Question 1

Including discouraged workers in the calculation of the unemployment rate would

Accepted Answer

A) increase the reported rate. 
B) lower the reported rate. 
C) not change the reported rate. 
D) change the reported rate, but in an unpredictable manner. 
A) increase the reported rate. 
B) lower the reported rate. 
C) not change the reported rate. 
D) change the reported rate, but in an unpredictable manner.

Question 2

The market basket cost $300 in 2015, while it cost $250 in the base year. Therefore, the price index for 2015 is

Accepted Answer

A) 83. 
B) 120. 
C) 80. 
D) cannot be calculated because the inflation rate is not given. 
A) 83. 
B) 120. 
C) 80. 
D) cannot be calculated because the inflation rate is not given.

Question 3

-Refer to the above figure. Point C is known as

Accepted Answer

A) a peak. 
B) a trough. 
C) an expansion. 
D) a contraction. 
A) a peak. 
B) a trough. 
C) an expansion. 
D) a contraction.

Question 4

A clause in a contract that automatically increases wages to account for increases in the price level is

Accepted Answer

A) the GDP deflation. 
B) the PCE index. 
C) a COLA. 
D) the real rate of interest. 
A) the GDP deflation. 
B) the PCE index. 
C) a COLA. 
D) the real rate of interest.

Question 5

The value of an item expressed in purchasing power that varies with the overall price level is known as

Accepted Answer

A) inflation. 
B) deflation. 
C) the nominal value. 
D) the real value. 
A) inflation. 
B) deflation. 
C) the nominal value. 
D) the real value.

Question 6

The National Bureau of Economic Research is

Accepted Answer

A) funded by Congress and evaluates the budget appropriations. 
B) funded by the Federal Reserve Banks and analyzes the banking system. 
C) a nonprofit organization and evaluates the business cycles. 
D) a nonprofit organization and evaluates the U.S. monetary policy. 
A) funded by Congress and evaluates the budget appropriations. 
B) funded by the Federal Reserve Banks and analyzes the banking system. 
C) a nonprofit organization and evaluates the business cycles. 
D) a nonprofit organization and evaluates the U.S. monetary policy.

Question 7

What are the costs to society of inflation?
 Who is harmed by inflation and who benefits?

Accepted Answer

The resources used by people to protect

Question 8

-Refer to the above figure. Stage "3" of the economy is called

Accepted Answer

A) a development. 
B) a pit. 
C) a trough. 
D) a hole. 
A) a development. 
B) a pit. 
C) a trough. 
D) a hole.

Question 9

Suppose medical care makes up 5 percent of the CPI index, and that prices rise in the medical care area faster than in the rest of the economy. An elderly couple spends 15 percent of their income on medical care. For this couple, the CPI

Accepted Answer

A) understates the inflation rate because of the importance of medical care for this family. 
B) overstates the inflation rate because this family is not typical of the country as a whole. 
C) understates the inflation rate because the CPI always understates inflation. 
D) is a good measure of inflation since the bias inherent in the CPI is offset by the increased emphasis on health care for this family. 
A) understates the inflation rate because of the importance of medical care for this family. 
B) overstates the inflation rate because this family is not typical of the country as a whole. 
C) understates the inflation rate because the CPI always understates inflation. 
D) is a good measure of inflation since the bias inherent in the CPI is offset by the increased emphasis on health care for this family.

Question 10

The real rate of interest equals 8%, and the expected rate of inflation equals 2%. The nominal rate of interest is

Accepted Answer

A) 2%. 
B) 6%. 
C) 8%. 
D) 10%. 
A) 2%. 
B) 6%. 
C) 8%. 
D) 10%.

Question 11

Which of the following would be a leading indicator?

Accepted Answer

A) the number of unemployment claims 
B) the real interest rate 
C) personal income in the United States 
D) an increase in stock prices 
A) the number of unemployment claims 
B) the real interest rate 
C) personal income in the United States 
D) an increase in stock prices

Question 12

Is it possible for the unemployment rate to rise at the same time that the number of people working increases?

Accepted Answer

A) no 
B) yes, if the new workers are employed less than full time 
C) yes, if labor force growth outpaces growth in the number of people working 
D) yes, if established workers keep their jobs but no longer have the option of working overtime 
A) no 
B) yes, if the new workers are employed less than full time 
C) yes, if labor force growth outpaces growth in the number of people working 
D) yes, if established workers keep their jobs but no longer have the option of working overtime

Question 13

The price index that measures the changes in prices of ALL goods and services produced by the economy is the

Accepted Answer

A) CPI. 
B) PPI. 
C) Gross Domestic Product (GDP)deflator. 
D) Personal Consumption Expenditure Index. 
A) CPI. 
B) PPI. 
C) Gross Domestic Product (GDP)deflator. 
D) Personal Consumption Expenditure Index.

Question 14

Most of the problems caused by inflation are caused by the fact that

Accepted Answer

A) there are no ways available for people to protect themselves against inflation. 
B) anticipated inflation induces people to protect themselves against inflation. 
C) inflation causes the purchasing power of the dollar to increase. 
D) the inflation is often unanticipated and therefore comes as a surprise to individuals in the economy. 
A) there are no ways available for people to protect themselves against inflation. 
B) anticipated inflation induces people to protect themselves against inflation. 
C) inflation causes the purchasing power of the dollar to increase. 
D) the inflation is often unanticipated and therefore comes as a surprise to individuals in the economy.

