Question 1

A price index is the

Accepted Answer

A) cost of a market basket of goods today. 
B) cost of a market basket of goods and services a year ago expressed as a percentage of the cost of the same market basket today. 
C) cost of a market basket of goods and services today expressed as a percentage of the cost of the same market basket during a base year. 
D) year that is chosen as the point of reference for comparison of prices in other years. 
A) cost of a market basket of goods today. 
B) cost of a market basket of goods and services a year ago expressed as a percentage of the cost of the same market basket today. 
C) cost of a market basket of goods and services today expressed as a percentage of the cost of the same market basket during a base year. 
D) year that is chosen as the point of reference for comparison of prices in other years.

Question 2

To be officially classified as unemployed, a person must be

Accepted Answer

A) collecting unemployment benefits. 
B) at least 18 and not working. 
C) at least 16, not working and actively seeking employment. 
D) laid off or fired. 
A) collecting unemployment benefits. 
B) at least 18 and not working. 
C) at least 16, not working and actively seeking employment. 
D) laid off or fired.

Question 3

"Discouraged workers"

Accepted Answer

A) would be considered as unemployed. 
B) would not be considered as unemployed. 
C) would be considered as part of the labor force. 
D) would, according to some, tend to skew the unemployment rate upward. 
A) would be considered as unemployed. 
B) would not be considered as unemployed. 
C) would be considered as part of the labor force. 
D) would, according to some, tend to skew the unemployment rate upward.

Question 4

A period of time in which the overall business activity is rising at a rapid rate is known as

Accepted Answer

A) inflation. 
B) hyperinflation. 
C) an expansion. 
D) a contraction. 
A) inflation. 
B) hyperinflation. 
C) an expansion. 
D) a contraction.

Question 5

-Refer to the above table. You are given information on Jasmin's consumption for 2005 and 2015. Using 2005 as the base year compute the price index for 2015. The index equals

Accepted Answer

A) 170. 
B) 58.823. 
C) 0.5823. 
D) 0.17. 
A) 170. 
B) 58.823. 
C) 0.5823. 
D) 0.17.

Question 6

Unemployment statistics are often criticized for

Accepted Answer

A) understating the number of people out of work, because discouraged workers are excluded in the statistics. 
B) overstating the number of people out of work, because retirees are included in the statistics. 
C) understating the number people out of work, because full-time college students are excluded. 
D) overstating the number of people out of work, because the unemployment statistics include all low-income workers. 
A) understating the number of people out of work, because discouraged workers are excluded in the statistics. 
B) overstating the number of people out of work, because retirees are included in the statistics. 
C) understating the number people out of work, because full-time college students are excluded. 
D) overstating the number of people out of work, because the unemployment statistics include all low-income workers.

Question 7

Annie had a job as a human resource manager of a restaurant chain that went out of business due to a downturn in the economy. She looked for work for six months and gave up because she was convinced that she could not find a suitable job to fit her skill set. In this instance she would be counted as a

Accepted Answer

A) job leaver. 
B) reentrant. 
C) discouraged worker. 
D) labor force participant. 
A) job leaver. 
B) reentrant. 
C) discouraged worker. 
D) labor force participant.

Question 8

Inflation can cause a misallocation of resources because

Accepted Answer

A) inflation doesn't proceed evenly which means that people have a difficult time determining when a price change signals a change in relative prices. 
B) firms have to change their price labels at unusual times. 
C) the nominal rate of inflation doesn't equal the real rate of inflation. 
D) people are encouraged to borrow too much. 
A) inflation doesn't proceed evenly which means that people have a difficult time determining when a price change signals a change in relative prices. 
B) firms have to change their price labels at unusual times. 
C) the nominal rate of inflation doesn't equal the real rate of inflation. 
D) people are encouraged to borrow too much.

Question 9

Which of the following is a measure of general inflation that is NOT based on a fixed market basket of goods and services?

