Question 1

Which of the following is a stock variable? The number of

Accepted Answer

A)  unemployed people. 
B)  reentrants. 
C)  job losers. 
D)  job leavers. 
A)  unemployed people. 
B)  reentrants. 
C)  job losers. 
D)  job leavers.

Question 2

A worker who has quit her job to obtain a higher paying job would be included in which unemployment category?

Accepted Answer

A)  Frictional unemployment 
B)  Cyclical unemployment 
C)  Structural unemployment 
D)  Seasonal unemployment 
A)  Frictional unemployment 
B)  Cyclical unemployment 
C)  Structural unemployment 
D)  Seasonal unemployment

Question 3

-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)  1.5. 
B)  70.588. 
C)  141.667. 
D)  107.143. 
A)  1.5. 
B)  70.588. 
C)  141.667. 
D)  107.143.

Question 4

An unemployment rate of zero cannot be expected since

Accepted Answer

A)  there are some people who do not want to work. 
B)  there will always be discouraged workers. 
C)  some portion of the labor force will always be between jobs. 
D)  aggregate demand can never create enough job vacancies. 
A)  there are some people who do not want to work. 
B)  there will always be discouraged workers. 
C)  some portion of the labor force will always be between jobs. 
D)  aggregate demand can never create enough job vacancies.

Question 5

Unemployment is a

Accepted Answer

A)  flow concept. 
B)  stock concept. 
C)  both a flow and a stock concept. 
D)  neither a stock nor a flow concept. 
A)  flow concept. 
B)  stock concept. 
C)  both a flow and a stock concept. 
D)  neither a stock nor a flow concept.

Question 6

The labor force participation rate is

Accepted Answer

A)  the percentage of the population who are in the labor force. 
B)  the percentage of the non-institutionalized working age population who is in the labor force. 
C)  the percentage of the non-institutionalized population who is in the labor force. 
D)  the percentage of the entire population who is in the labor force. 
A)  the percentage of the population who are in the labor force. 
B)  the percentage of the non-institutionalized working age population who is in the labor force. 
C)  the percentage of the non-institutionalized population who is in the labor force. 
D)  the percentage of the entire population who is in the labor force.

Question 7

People who have dropped out of the labor force and who are no longer looking for a job because they believe the job market has little to offer them are classified by the Labor Department as

Accepted Answer

A)  unemployed. 
B)  non-participants. 
C)  discouraged workers. 
D)  wage-rate busters. 
A)  unemployed. 
B)  non-participants. 
C)  discouraged workers. 
D)  wage-rate busters.

Question 8

If the duration of unemployment increases, what happens to the unemployment rate, other things being equal? Why?

Accepted Answer

An increase in the duration of unemploym

Question 9

A discouraged worker is someone who

Accepted Answer

A)  has been fired. 
B)  is unemployed. 
C)  is not in the labor force. 
D)  is employed. 
A)  has been fired. 
B)  is unemployed. 
C)  is not in the labor force. 
D)  is employed.

Question 10

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.

Question 11

Which of the following is true of unemployment?

Accepted Answer

A)  It is defined as the number of people actively looking for work who do not have jobs. 
B)  The result is that the economy operates inside its production possibilities curve. 
C)  There are psychological consequences associated with unemployment. 
D)  All of the above. 
A)  It is defined as the number of people actively looking for work who do not have jobs. 
B)  The result is that the economy operates inside its production possibilities curve. 
C)  There are psychological consequences associated with unemployment. 
D)  All of the above.

Question 12

In a small country, there are 5,000 people in the labor force and 3,000 people are employed. The labor force participation rate equals

Accepted Answer

A)  40 percent. 
B)  60 percent. 
C)  62.5 percent. 
D)  an undetermined amount given the lack of information. 
A)  40 percent. 
B)  60 percent. 
C)  62.5 percent. 
D)  an undetermined amount given the lack of information.

Question 13

Structural unemployment results when

Accepted Answer

A)  a reduction in consumer income reduces demand for products. 
B)  individuals enter the labor market in June following graduation. 
C)  workers face layoffs following a decrease in economic activity. 
D)  the introduction of a product substitute leads to a large decline in the market demand for a product so that workers specializing in the production of that product find themselves out of work. 
A)  a reduction in consumer income reduces demand for products. 
B)  individuals enter the labor market in June following graduation. 
C)  workers face layoffs following a decrease in economic activity. 
D)  the introduction of a product substitute leads to a large decline in the market demand for a product so that workers specializing in the production of that product find themselves out of work.

