Question 1

When an economy is at its natural rate of unemployment, which of the following will be true?

Accepted Answer

A) The unemployment rate will be 0%. 
B) The labour force participation rate will be 100%. 
C) The unemployment rate will be greater than 0%. 
D) The employment population ratio will be 80%. 
E) Only structural unemployment as a result of technological change will exist in the economy. 
A) The unemployment rate will be 0%. 
B) The labour force participation rate will be 100%. 
C) The unemployment rate will be greater than 0%. 
D) The employment population ratio will be 80%. 
E) Only structural unemployment as a result of technological change will exist in the economy.

Question 2

Table 5.3  
-Refer to Table 5.3.Assume the market basket for the consumer price index has three products - Cokes, hamburgers, and CDs - with the above values in 2002 and 2014 for price and quantity.The Consumer Price Index for 2014 equals

Accepted Answer

A) 75. 
B) 93. 
C) 108. 
D) 121. 
E) 132. 
A) 75. 
B) 93. 
C) 108. 
D) 121. 
E) 132.

Question 3

Table 5.20  
-Refer to Table 5.20.The table above lists the actual minimum wage and CPI in 1981 and in 2015.Using the above table, calculate the real minimum wage for 1981 and 2015.Calculate the rate of growth of the real minimum wage from 1981 to 2015.Are workers better off in terms of the purchasing power of a dollar in 1981 or 2015? Explain why.

Accepted Answer

The real minimum wage in 1981 is @#IMG-DLM& × 100

Question 4

The advice to "retrain" would be most appropriate for which of the following types of unemployment?

Accepted Answer

A) frictional unemployment 
B) structural unemployment 
C) cyclical unemployment 
D) core unemployment 
E) seasonal unemployment 
A) frictional unemployment 
B) structural unemployment 
C) cyclical unemployment 
D) core unemployment 
E) seasonal unemployment

Question 5

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 6

In Canada the Employment Insurance (EI)will tend to ________ the opportunity cost of continuing to search for a job, and generally will ________ the unemployment rate.

Accepted Answer

A) lower; lower 
B) lower; increase 
C) increase; lower 
D) increase; increase 
E) increase; not impact 
A) lower; lower 
B) lower; increase 
C) increase; lower 
D) increase; increase 
E) increase; not impact

Question 7

Table 5.19  
-Refer to Table 5.19.Looking at the table above, what is the rate of growth of the average price level from 2011 to 2012?

Accepted Answer

A) 0.9% 
B) 1.5% 
C) 2% 
D) 2.1% 
E) 19% 
A) 0.9% 
B) 1.5% 
C) 2% 
D) 2.1% 
E) 19%

Question 8

During the recession of 2008-2009, cyclical unemployment increased as the recession continued.This increase in cyclical unemployment

Accepted Answer

A) increased the natural rate of unemployment. 
B) decreased the natural rate of unemployment. 
C) had no effect on the natural rate of unemployment. 
D) could have increased or decreased the natural rate of unemployment. 
A) increased the natural rate of unemployment. 
B) decreased the natural rate of unemployment. 
C) had no effect on the natural rate of unemployment. 
D) could have increased or decreased the natural rate of unemployment.

Question 9

If inflation is anticipated, some effects of inflation on the redistribution of income can be avoided.

Accepted Answer

A) True 
 B)False

Question 10

In 2016 thousands of workers were laid-off in Alberta's oil and gas sector due to low prices for crude oil.Workers outside the oil and gas sector who lose their jobs due to the increase in unemployment would be classed as

Accepted Answer

A) cyclically unemployed. 
B) structurally unemployed. 
C) seasonally unemployed. 
D) frictionally unemployed. 
E) under employed. 
A) cyclically unemployed. 
B) structurally unemployed. 
C) seasonally unemployed. 
D) frictionally unemployed. 
E) under employed.

Question 11

Table 5.19  
-Refer to Table 5.19.Looking at the table above, what is the approximate rate of growth of real average hourly earnings from 2011 to 2012?