Accepted Answer

A) consumer price index 
B) producer price index 
C) personal consumption expenditure index 
D) medical price index 
A) consumer price index 
B) producer price index 
C) personal consumption expenditure index 
D) medical price index

Question 10

An unexpected reduction in inflation would tend to benefit which of the following?

Accepted Answer

A) creditors 
B) debtors 
C) creditors and debtors 
D) neither creditors nor debtors 
A) creditors 
B) debtors 
C) creditors and debtors 
D) neither creditors nor debtors

Question 11

If the Bureau of Labor Statistics changed the way it calculates the consumer price index (CPI)so as to take into account product quality changes and the changing mix of products and services purchased by the average family, the result would most likely

Accepted Answer

A) show a higher rate of inflation. 
B) show a lower rate of inflation. 
C) cause an increase in Social Security payments. 
D) cause higher wage increases for union employees with contracts that specify automatic wage boosts when the CPI rises. 
A) show a higher rate of inflation. 
B) show a lower rate of inflation. 
C) cause an increase in Social Security payments. 
D) cause higher wage increases for union employees with contracts that specify automatic wage boosts when the CPI rises.

Question 12

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is ________ and the new unemployment rate is ________.

Accepted Answer

A) 100.1 million; 5.8 percent 
B) 100 million; 6.1 percent 
C) 94.1 million; 5.9 percent 
D) 93.9 million; 6.1 percent 
A) 100.1 million; 5.8 percent 
B) 100 million; 6.1 percent 
C) 94.1 million; 5.9 percent 
D) 93.9 million; 6.1 percent

Question 13

Inflation refers to the situation when

Accepted Answer

A) the prices of necessities increase. 
B) the average of all prices is increasing. 
C) all prices rise by the same rate. 
D) the rate at which prices are rising is rising. 
A) the prices of necessities increase. 
B) the average of all prices is increasing. 
C) all prices rise by the same rate. 
D) the rate at which prices are rising is rising.

Question 14

In a small country, the adult population is 10,000. In that country, 7,000 people are in the labor force and 6,300 people are employed. The unemployment rate equals

Accepted Answer

A) 0.63 percent. 
B) 7 percent. 
C) 10 percent. 
D) an undetermined amount given the lack of information. 
A) 0.63 percent. 
B) 7 percent. 
C) 10 percent. 
D) an undetermined amount given the lack of information.

Question 15

Which of the following can cause official unemployment figures to underestimate the true unemployment rate?

Accepted Answer

A) Some people get discouraged and quit looking for a job. 
B) Some people engage in illegal activities. 
C) Some people work "off the books." 
D) Some people work overtime. 
A) Some people get discouraged and quit looking for a job. 
B) Some people engage in illegal activities. 
C) Some people work "off the books." 
D) Some people work overtime.

Question 16

Which one of the following individuals is NOT counted as unemployed?

Accepted Answer

A) a recent college graduate currently without any employment and looking for her first full-time job 
B) a 35-year-old woman fired from her prior work because of poor performance and looking for another job 
C) a 50-year-old woman laid off from her former job because of a downturn in the company's sales and looking for another job 
D) a 22-year-old aspiring actress currently without any show business employment, but working temporarily as a waitress while she auditions for acting jobs 
A) a recent college graduate currently without any employment and looking for her first full-time job 
B) a 35-year-old woman fired from her prior work because of poor performance and looking for another job 
C) a 50-year-old woman laid off from her former job because of a downturn in the company's sales and looking for another job 
D) a 22-year-old aspiring actress currently without any show business employment, but working temporarily as a waitress while she auditions for acting jobs

Question 17

A person who is employed in the construction industry may frequently experience

Accepted Answer

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

Question 18

The level of unemployment that is equal to the frictional and structural rate in the long run is sometimes referred to as

Accepted Answer

A) cyclical employment. 
B) the natural rate of unemployment. 
C) the total rate of unemployment. 
D) the zero unemployment rate. 
A) cyclical employment. 
B) the natural rate of unemployment. 
C) the total rate of unemployment. 
D) the zero unemployment rate.