Question 14

Ups and downs in business activity are referred to as

Accepted Answer

A)  ebb and flow. 
B)  contractions. 
C)  variability. 
D)  business fluctuations. 
A)  ebb and flow. 
B)  contractions. 
C)  variability. 
D)  business fluctuations.

Question 15

Deflation refers to a situation in which

Accepted Answer

A)  the inflation rate decreases. 
B)  the average of all prices is falling. 
C)  there is a recession and inflation. 
D)  prices are not changing. 
A)  the inflation rate decreases. 
B)  the average of all prices is falling. 
C)  there is a recession and inflation. 
D)  prices are not changing.

Question 16

When computing a price index, the base year is

Accepted Answer

A)  the earliest year for which data are available. 
B)  the year that is chosen as the point of reference for comparison of prices with other years. 
C)  the most recent year for which data are available. 
D)  the most recent year in which the inflation rate was close to zero. 
A)  the earliest year for which data are available. 
B)  the year that is chosen as the point of reference for comparison of prices with other years. 
C)  the most recent year for which data are available. 
D)  the most recent year in which the inflation rate was close to zero.

Question 17

Which of the following statements is true if your money income stays the same but the price of one good that you are buying goes up?

Accepted Answer

A)  Your effective purchasing power falls. 
B)  Your nominal income has been decreased. 
C)  You will have to reduce the quantities you purchase of all goods. 
D)  Your real income has increased. 
A)  Your effective purchasing power falls. 
B)  Your nominal income has been decreased. 
C)  You will have to reduce the quantities you purchase of all goods. 
D)  Your real income has increased.

Question 18

The relationship between the producer price index (PPI) and the consumer price index (CPI) is such that, in the short run,

Accepted Answer

A)  the CPI usually increases before the PPI. 
B)  the CPI and the PPI usually move simultaneously. 
C)  the PPI usually increases before the CPI. 
D)  the CPI and the PPI usually move in opposite directions. 
A)  the CPI usually increases before the PPI. 
B)  the CPI and the PPI usually move simultaneously. 
C)  the PPI usually increases before the CPI. 
D)  the CPI and the PPI usually move in opposite directions.

Question 19

Suppose the rate of inflation unexpectedly decreases from 7% to 4%. Which one of the following would most likely benefit from this unexpected reduction in the rate of inflation?

Accepted Answer

A)  creditors. 
B)  a borrower whose loan has a fixed nominal interest rate. 
C)  debtors. 
D)  workers who are covered by a COLA agreement. 
A)  creditors. 
B)  a borrower whose loan has a fixed nominal interest rate. 
C)  debtors. 
D)  workers who are covered by a COLA agreement.

Question 20

A person graduates from college, then starts to look for a job. This is an example of

Accepted Answer

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

Exam 7: The Macroeconomy: Unemployment, Inflation, and Deflation

Which of the following is a stock variable? The number of

A worker who has quit her job to obtain a higher paying job would be included in which unemployment category?

-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

An unemployment rate of zero cannot be expected since

Unemployment is a

The labor force participation rate is

People who have dropped out of the labor force and who are no longer looking for a job because they believe the job market has little to offer them are classified by the Labor Department as

If the duration of unemployment increases, what happens to the unemployment rate, other things being equal? Why?

A discouraged worker is someone who

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

Which of the following is true of unemployment?

In a small country, there are 5,000 people in the labor force and 3,000 people are employed. The labor force participation rate equals

Structural unemployment results when

Ups and downs in business activity are referred to as

Deflation refers to a situation in which

When computing a price index, the base year is

Which of the following statements is true if your money income stays the same but the price of one good that you are buying goes up?

The relationship between the producer price index (PPI) and the consumer price index (CPI) is such that, in the short run,

Suppose the rate of inflation unexpectedly decreases from 7% to 4%. Which one of the following would most likely benefit from this unexpected reduction in the rate of inflation?

A person graduates from college, then starts to look for a job. This is an example of

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

Measuring the Economys Performance

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

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters