Question 1

The equilibrium wage in a local labour market is $12 per hour.If a minimum wage of $15 per hour is imposed, which of the following will occur?

Accepted Answer

A) There will be an increase in unemployment. 
B) There will be an increase in the quantity of labour demanded by firms. 
C) There will be a decrease in the quantity of labour supplied by households. 
D) There will be a decrease in automation. 
E) All of the above will occur. 
A) There will be an increase in unemployment. 
B) There will be an increase in the quantity of labour demanded by firms. 
C) There will be a decrease in the quantity of labour supplied by households. 
D) There will be a decrease in automation. 
E) All of the above will occur.

Question 2

Nominal income is equal to real income if the CPI is less than 100.

Accepted Answer

A) True 
 B)False

Question 3

Table 5.4  
-Refer to Table 5.4.Assume the market basket for the consumer price index has two products - meat and potatoes - with the above values in 2002 and 2014 for price and quantity.The Consumer Price Index for 2014 equals

Accepted Answer

A) 125. 
B) 129. 
C) 135. 
D) 141. 
E) 153. 
A) 125. 
B) 129. 
C) 135. 
D) 141. 
E) 153.

Question 4

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

Accepted Answer

A) employed. 
B) unemployed. 
C) not in the labour force. 
D) not in the working-age population. 
E) not legally entitled to work. 
A) employed. 
B) unemployed. 
C) not in the labour force. 
D) not in the working-age population. 
E) not legally entitled to work.

Question 5

The most important group not identified by the unemployment rate is

Accepted Answer

A) seniors. 
B) discouraged workers. 
C) part-time workers seeking full-time work. 
D) those under the minimum working age. 
E) students. 
A) seniors. 
B) discouraged workers. 
C) part-time workers seeking full-time work. 
D) those under the minimum working age. 
E) students.

Question 6

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 2012 to 2013?

Accepted Answer

A) 0.9% 
B) 1.5% 
C) 2% 
D) 2.6% 
E) 5.25% 
A) 0.9% 
B) 1.5% 
C) 2% 
D) 2.6% 
E) 5.25%

Question 7

If the CPI rises from 206.7 to 212.7 between two consecutive years, by how much has the cost of living changed between these two years?

Accepted Answer

A) The cost of living has increased by 6%. 
B) The cost of living has increased by 2.9%. 
C) The cost of living has increased by 12.7%. 
D) The cost of living has decreased by 6%. 
E) The cost of living has decreased by 5.1%. 
A) The cost of living has increased by 6%. 
B) The cost of living has increased by 2.9%. 
C) The cost of living has increased by 12.7%. 
D) The cost of living has decreased by 6%. 
E) The cost of living has decreased by 5.1%.

Question 8

Which of the following would decrease the unemployment rate?

Accepted Answer

A) an increase in the minimum wage 
B) an increase in the efficiency wage 
C) an increase in labour union membership 
D) government aid to retrain unemployed workers 
E) an increase in the generousity of Employment Insurance payments 
A) an increase in the minimum wage 
B) an increase in the efficiency wage 
C) an increase in labour union membership 
D) government aid to retrain unemployed workers 
E) an increase in the generousity of Employment Insurance payments

Question 9

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time students.This would cause

Accepted Answer

A) the unemployment rate to decrease. 
B) the labour force participation rate to decrease. 
C) the number of discouraged workers to increase. 
D) no change in the unemployment rate. 
E) the employment population ratio to increase. 
A) the unemployment rate to decrease. 
B) the labour force participation rate to decrease. 
C) the number of discouraged workers to increase. 
D) no change in the unemployment rate. 
E) the employment population ratio to increase.

Question 10

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 losses?

Accepted Answer

Lenders require compensation for inflati

Question 11

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. 
E) more than two 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. 
E) more than two percentage points.

Question 12

Table 5.16   Salaries in major league baseball have soared over the last 30 to 40 years.Some of the salary increase is due to inflation.The table above reports the consumer price index and the median nominal salary of the New York Yankees for 1989 and 2009.
Source: USA Today Salaries Database, asp.usatoday.com/sports/baseball/salaries/default.aspx
-Refer to Table 5.16.Calculate the real median salary of the New York Yankees in both 1982-1984 dollars and 2009 dollars.Calculate the percentage increase in the median salary of the Yankees from 1989 to 2009 in both nominal terms and in real terms.

Accepted Answer

Real median salary = @#IMG-DLM& × 100.
Real median

Question 13

The base period for CPI calculations is generally 2002.In 2014, 55% of Canadians had a smartphone, but in 2002 almost no one had a smartphone.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) new product; the CPI underestimating the true change in the cost of living 
E) substitution; 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) new product; the CPI underestimating the true change in the cost of living 
E) substitution; the CPI underestimating the true change in the cost of living

Question 14

To understand why someone cannot get a job, it helps to know the four types of unemployment.List the four types of unemployment and explain what causes each type.What advice for finding a job would be appropriate for someone in each type of unemployment?

Accepted Answer

Frictional unemployment is the unemploym

Question 15

Which of the following labour market statistics best indicates the amount of labour that is available to the economy from a given working-age population?