Question 19

Assume you borrow funds to buy a new car at 10 percent interest and you think that the economy-wide rate of inflation over the life of the loan will be 8 percent. If you are correct in your assumption, your real rate of interest on the car loan will be

Accepted Answer

A) 2 percent. 
B) 8 percent. 
C) 10 percent. 
D) 18 percent. 
A) 2 percent. 
B) 8 percent. 
C) 10 percent. 
D) 18 percent.

Question 20

Mrs. Garcia lost her job at a textile mill due to competition from cheaper imported goods. She would be classified as

Accepted Answer

A) frictionally unemployed. 
B) not in the labor force. 
C) cyclically unemployed. 
D) structurally unemployed. 
A) frictionally unemployed. 
B) not in the labor force. 
C) cyclically unemployed. 
D) structurally unemployed.

A price index is the

To be officially classified as unemployed, a person must be

"Discouraged workers"

A period of time in which the overall business activity is rising at a rapid rate is known as

-Refer to the above table. You are given information on Jasmin's consumption for 2005 and 2015. Using 2005 as the base year compute the price index for 2015. The index equals

Unemployment statistics are often criticized for

Inflation can cause a misallocation of resources because

Which of the following is a measure of general inflation that is NOT based on a fixed market basket of goods and services?

An unexpected reduction in inflation would tend to benefit which of the following?

If the Bureau of Labor Statistics changed the way it calculates the consumer price index (CPI)so as to take into account product quality changes and the changing mix of products and services purchased by the average family, the result would most likely

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is and the new unemployment rate is .

Inflation refers to the situation when

In a small country, the adult population is 10,000. In that country, 7,000 people are in the labor force and 6,300 people are employed. The unemployment rate equals

Which of the following can cause official unemployment figures to underestimate the true unemployment rate?

Which one of the following individuals is NOT counted as unemployed?

A person who is employed in the construction industry may frequently experience

The level of unemployment that is equal to the frictional and structural rate in the long run is sometimes referred to as

Assume you borrow funds to buy a new car at 10 percent interest and you think that the economy-wide rate of inflation over the life of the loan will be 8 percent. If you are correct in your assumption, your real rate of interest on the car loan will be

Mrs. Garcia lost her job at a textile mill due to competition from cheaper imported goods. She would be classified as

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

A price index is the

To be officially classified as unemployed, a person must be

"Discouraged workers"

A period of time in which the overall business activity is rising at a rapid rate is known as

-Refer to the above table. You are given information on Jasmin's consumption for 2005 and 2015. Using 2005 as the base year compute the price index for 2015. The index equals

Unemployment statistics are often criticized for

Inflation can cause a misallocation of resources because

Which of the following is a measure of general inflation that is NOT based on a fixed market basket of goods and services?

An unexpected reduction in inflation would tend to benefit which of the following?

If the Bureau of Labor Statistics changed the way it calculates the consumer price index (CPI)so as to take into account product quality changes and the changing mix of products and services purchased by the average family, the result would most likely

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is ________ and the new unemployment rate is ________.

Inflation refers to the situation when

In a small country, the adult population is 10,000. In that country, 7,000 people are in the labor force and 6,300 people are employed. The unemployment rate equals

Which of the following can cause official unemployment figures to underestimate the true unemployment rate?

Which one of the following individuals is NOT counted as unemployed?

A person who is employed in the construction industry may frequently experience

The level of unemployment that is equal to the frictional and structural rate in the long run is sometimes referred to as

Assume you borrow funds to buy a new car at 10 percent interest and you think that the economy-wide rate of inflation over the life of the loan will be 8 percent. If you are correct in your assumption, your real rate of interest on the car loan will be

Mrs. Garcia lost her job at a textile mill due to competition from cheaper imported goods. She would be classified as

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

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is and the new unemployment rate is .