Accepted Answer

A) 0.67% 
B) 2% 
C) 0% 
D) -2% 
E) -0.5% 
A) 0.67% 
B) 2% 
C) 0% 
D) -2% 
E) -0.5%

Question 12

The CPI in 1997 was 90.4, and the CPI in 2015 was 126.6.If you earned a salary of $60,000 in 1997, what would be a salary with equivalent purchasing power in 2016?

Accepted Answer

A) $54,240 
B) $75,960 
C) $84,027 
D) $127,214 
E) $136,841 
A) $54,240 
B) $75,960 
C) $84,027 
D) $127,214 
E) $136,841

Question 13

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket.

Accepted Answer

A) change; overestimates 
B) change; underestimates 
C) do not change; overestimates 
D) do not change; underestimates 
A) change; overestimates 
B) change; underestimates 
C) do not change; overestimates 
D) do not change; underestimates

Question 14

An issue with the Labour Force Survey (LFS)which overstates the extent of joblessness is

Accepted Answer

A) individuals who are working but concealing it for legal reasons are counted as unemployed. 
B) they verify claims that people have actively looked for work. 
C) they tend to count unemployed people more often because they are not working. 
D) there is no distinction between employees who work part-time but would like to have a full-time job and those who are content with their full- or part-time job. 
E) people who choose not to work are counted as unemployed. 
A) individuals who are working but concealing it for legal reasons are counted as unemployed. 
B) they verify claims that people have actively looked for work. 
C) they tend to count unemployed people more often because they are not working. 
D) there is no distinction between employees who work part-time but would like to have a full-time job and those who are content with their full- or part-time job. 
E) people who choose not to work are counted as unemployed.

Question 15

If inflationary expectations are increasing, we would expect that the nominal interest rate would also be increasing, holding all else constant.

Accepted Answer

A) True 
 B)False

Question 16

The labour 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 labour force that is employed. 
D) the percentage of the labour force that is unemployed. 
E) the percentage of the working-age population in the labour 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 labour force that is employed. 
D) the percentage of the labour force that is unemployed. 
E) the percentage of the working-age population in the labour force.

Question 17

The unemployment rate is an important economic statistic that can tell us about the health of the economy.If the unemployment rate turns out to be high or higher than anticipated, we would expect

Accepted Answer

A) it is more likely that an incumbent Prime Minister will be re-elected. 
B) that stock prices are more likely to fall. 
C) that jobs are less difficult to find. 
D) that investors will be more optimistic about the economy. 
E) consumer spending is likely to rise. 
A) it is more likely that an incumbent Prime Minister will be re-elected. 
B) that stock prices are more likely to fall. 
C) that jobs are less difficult to find. 
D) that investors will be more optimistic about the economy. 
E) consumer spending is likely to rise.

Question 18

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 underpredicted 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 underpredicted. 
E) A professional pays more income taxes because tax brackets were not adjusted for inflation. 
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 underpredicted 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 underpredicted. 
E) A professional pays more income taxes because tax brackets were not adjusted for inflation.

Question 19

The unemployment rate equals the number of unemployed divided by the ________, all times 100.

Accepted Answer

A) number of employed 
B) labour force 
C) working-age population 
D) total population 
E) discouraged workers 
A) number of employed 
B) labour force 
C) working-age population 
D) total population 
E) discouraged workers

Question 20

The "new product bias" in the consumer price index refers to the idea that

Accepted Answer

A) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers. 
B) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers. 
C) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers. 
D) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers. 
E) new products are often over represented in the basket as consumers move quickly to adopt new technology and then buy fewer units as time passes. 
A) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers. 
B) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers. 
C) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers. 
D) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers. 
E) new products are often over represented in the basket as consumers move quickly to adopt new technology and then buy fewer units as time passes.

When an economy is at its natural rate of unemployment, which of the following will be true?