Accepted Answer

A) unemployment rate 
B) discouraged-worker ratio 
C) labour force participation rate 
D) the ratio of minimum wage to inflation 
E) the employment population ratio 
A) unemployment rate 
B) discouraged-worker ratio 
C) labour force participation rate 
D) the ratio of minimum wage to inflation 
E) the employment population ratio

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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) less than 6 percent. 
B) greater than 6 percent. 
C) equal to 6 percent. 
D) equal to 4 percent. 
A) less than 6 percent. 
B) greater than 6 percent. 
C) equal to 6 percent. 
D) equal to 4 percent.

Question 18

Efficiency wages cause unemployment because

Accepted Answer

A) firms pay wages that are below the market wage, causing the quantity of labour demanded to be greater than the quantity of labour supplied. 
B) firms pay wages that are below the market wage, causing the quantity of labour demanded to be less than the quantity of labour supplied. 
C) firms pay wages that are above the market wage, causing the quantity of labour demanded to be greater than the quantity of labour supplied. 
D) firms pay wages that are above the market wage, causing the quantity of labour demanded to be less than the quantity of labour supplied. 
E) firms pay wages that are above the market wage, causing the quantity of labour demanded to increase in all industries. 
A) firms pay wages that are below the market wage, causing the quantity of labour demanded to be greater than the quantity of labour supplied. 
B) firms pay wages that are below the market wage, causing the quantity of labour demanded to be less than the quantity of labour supplied. 
C) firms pay wages that are above the market wage, causing the quantity of labour demanded to be greater than the quantity of labour supplied. 
D) firms pay wages that are above the market wage, causing the quantity of labour demanded to be less than the quantity of labour supplied. 
E) firms pay wages that are above the market wage, causing the quantity of labour demanded to increase in all industries.

Question 19

What is outlet bias?

Accepted Answer

A) the tendency for households to spend more money over time 
B) the tendency for households to spend their money at discount stores as prices rise 
C) the tendency for the quality of products to improve over time even though the CPI does not measure changes in quality 
D) the tendency for consumers to purchase newer, more technologically advanced products even though they have higher prices 
E) the tendency for households to substitute one good for another in response to price changes 
A) the tendency for households to spend more money over time 
B) the tendency for households to spend their money at discount stores as prices rise 
C) the tendency for the quality of products to improve over time even though the CPI does not measure changes in quality 
D) the tendency for consumers to purchase newer, more technologically advanced products even though they have higher prices 
E) the tendency for households to substitute one good for another in response to price changes

Question 20

Many of the reasons why someone cannot get a job are similar to the reasons why someone cannot get a date.Using the ideas of frictionally unemployed, structurally unemployed, and cyclically unemployed, describe and explain how a student at your university might be frictionally "undated," structurally "undated," seasonally "undated", and cyclically "undated."

Accepted Answer

The frictionally "undated" student does

The equilibrium wage in a local labour market is $12 per hour.If a minimum wage of $15 per hour is imposed, which of the following will occur?

Nominal income is equal to real income if the CPI is less than 100.

Table 5.4 -Refer to Table 5.4.Assume the market basket for the consumer price index has two products - meat and potatoes - with the above values in 2002 and 2014 for price and quantity.The Consumer Price Index for 2014 equals

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

The most important group not identified by the unemployment rate is

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 2012 to 2013?

If the CPI rises from 206.7 to 212.7 between two consecutive years, by how much has the cost of living changed between these two years?

Which of the following would decrease the unemployment rate?

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time students.This would cause

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 losses?

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

The base period for CPI calculations is generally 2002.In 2014, 55% of Canadians had a smartphone, but in 2002 almost no one had a smartphone.This potential for bias in the CPI is referred to as bias and results in .

To understand why someone cannot get a job, it helps to know the four types of unemployment.List the four types of unemployment and explain what causes each type.What advice for finding a job would be appropriate for someone in each type of unemployment?

Which of the following labour market statistics best indicates the amount of labour that is available to the economy from a given working-age population?

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

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

Efficiency wages cause unemployment because

What is outlet bias?

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

Exam 5: Unemployment and Inflation

The equilibrium wage in a local labour market is $12 per hour.If a minimum wage of $15 per hour is imposed, which of the following will occur?

Nominal income is equal to real income if the CPI is less than 100.

Table 5.4 -Refer to Table 5.4.Assume the market basket for the consumer price index has two products - meat and potatoes - with the above values in 2002 and 2014 for price and quantity.The Consumer Price Index for 2014 equals

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

The most important group not identified by the unemployment rate is

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 2012 to 2013?

If the CPI rises from 206.7 to 212.7 between two consecutive years, by how much has the cost of living changed between these two years?

Which of the following would decrease the unemployment rate?

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time students.This would cause

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 losses?

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

The base period for CPI calculations is generally 2002.In 2014, 55% of Canadians had a smartphone, but in 2002 almost no one had a smartphone.This potential for bias in the CPI is referred to as ________ bias and results in ________.

To understand why someone cannot get a job, it helps to know the four types of unemployment.List the four types of unemployment and explain what causes each type.What advice for finding a job would be appropriate for someone in each type of unemployment?

Which of the following labour market statistics best indicates the amount of labour that is available to the economy from a given working-age population?

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

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

Efficiency wages cause unemployment because

What is outlet bias?

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

The base period for CPI calculations is generally 2002.In 2014, 55% of Canadians had a smartphone, but in 2002 almost no one had a smartphone.This potential for bias in the CPI is referred to as bias and results in .