Question 1

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 2

The United States has ________ social insurance programs,and generally has a ________ unemployment rate,as compared to Canada and Western Europe.

Accepted Answer

A)  less generous; lower 
B)  less generous; greater 
C)  more generous; lower 
D)  more generous; greater 
A)  less generous; lower 
B)  less generous; greater 
C)  more generous; lower 
D)  more generous; greater

Question 3

Assume the average annual CPI values for 2010 and 2011 were 207.3 and 215.3,respectively.What was the percent increase in the CPI between these two years?

Accepted Answer

A)  0.96 
B)  1.04 
C)  3.86 
D)  8.0 
A)  0.96 
B)  1.04 
C)  3.86 
D)  8.0

Question 4

The Bureau of Labor Statistics counts as employed people who work part-time,but would prefer to work full-time.Suppose the people who had part-time jobs,but wanted full-time jobs,were counted as unemployed.Explain how the unemployment rate and the labor force participation rate would change.

Accepted Answer

The unemployment rate would increase and

Question 5

You earned $30,000 in 1990,and your salary rose to $80,000 in 2011.If the CPI rose from 82 to 202 between 1990 and 2011,which of the following is true?

Accepted Answer

A)  There was deflation between 1990 and 2011. 
B)  The purchasing power of your salary fell between 1990 and 2011. 
C)  The purchasing power of your salary remained constant between 1990 and 2011. 
D)  The purchasing power of your salary increased between 1900 and 2011. 
A)  There was deflation between 1990 and 2011. 
B)  The purchasing power of your salary fell between 1990 and 2011. 
C)  The purchasing power of your salary remained constant between 1990 and 2011. 
D)  The purchasing power of your salary increased between 1900 and 2011.

Question 6

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 7

Suppose that at the beginning of a loan contract,the real interest rate is 4% and expected inflation is currently 6%.If actual inflation turns out to be 7% over the loan contract period,then

Accepted Answer

A)  borrowers gain 1% of the loan value. 
B)  lenders gain 1% of the loan value. 
C)  borrowers lose 3% of the loan value. 
D)  lenders gain 3% of the loan value. 
A)  borrowers gain 1% of the loan value. 
B)  lenders gain 1% of the loan value. 
C)  borrowers lose 3% of the loan value. 
D)  lenders gain 3% of the loan value.

Question 8

If firms pay what are called "efficiency wages," they pay wages that

Accepted Answer

A)  motivate workers to increase their productivity. 
B)  are lower than average to ensure maximum profit. 
C)  will eventually lower the unemployment rate. 
D)  are mandated by the government. 
A)  motivate workers to increase their productivity. 
B)  are lower than average to ensure maximum profit. 
C)  will eventually lower the unemployment rate. 
D)  are mandated by the government.

Question 9

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

Accepted Answer

A)  A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year, and the actual rate of inflation ends up being 7 percent per year. 
B)  A worker receives a raise in salary that is less than the rate of inflation, because management under-predicted inflation. 
C)  Firms have to hire an extra worker to change prices in its store because of inflation. 
D)  A bank collects a lower amount of interest from a loan because inflation was under-predicted. 
A)  A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year, and the actual rate of inflation ends up being 7 percent per year. 
B)  A worker receives a raise in salary that is less than the rate of inflation, because management under-predicted inflation. 
C)  Firms have to hire an extra worker to change prices in its store because of inflation. 
D)  A bank collects a lower amount of interest from a loan because inflation was under-predicted.

Question 10

The consumer price index implicitly assumes that the demand curve for each good and service in the representative market basket is

Accepted Answer

A)  positively sloped. 
B)  negatively sloped. 
C)  vertical. 
D)  horizontal. 
A)  positively sloped. 
B)  negatively sloped. 
C)  vertical. 
D)  horizontal.

Question 11

Fill in the missing values in the table of data collected in the household survey for December,1996.The working-age population,employment,unemployment,and labor force are measured in thousands.Show your work.

Accepted Answer

@#IMG-DLM& 
Unemployment rate = @#IMG-DLM& × 100.
Unemployed

Question 12

To reduce the bias in the consumer price index,the Bureau of Labor Statistics

Accepted Answer

A)  updates the market basket every two years, rather than every 10 years. 
B)  updates the market basket every 10 years, rather than every two years. 
C)  incorporates substitutions by consumers when prices of specific products rise rapidly. 
D)  incorporates substitutions by consumers when prices of specific products fall rapidly. 
A)  updates the market basket every two years, rather than every 10 years. 
B)  updates the market basket every 10 years, rather than every two years. 
C)  incorporates substitutions by consumers when prices of specific products rise rapidly. 
D)  incorporates substitutions by consumers when prices of specific products fall rapidly.

Question 13

When prices are rising,which of the following will be true?

Accepted Answer

A)  The real interest rate will be lower than the nominal interest rate. 
B)  The real interest rate will be negative. 
C)  The real interest rate will be higher than the nominal interest rate. 
D)  The nominal interest rate will be negative. 
A)  The real interest rate will be lower than the nominal interest rate. 
B)  The real interest rate will be negative. 
C)  The real interest rate will be higher than the nominal interest rate. 
D)  The nominal interest rate will be negative.

Question 14

Efficiency wage is another name for the minimum wage.

Accepted Answer

A) True 
 B)False

Question 15

Housing is the largest component of the U.S.CPI market basket.

Accepted Answer

A) True 
 B)False

Question 16

Table 20-8
   
The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 20-8.The real average hourly earnings for 1965 in 2010 dollars equal

Accepted Answer

A)  $3.87. 
B)  $5.80. 
C)  $12.10. 
D)  $18.14. 
A)  $3.87. 
B)  $5.80. 
C)  $12.10. 
D)  $18.14.

