Question 1

Real interest rates at times have been negative.Why would anyone lending money agree to a negative real interest rate?

Accepted Answer

The lender did not agree to a negative r

Question 2

If the price level rose in three consecutive years from 100 to 120 to 140,then the annual inflation rate over those years would

Accepted Answer

A)  increase. 
B)  remain the same. 
C)  decrease. 
D)  equal 20%. 
A)  increase. 
B)  remain the same. 
C)  decrease. 
D)  equal 20%.

Question 3

Table 13-14
 $\begin{array}{|c|c|c|}
\hline \text { Year } & \begin{array}{c}
\text { Nominal Average } \
\text { Hourly Earnings }
\end{array} & \begin{array}{c}
\text { CPI (1982-1984 = } \
\mathbf{1 0 0})
\end{array} \
\hline 1965 & \$ 2.65 & 32 \
\hline 2010 & 22.59 & 219 \
\hline
\end{array}$ The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 13-14.The percentage change in real average earnings from 1965 to 2010 equals

Accepted Answer

A)  2.0 percent. 
B)  19.7 percent. 
C)  24.6 percent. 
D)  80.3 percent. 
A)  2.0 percent. 
B)  19.7 percent. 
C)  24.6 percent. 
D)  80.3 percent.

Question 4

Most economists believe that the biases in the consumer price index cause the CPI to overstate the true inflation rate by about

Accepted Answer

A)  one-half to one percentage point. 
B)  one to two percentage points. 
C)  one quarter percentage point. 
D)  one and one-half percentage points. 
A)  one-half to one percentage point. 
B)  one to two percentage points. 
C)  one quarter percentage point. 
D)  one and one-half percentage points.

Question 5

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

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 6

When deflation occurs

Accepted Answer

A)  the real interest rate is greater than the nominal interest rate. 
B)  the nominal interest rate is greater than the real interest rate. 
C)  the nominal interest rate is equal to the real interest rate and inflation is negative. 
D)  the nominal interest rate is equal to the real interest rate and inflation is positive. 
A)  the real interest rate is greater than the nominal interest rate. 
B)  the nominal interest rate is greater than the real interest rate. 
C)  the nominal interest rate is equal to the real interest rate and inflation is negative. 
D)  the nominal interest rate is equal to the real interest rate and inflation is positive.

Question 7

Table 13-22
 $\begin{array}{|c|c|c|}
\hline \text { Year } & \begin{array}{c}
\text { Nominal Average Hourly } \
\text { Earnings }
\end{array} & \begin{array}{c}
\text { CPI } \
(\mathbf{1 9 8 2 - 1 9 8 4}=\mathbf{1 0 0})
\end{array} \
\hline 2016 & \$ 10 & 100 \
\hline 2017 & 11 & 105 \
\hline 2018 & 12 & 110 \
\hline
\end{array}$
-Refer to Table 13-22.Using the above table,calculate real average hourly earnings for 2016,2017,and 2018.Calculate the rate of growth of real average hourly earnings from 2017 to 2018.

Accepted Answer

Real average hourly earnings in 2016 are

Question 8

The costs to firms of changing prices are called

Accepted Answer

A)  redistribution costs. 
B)  menu costs. 
C)  anticipation costs. 
D)  money illusion costs. 
A)  redistribution costs. 
B)  menu costs. 
C)  anticipation costs. 
D)  money illusion costs.

Question 9

If the nominal rate of interest is 6.5% and the inflation rate is 3.0%,what is the real rate of interest?

Accepted Answer

A)  -9.5% 
B)  -3.5% 
C)  1.5% 
D)  3.5% 
E)  9.5% 
A)  -9.5% 
B)  -3.5% 
C)  1.5% 
D)  3.5% 
E)  9.5%

Question 10

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?

Accepted Answer

The substitution bias causes the CPI to

Question 11

Minimum wage laws cause unemployment because the legal minimum wage is set

Accepted Answer

A)  below the market wage, causing labor demand to be greater than labor supply. 
B)  below the market wage, causing labor demand to be less than labor supply. 
C)  above the market wage, causing labor demand to be greater than labor supply. 
D)  above the market wage, causing labor demand to be less than labor supply. 
A)  below the market wage, causing labor demand to be greater than labor supply. 
B)  below the market wage, causing labor demand to be less than labor supply. 
C)  above the market wage, causing labor demand to be greater than labor supply. 
D)  above the market wage, causing labor demand to be less than labor supply.

Question 12

The nominal interest rate minus the inflation rate equals the real interest rate.

Accepted Answer

A) True 
 B)False

Question 13

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 14

The unemployment rate is higher with a minimum wage law than it would be without a minimum wage law.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that in 2018,all prices in the economy double and that all wages and salaries also double.In 2018 you

Accepted Answer

A)  are worse off than you were in 2017 as you can no longer afford to buy as many goods and services. 
B)  are better off than you were in 2017 as your salary is higher than it was in 2017 and you can now buy more goods and services. 
C)  are no better off or worse off than you were in 2017 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 2017, because the purchasing power of your salary cannot be determined. 
A)  are worse off than you were in 2017 as you can no longer afford to buy as many goods and services. 
B)  are better off than you were in 2017 as your salary is higher than it was in 2017 and you can now buy more goods and services. 
C)  are no better off or worse off than you were in 2017 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 2017, because the purchasing power of your salary cannot be determined.

