than in the United States. 
C) the opportunity cost of job search in Canada is lower than in the United States. 
D) frictional unemployment is higher, on average, in the United States than in Canada. 
A) the average duration of unemployment is longer in the United States than in Canada. 
B) the unemployment rate in Canada is usually higher than in the United States. 
C) the opportunity cost of job search in Canada is lower than in the United States. 
D) frictional unemployment is higher, on average, in the United States than in Canada.

Question 13

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest.If the inflation rate was 7%,what was the real interest rate you paid?

Accepted Answer

A) 17 percent 
B) 10 percent 
C) 7 percent 
D) 3 percent 
A) 17 percent 
B) 10 percent 
C) 7 percent 
D) 3 percent

Question 14

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?

Accepted Answer

A) inflation 
B) discouraged workers 
C) people employed in the underground economy 
D) unemployed persons falsely report themselves to be actively looking for a job 
A) inflation 
B) discouraged workers 
C) people employed in the underground economy 
D) unemployed persons falsely report themselves to be actively looking for a job

Question 15

Upon your graduation from college,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

Accepted Answer

A) the cost of additional education is always higher during recession. 
B) high unemployment rates do not usually last for very long. 
C) looking for work is your only option. 
D) the wages of college graduates do not fall during recession. 
A) the cost of additional education is always higher during recession. 
B) high unemployment rates do not usually last for very long. 
C) looking for work is your only option. 
D) the wages of college graduates do not fall during recession.

Question 16

Except for recessions,the duration of unemployment for the typical person lasts

Accepted Answer

A) less than six months. 
B) six to nine months. 
C) over nine months. 
D) over one year. 
E) over five years. 
A) less than six months. 
B) six to nine months. 
C) over nine months. 
D) over one year. 
E) over five years.

Question 17

When the price of gasoline rises,some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars.The fact that the CPI does not fully account for such changes in consumer behavior is called

Accepted Answer

A) outlet bias. 
B) increase in quality bias. 
C) substitution bias. 
D) discrimination bias. 
A) outlet bias. 
B) increase in quality bias. 
C) substitution bias. 
D) discrimination bias.

Question 18

Which of the following would increase the unemployment rate?

Accepted Answer

A) a law making it illegal to work more than 35 hours per week 
B) a cut in unemployment compensation 
C) an increase in unemployment insurance payments 
D) a decrease in the minimum wage 
A) a law making it illegal to work more than 35 hours per week 
B) a cut in unemployment compensation 
C) an increase in unemployment insurance payments 
D) a decrease in the minimum wage

Question 19

If you want to earn a real interest rate of 3% on money you lend,and you expect that inflation will be 2%,what nominal rate of interest will you charge?

Accepted Answer

A) 1% 
B) 5% 
C) 6% 
D) 9% 
A) 1% 
B) 5% 
C) 6% 
D) 9%

Question 20

During the Great Depression,cyclical unemployment increased as the recession continued.This increase in cyclical unemployment

Accepted Answer

A) increased the natural rate of unemployment. 
B) decreased the natural rate of unemployment. 
C) had no effect on the natural rate of unemployment. 
D) could have increased or decreased the natural rate of unemployment. 
A) increased the natural rate of unemployment. 
B) decreased the natural rate of unemployment. 
C) had no effect on the natural rate of unemployment. 
D) could have increased or decreased the natural rate of unemployment.

When an economy is at its natural rate of unemployment,which of the following will be true?

In 2013,Caterpillar laid off employees who produced mining machinery at its South Milwaukee plant.The laid-off employees who were not able to find jobs at another factory due to a permanent decline in demand in the mining industry would be considered

If inflation is anticipated,some effects of inflation on the redistribution of income can be avoided.

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

Deflation occurs when

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 rate of growth of the average price level from 2011 to 2012?

What effect does the payment of government unemployment insurance have on the unemployment rate?

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

Which of the following would be the best measure of the cost of living?

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

With the exception of during recessions,workers in Canada are eligible for unemployment benefits for about twice as long a period of time as workers in the United States.As a result,

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest.If the inflation rate was 7%,what was the real interest rate you paid?

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?

Upon your graduation from college,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

Except for recessions,the duration of unemployment for the typical person lasts

When the price of gasoline rises,some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars.The fact that the CPI does not fully account for such changes in consumer behavior is called

Which of the following would increase the unemployment rate?

If you want to earn a real interest rate of 3% on money you lend,and you expect that inflation will be 2%,what nominal rate of interest will you charge?

During the Great Depression,cyclical unemployment increased as the recession continued.This increase in cyclical unemployment

Economics: Foundations and Models

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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

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Exam 13: Unemployment and Inflation

When an economy is at its natural rate of unemployment,which of the following will be true?

In 2013,Caterpillar laid off employees who produced mining machinery at its South Milwaukee plant.The laid-off employees who were not able to find jobs at another factory due to a permanent decline in demand in the mining industry would be considered

If inflation is anticipated,some effects of inflation on the redistribution of income can be avoided.

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

Deflation occurs when

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 rate of growth of the average price level from 2011 to 2012?

What effect does the payment of government unemployment insurance have on the unemployment rate?

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

Which of the following would be the best measure of the cost of living?

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

With the exception of during recessions,workers in Canada are eligible for unemployment benefits for about twice as long a period of time as workers in the United States.As a result,

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest.If the inflation rate was 7%,what was the real interest rate you paid?

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?

Upon your graduation from college,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

Except for recessions,the duration of unemployment for the typical person lasts

When the price of gasoline rises,some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars.The fact that the CPI does not fully account for such changes in consumer behavior is called

Which of the following would increase the unemployment rate?

If you want to earn a real interest rate of 3% on money you lend,and you expect that inflation will be 2%,what nominal rate of interest will you charge?

During the Great Depression,cyclical unemployment increased as the recession continued.This increase in 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

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