Question 17

Based in part on the aftermath of the financial crisis that began in 2008 and the speed of the recovery of the U.S.economy following the recession of 2007-2009,Bank of America ________ the number of persons it employed in September 2011 and this ________ the total number of persons unemployed in the economy.

Accepted Answer

A)  decreased; increased 
B)  decreased; decreased 
C)  increased; decreased 
D)  increased; increased 
A)  decreased; increased 
B)  decreased; decreased 
C)  increased; decreased 
D)  increased; increased

Question 18

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 19

Suppose that in 2012,all prices in the economy double and that all wages and salaries have also doubled.In 2012 you

Accepted Answer

A)  are worse off than you were in 2011 as you can no longer afford to buy as many goods and services. 
B)  are better off than you were in 2011 as your salary is higher than it was in 2011 and you can now buy more goods and services. 
C)  are no better off or worse off than you were in 2011 as the purchasing power of your salary has remained the same. 
D)  cannot determine whether you are better off or worse off than you were in 2011, because the purchasing power of your salary cannot be determined. 
A)  are worse off than you were in 2011 as you can no longer afford to buy as many goods and services. 
B)  are better off than you were in 2011 as your salary is higher than it was in 2011 and you can now buy more goods and services. 
C)  are no better off or worse off than you were in 2011 as the purchasing power of your salary has remained the same. 
D)  cannot determine whether you are better off or worse off than you were in 2011, because the purchasing power of your salary cannot be determined.

Question 20

Table 20-5
  
-Refer to Table 20-5.Consider the following values of the consumer price index for 2010 and 2011.The inflation rate for 2011 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.

If cyclical unemployment is eliminated in the economy,then

The United States has social insurance programs,and generally has a unemployment rate,as compared to Canada and Western Europe.

Assume the average annual CPI values for 2010 and 2011 were 207.3 and 215.3,respectively.What was the percent increase in the CPI between these two years?

The Bureau of Labor Statistics counts as employed people who work part-time,but would prefer to work full-time.Suppose the people who had part-time jobs,but wanted full-time jobs,were counted as unemployed.Explain how the unemployment rate and the labor force participation rate would change.

You earned $30,000 in 1990,and your salary rose to $80,000 in 2011.If the CPI rose from 82 to 202 between 1990 and 2011,which of the following is true?

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

Suppose that at the beginning of a loan contract,the real interest rate is 4% and expected inflation is currently 6%.If actual inflation turns out to be 7% over the loan contract period,then

If firms pay what are called "efficiency wages," they pay wages that

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

The consumer price index implicitly assumes that the demand curve for each good and service in the representative market basket is

Fill in the missing values in the table of data collected in the household survey for December,1996.The working-age population,employment,unemployment,and labor force are measured in thousands.Show your work.

To reduce the bias in the consumer price index,the Bureau of Labor Statistics

When prices are rising,which of the following will be true?

Efficiency wage is another name for the minimum wage.

Housing is the largest component of the U.S.CPI market basket.

Table 20-8 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 20-8.The real average hourly earnings for 1965 in 2010 dollars equal

Based in part on the aftermath of the financial crisis that began in 2008 and the speed of the recovery of the U.S.economy following the recession of 2007-2009,Bank of America the number of persons it employed in September 2011 and this the total number of persons unemployed in the economy.

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

Suppose that in 2012,all prices in the economy double and that all wages and salaries have also doubled.In 2012 you

Table 20-5 -Refer to Table 20-5.Consider the following values of the consumer price index for 2010 and 2011.The inflation rate for 2011 was equal to

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 9: Unemployment and Inflation

If cyclical unemployment is eliminated in the economy,then

The United States has ________ social insurance programs,and generally has a ________ unemployment rate,as compared to Canada and Western Europe.

Assume the average annual CPI values for 2010 and 2011 were 207.3 and 215.3,respectively.What was the percent increase in the CPI between these two years?

The Bureau of Labor Statistics counts as employed people who work part-time,but would prefer to work full-time.Suppose the people who had part-time jobs,but wanted full-time jobs,were counted as unemployed.Explain how the unemployment rate and the labor force participation rate would change.

You earned $30,000 in 1990,and your salary rose to $80,000 in 2011.If the CPI rose from 82 to 202 between 1990 and 2011,which of the following is true?

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

Suppose that at the beginning of a loan contract,the real interest rate is 4% and expected inflation is currently 6%.If actual inflation turns out to be 7% over the loan contract period,then

If firms pay what are called "efficiency wages," they pay wages that

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

The consumer price index implicitly assumes that the demand curve for each good and service in the representative market basket is

Fill in the missing values in the table of data collected in the household survey for December,1996.The working-age population,employment,unemployment,and labor force are measured in thousands.Show your work.

To reduce the bias in the consumer price index,the Bureau of Labor Statistics

When prices are rising,which of the following will be true?

Efficiency wage is another name for the minimum wage.

Housing is the largest component of the U.S.CPI market basket.

Table 20-8 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 20-8.The real average hourly earnings for 1965 in 2010 dollars equal

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

Suppose that in 2012,all prices in the economy double and that all wages and salaries have also doubled.In 2012 you

Table 20-5 -Refer to Table 20-5.Consider the following values of the consumer price index for 2010 and 2011.The inflation rate for 2011 was equal to

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

The United States has social insurance programs,and generally has a unemployment rate,as compared to Canada and Western Europe.