Question 16

The labor force participation rate is defined as

Accepted Answer

A)  the percentage of the working-age population that is employed. 
B)  the percentage of the working-age population that is unemployed. 
C)  the percentage of the labor force that is employed. 
D)  the percentage of the labor force that is unemployed. 
E)  the percentage of the working-age population in the labor force. 
A)  the percentage of the working-age population that is employed. 
B)  the percentage of the working-age population that is unemployed. 
C)  the percentage of the labor force that is employed. 
D)  the percentage of the labor force that is unemployed. 
E)  the percentage of the working-age population in the labor force.

Question 17

If the number employed is 190 million,the working-age population is 230 million,and the number unemployed is 10 million,then the unemployment rate is

Accepted Answer

A)  5%. 
B)  5.2%. 
C)  8%. 
D)  10%. 
E)  50%. 
A)  5%. 
B)  5.2%. 
C)  8%. 
D)  10%. 
E)  50%.

Question 18

By offering training to workers whose firms laid them off because of competition from foreign firms,the federal government is attempting to reduce

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 19

The CPI in 1990 was 131,and the CPI in 2010 was 218.If you earned a salary of $40,000 in 1990,what would be a salary with equivalent purchasing power in 2010?

Accepted Answer

A)  $45,977 
B)  $66,565 
C)  $87,200 
D)  $143,486 
A)  $45,977 
B)  $66,565 
C)  $87,200 
D)  $143,486

Question 20

Jack lost his job six months ago,and he's been actively looking for a new job ever since.The Bureau of Labor Statistics would classify Jack as

Accepted Answer

A)  unemployed. 
B)  out of the labor force. 
C)  a discouraged worker. 
D)  all of the above. 
A)  unemployed. 
B)  out of the labor force. 
C)  a discouraged worker. 
D)  all of the above.

Real interest rates at times have been negative.Why would anyone lending money agree to a negative real interest rate?

If the price level rose in three consecutive years from 100 to 120 to 140,then the annual inflation rate over those years would

Most economists believe that the biases in the consumer price index cause the CPI to overstate the true inflation rate by about

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

When deflation occurs

Table 13-22 Year Nominal Average Hourly Earnings CPI (=) 2016 \ 10 100 2017 11 105 2018 12 110 -Refer to Table 13-22.Using the above table,calculate real average hourly earnings for 2016,2017,and 2018.Calculate the rate of growth of real average hourly earnings from 2017 to 2018.

The costs to firms of changing prices are called

If the nominal rate of interest is 6.5% and the inflation rate is 3.0%,what is the real rate of interest?

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?

Minimum wage laws cause unemployment because the legal minimum wage is set

The nominal interest rate minus the inflation rate equals the real interest rate.

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

The unemployment rate is higher with a minimum wage law than it would be without a minimum wage law.

Suppose that in 2018,all prices in the economy double and that all wages and salaries also double.In 2018 you

The labor force participation rate is defined as

If the number employed is 190 million,the working-age population is 230 million,and the number unemployed is 10 million,then the unemployment rate is

By offering training to workers whose firms laid them off because of competition from foreign firms,the federal government is attempting to reduce

The CPI in 1990 was 131,and the CPI in 2010 was 218.If you earned a salary of $40,000 in 1990,what would be a salary with equivalent purchasing power in 2010?

Jack lost his job six months ago,and he's been actively looking for a new job ever since.The Bureau of Labor Statistics would classify Jack as

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

Real interest rates at times have been negative.Why would anyone lending money agree to a negative real interest rate?

If the price level rose in three consecutive years from 100 to 120 to 140,then the annual inflation rate over those years would

Most economists believe that the biases in the consumer price index cause the CPI to overstate the true inflation rate by about

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

When deflation occurs

Table 13-22 Year Nominal Average Hourly Earnings CPI (=) 2016 \ 10 100 2017 11 105 2018 12 110 -Refer to Table 13-22.Using the above table,calculate real average hourly earnings for 2016,2017,and 2018.Calculate the rate of growth of real average hourly earnings from 2017 to 2018.

The costs to firms of changing prices are called

If the nominal rate of interest is 6.5% and the inflation rate is 3.0%,what is the real rate of interest?

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?

Minimum wage laws cause unemployment because the legal minimum wage is set

The nominal interest rate minus the inflation rate equals the real interest rate.

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

The unemployment rate is higher with a minimum wage law than it would be without a minimum wage law.

Suppose that in 2018,all prices in the economy double and that all wages and salaries also double.In 2018 you

The labor force participation rate is defined as

If the number employed is 190 million,the working-age population is 230 million,and the number unemployed is 10 million,then the unemployment rate is

By offering training to workers whose firms laid them off because of competition from foreign firms,the federal government is attempting to reduce

The CPI in 1990 was 131,and the CPI in 2010 was 218.If you earned a salary of $40,000 in 1990,what would be a salary with equivalent purchasing power in 2010?

Jack lost his job six months ago,and he's been actively looking for a new job ever since.The Bureau of Labor Statistics would classify Jack as

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

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