Question 15

Bob's assembly line job has been replaced by robots, and Bob lacks abilities and skills required to attain other jobs. He is considered

Accepted Answer

A) structurally unemployed. 
B) frictionally unemployed. 
C) seasonally unemployed. 
D) a discouraged worker. 
A) structurally unemployed. 
B) frictionally unemployed. 
C) seasonally unemployed. 
D) a discouraged worker.

Question 16

If your income rises at 5 percent and inflation has risen at 2 percent, then the purchasing power of your income has

Accepted Answer

A) eroded. 
B) stayed the same. 
C) fallen, but will increase due to indexing. 
D) increased. 
A) eroded. 
B) stayed the same. 
C) fallen, but will increase due to indexing. 
D) increased.

Question 17

-Refer to the above figure. The points between A and B are known as

Accepted Answer

A) a peak. 
B) a trough. 
C) an expansion. 
D) a contraction. 
A) a peak. 
B) a trough. 
C) an expansion. 
D) a contraction.

Question 18

The highest measured rate of unemployment in the United States occurred during

Accepted Answer

A) the post-WWII years. 
B) the Panic of 1893. 
C) the Carter administration. 
D) the Great Depression. 
A) the post-WWII years. 
B) the Panic of 1893. 
C) the Carter administration. 
D) the Great Depression.

Question 19

Suppose the population of El Campo is 120,000. Of the population 16 years and older, 50,000 are employed, 10,000 have never worked and are not looking for work, 5,000 are not working and are looking for work, and 15,000 are retired and not looking for work. The number unemployed equals

Accepted Answer

A) 5,000. 
B) 10,000. 
C) 15,000. 
D) 20,000. 
A) 5,000. 
B) 10,000. 
C) 15,000. 
D) 20,000.

Question 20

A person graduates from college, then starts to look for a job. This is an example of

Accepted Answer

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

Including discouraged workers in the calculation of the unemployment rate would

The market basket cost $300 in 2015, while it cost $250 in the base year. Therefore, the price index for 2015 is

-Refer to the above figure. Point C is known as

A clause in a contract that automatically increases wages to account for increases in the price level is

The value of an item expressed in purchasing power that varies with the overall price level is known as

The National Bureau of Economic Research is

What are the costs to society of inflation? Who is harmed by inflation and who benefits?

-Refer to the above figure. Stage "3" of the economy is called

Suppose medical care makes up 5 percent of the CPI index, and that prices rise in the medical care area faster than in the rest of the economy. An elderly couple spends 15 percent of their income on medical care. For this couple, the CPI

The real rate of interest equals 8%, and the expected rate of inflation equals 2%. The nominal rate of interest is

Which of the following would be a leading indicator?

Is it possible for the unemployment rate to rise at the same time that the number of people working increases?

The price index that measures the changes in prices of ALL goods and services produced by the economy is the

Most of the problems caused by inflation are caused by the fact that

Bob's assembly line job has been replaced by robots, and Bob lacks abilities and skills required to attain other jobs. He is considered

If your income rises at 5 percent and inflation has risen at 2 percent, then the purchasing power of your income has

-Refer to the above figure. The points between A and B are known as

The highest measured rate of unemployment in the United States occurred during

Suppose the population of El Campo is 120,000. Of the population 16 years and older, 50,000 are employed, 10,000 have never worked and are not looking for work, 5,000 are not working and are looking for work, and 15,000 are retired and not looking for work. The number unemployed equals

A person graduates from college, then starts to look for a job. This is an example of

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 7: The Macroeconomy: Unemployment, Inflation, and Deflation

Including discouraged workers in the calculation of the unemployment rate would

The market basket cost $300 in 2015, while it cost $250 in the base year. Therefore, the price index for 2015 is

-Refer to the above figure. Point C is known as

A clause in a contract that automatically increases wages to account for increases in the price level is

The value of an item expressed in purchasing power that varies with the overall price level is known as

The National Bureau of Economic Research is

What are the costs to society of inflation? Who is harmed by inflation and who benefits?

-Refer to the above figure. Stage "3" of the economy is called

Suppose medical care makes up 5 percent of the CPI index, and that prices rise in the medical care area faster than in the rest of the economy. An elderly couple spends 15 percent of their income on medical care. For this couple, the CPI

The real rate of interest equals 8%, and the expected rate of inflation equals 2%. The nominal rate of interest is

Which of the following would be a leading indicator?

Is it possible for the unemployment rate to rise at the same time that the number of people working increases?

The price index that measures the changes in prices of ALL goods and services produced by the economy is the

Most of the problems caused by inflation are caused by the fact that

Bob's assembly line job has been replaced by robots, and Bob lacks abilities and skills required to attain other jobs. He is considered

If your income rises at 5 percent and inflation has risen at 2 percent, then the purchasing power of your income has

-Refer to the above figure. The points between A and B are known as

The highest measured rate of unemployment in the United States occurred during

Suppose the population of El Campo is 120,000. Of the population 16 years and older, 50,000 are employed, 10,000 have never worked and are not looking for work, 5,000 are not working and are looking for work, and 15,000 are retired and not looking for work. The number unemployed equals

A person graduates from college, then starts to look for a job. This is an example of

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters