Question 1

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 2

Since 1948,the labor force participation rate for adult men has ________ and for adult women has ________.

Accepted Answer

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

Question 3

Describe how a lender can lose during inflation if the inflation is unanticipated and the loan is a fixed-interest-rate loan.How would a variable-interest-rate loan (one that adjusts over the contract period)eliminate these loses?

Accepted Answer

Lenders require compensation for inflati

Question 4

Due to lowering its prices to compete with its rivals,increased competition from Airbus,and cuts to military spending,Boeing announced it would ________ the number of persons it employed in 2017 and this would ________ the total number of persons unemployed in the economy.

Accepted Answer

A)  decrease; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  increase; increase 
A)  decrease; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  increase; increase

Question 5

Discuss the likely impact of each of the following on the unemployment rate:
a.The length of time workers are eligible to receive unemployment insurance payments is cut in half.
b.The government passes a law making labor unions illegal.
c.The minimum wage is raised by 50 percent.
d.The government funds an Internet site where companies can post job openings at no charge.

Accepted Answer

a∙The unemployment rate will likely decr

Question 6

Which of the following policies would reduce structural unemployment?

Accepted Answer

A)  an increase in the minimum wage 
B)  a job retraining program 
C)  implementing an unemployment insurance policy 
D)  building an online job database that helps workers find jobs 
A)  an increase in the minimum wage 
B)  a job retraining program 
C)  implementing an unemployment insurance policy 
D)  building an online job database that helps workers find jobs

Question 7

The full-employment rate of unemployment is zero.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true about the consumer price index?

Accepted Answer

A)  It accounts for people switching to goods whose prices have fallen. 
B)  It assumes that consumers purchase the same amount of each product in the market basket each month. 
C)  It frequently updates the price changes of new products added to the market basket, as these have a tendency to fall. 
D)  It filters out the part of price increases that occurs because of quality improvements in products. 
A)  It accounts for people switching to goods whose prices have fallen. 
B)  It assumes that consumers purchase the same amount of each product in the market basket each month. 
C)  It frequently updates the price changes of new products added to the market basket, as these have a tendency to fall. 
D)  It filters out the part of price increases that occurs because of quality improvements in products.

Question 9

The producer price index measures the prices that firms

Accepted Answer

A)  pay for imported natural resources that go into the production process. 
B)  receive for the goods and services they export. 
C)  receive for the goods and services they use at all stages of production. 
D)  pay for labor, whether or not the labor is foreign or domestic. 
A)  pay for imported natural resources that go into the production process. 
B)  receive for the goods and services they export. 
C)  receive for the goods and services they use at all stages of production. 
D)  pay for labor, whether or not the labor is foreign or domestic.

Question 10

The producer price index tracks the prices firms receive for goods and services at all stages of production.

Accepted Answer

A) True 
 B)False

Question 11

The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as ________ bias and results in ________.

Accepted Answer

A)  outlet; the CPI underestimating the true change in the cost of living 
B)  new product; the CPI overestimating the true change in the cost of living 
C)  outlet; the CPI overestimating the true change in the cost of living 
D)  net product; the CPI underestimating the true change in the cost of living 
A)  outlet; the CPI underestimating the true change in the cost of living 
B)  new product; the CPI overestimating the true change in the cost of living 
C)  outlet; the CPI overestimating the true change in the cost of living 
D)  net product; the CPI underestimating the true change in the cost of living

Question 12

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 13

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 14

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

Accepted Answer

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

Question 15

Workers laid off as a result of a recession suffer

Accepted Answer

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

Question 16

To obtain real average hourly earnings,nominal average hourly earnings are multiplied by the CPI.

Accepted Answer

A) True 
 B)False

Question 17

Table 13-11
 $\begin{array}{|l|r|r|r|r|r|}
\hline &\text { Ouantity } & \text { Price } & \text { Expenditure } & \text { Price }& \text { Expenditure (on base year} \
\text { Product } & \text { (2013) } & (2013) & {(2013)} & \text { (2018) } & \text { quantities) (2018) } \
\hline \text { Hair cuts } & 6 & \$ 50 & \$ 300 & \$ 70 &\$ 420 \
\hline \text { Backpacks } & 4 & 25 & 100 & 30 &120 \
\hline \text { Tacos } & 100 & 1 & 100 & 5 & 500\
\hline \text { Total } & & & \$ 500 & &\mathbf{\$ 1 , 0 4 0}\
\hline
\end{array}$
-Refer to Table 13-11.Suppose an economy has only three goods and the typical family purchases the amounts given in the table above.If 2013 is the base year,then what is the CPI for 2018?

Accepted Answer

A)  40.08 
B)  100 
C)  180 
D)  208 
A)  40.08 
B)  100 
C)  180 
D)  208

Question 18

Suppose you borrow $1,000 at an interest rate of 12 percent.If the expected real interest rate is 5 percent,then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation

Accepted Answer

A)  equal to 0 percent. 
B)  greater than 7 percent. 
C)  equal to 7 percent. 
D)  less than 7 percent. 
A)  equal to 0 percent. 
B)  greater than 7 percent. 
C)  equal to 7 percent. 
D)  less than 7 percent.

Question 19

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 20

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

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

Since 1948,the labor force participation rate for adult men has and for adult women has .

Describe how a lender can lose during inflation if the inflation is unanticipated and the loan is a fixed-interest-rate loan.How would a variable-interest-rate loan (one that adjusts over the contract period)eliminate these loses?

Due to lowering its prices to compete with its rivals,increased competition from Airbus,and cuts to military spending,Boeing announced it would the number of persons it employed in 2017 and this would the total number of persons unemployed in the economy.

Which of the following policies would reduce structural unemployment?

The full-employment rate of unemployment is zero.

Which of the following is true about the consumer price index?

The producer price index measures the prices that firms

The producer price index tracks the prices firms receive for goods and services at all stages of production.

The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as bias and results in .

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

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

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

Workers laid off as a result of a recession suffer

To obtain real average hourly earnings,nominal average hourly earnings are multiplied by the CPI.

Suppose you borrow $1,000 at an interest rate of 12 percent.If the expected real interest rate is 5 percent,then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation

If an economy experiences deflation,the real interest rate

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.

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

Since 1948,the labor force participation rate for adult men has ________ and for adult women has ________.

Describe how a lender can lose during inflation if the inflation is unanticipated and the loan is a fixed-interest-rate loan.How would a variable-interest-rate loan (one that adjusts over the contract period)eliminate these loses?

Due to lowering its prices to compete with its rivals,increased competition from Airbus,and cuts to military spending,Boeing announced it would ________ the number of persons it employed in 2017 and this would ________ the total number of persons unemployed in the economy.

Which of the following policies would reduce structural unemployment?

The full-employment rate of unemployment is zero.

Which of the following is true about the consumer price index?

The producer price index measures the prices that firms

The producer price index tracks the prices firms receive for goods and services at all stages of production.

The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as ________ bias and results in ________.

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

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

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

Workers laid off as a result of a recession suffer

To obtain real average hourly earnings,nominal average hourly earnings are multiplied by the CPI.

Suppose you borrow $1,000 at an interest rate of 12 percent.If the expected real interest rate is 5 percent,then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation

If an economy experiences deflation,the real interest rate

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.

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

Since 1948,the labor force participation rate for adult men has and for adult women has .

Due to lowering its prices to compete with its rivals,increased competition from Airbus,and cuts to military spending,Boeing announced it would the number of persons it employed in 2017 and this would the total number of persons unemployed in the economy.

The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as bias and results in .