Table 5.3 -Refer to Table 5.3.Assume the market basket for the consumer price index has three products - Cokes, hamburgers, and CDs - with the above values in 2002 and 2014 for price and quantity.The Consumer Price Index for 2014 equals

The advice to "retrain" would be most appropriate for which of the following types of unemployment?

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

In Canada the Employment Insurance (EI)will tend to the opportunity cost of continuing to search for a job, and generally will the unemployment rate.

Table 5.19 -Refer to Table 5.19.Looking at the table above, what is the rate of growth of the average price level from 2011 to 2012?

During the recession of 2008-2009, cyclical unemployment increased as the recession continued.This increase in cyclical unemployment

If inflation is anticipated, some effects of inflation on the redistribution of income can be avoided.

In 2016 thousands of workers were laid-off in Alberta's oil and gas sector due to low prices for crude oil.Workers outside the oil and gas sector who lose their jobs due to the increase in unemployment would be classed as

Table 5.19 -Refer to Table 5.19.Looking at the table above, what is the approximate rate of growth of real average hourly earnings from 2011 to 2012?

The CPI in 1997 was 90.4, and the CPI in 2015 was 126.6.If you earned a salary of $60,000 in 1997, what would be a salary with equivalent purchasing power in 2016?

The substitution bias in the consumer price index refers to the idea that consumers the quantity of products they buy in response to price, and the CPI does not reflect this and the cost of the market basket.

An issue with the Labour Force Survey (LFS)which overstates the extent of joblessness is

If inflationary expectations are increasing, we would expect that the nominal interest rate would also be increasing, holding all else constant.

The labour force participation rate is defined as

The unemployment rate is an important economic statistic that can tell us about the health of the economy.If the unemployment rate turns out to be high or higher than anticipated, we would expect

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

The unemployment rate equals the number of unemployed divided by the ________, all times 100.

The "new product bias" in the consumer price index refers to the idea that

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

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 Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 5: Unemployment and Inflation

When an economy is at its natural rate of unemployment, which of the following will be true?

Table 5.3 -Refer to Table 5.3.Assume the market basket for the consumer price index has three products - Cokes, hamburgers, and CDs - with the above values in 2002 and 2014 for price and quantity.The Consumer Price Index for 2014 equals

The advice to "retrain" would be most appropriate for which of the following types of unemployment?

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

In Canada the Employment Insurance (EI)will tend to ________ the opportunity cost of continuing to search for a job, and generally will ________ the unemployment rate.

Table 5.19 -Refer to Table 5.19.Looking at the table above, what is the rate of growth of the average price level from 2011 to 2012?

During the recession of 2008-2009, cyclical unemployment increased as the recession continued.This increase in cyclical unemployment

If inflation is anticipated, some effects of inflation on the redistribution of income can be avoided.

In 2016 thousands of workers were laid-off in Alberta's oil and gas sector due to low prices for crude oil.Workers outside the oil and gas sector who lose their jobs due to the increase in unemployment would be classed as

Table 5.19 -Refer to Table 5.19.Looking at the table above, what is the approximate rate of growth of real average hourly earnings from 2011 to 2012?

The CPI in 1997 was 90.4, and the CPI in 2015 was 126.6.If you earned a salary of $60,000 in 1997, what would be a salary with equivalent purchasing power in 2016?

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket.

An issue with the Labour Force Survey (LFS)which overstates the extent of joblessness is

If inflationary expectations are increasing, we would expect that the nominal interest rate would also be increasing, holding all else constant.

The labour force participation rate is defined as

The unemployment rate is an important economic statistic that can tell us about the health of the economy.If the unemployment rate turns out to be high or higher than anticipated, we would expect

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

The unemployment rate equals the number of unemployed divided by the ________, all times 100.

The "new product bias" in the consumer price index refers to the idea that

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

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 Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

In Canada the Employment Insurance (EI)will tend to the opportunity cost of continuing to search for a job, and generally will the unemployment rate.

The substitution bias in the consumer price index refers to the idea that consumers the quantity of products they buy in response to price, and the CPI does not reflect this and the cost of the market basket.