Question 1

Which of the following individuals is NOT counted as unemployed?

Accepted Answer

A)  Jamil, who recently quit his job and is looking for a new position 
B)  Jackie, who was recently fired and is now applying for another job 
C)  Jack, who has become discouraged about ever finding a job and has stopped looking 
D)  Jennifer, who just graduated from college and is now seeking employment with the company of her dreams. 
A)  Jamil, who recently quit his job and is looking for a new position 
B)  Jackie, who was recently fired and is now applying for another job 
C)  Jack, who has become discouraged about ever finding a job and has stopped looking 
D)  Jennifer, who just graduated from college and is now seeking employment with the company of her dreams.

Question 2

A period of time in which the overall business activity is rising at a rapid rate is known as

Accepted Answer

A)  inflation. 
B)  hyperinflation. 
C)  an expansion. 
D)  a contraction. 
A)  inflation. 
B)  hyperinflation. 
C)  an expansion. 
D)  a contraction.

Question 3

Most of the problems caused by inflation are caused by the fact that

Accepted Answer

A)  there are no ways available for people to protect themselves against inflation. 
B)  anticipated inflation induces people to protect themselves against inflation. 
C)  inflation causes the purchasing power of the dollar to increase. 
D)  the inflation is often unanticipated and therefore comes as a surprise to individuals in the economy. 
A)  there are no ways available for people to protect themselves against inflation. 
B)  anticipated inflation induces people to protect themselves against inflation. 
C)  inflation causes the purchasing power of the dollar to increase. 
D)  the inflation is often unanticipated and therefore comes as a surprise to individuals in the economy.

Question 4

If all prices in the economy go up from one year to the next, the CPI index, using the previous year as the base would

Accepted Answer

A)  be less than 100. 
B)  be greater than 100. 
C)  not be influenced since quantities have remained unchanged. 
D)  not be determined since enough information is given. 
A)  be less than 100. 
B)  be greater than 100. 
C)  not be influenced since quantities have remained unchanged. 
D)  not be determined since enough information is given.

Question 5

Many economists would argue that some frictional unemployment

Accepted Answer

A)  creates massive economic disruptions and should be eliminated as quickly as feasible. 
B)  should be eliminated whatever the cost. 
C)  no longer exists because increased unemployment benefits have generally solved this problem. 
D)  cannot and probably should not be eliminated. 
A)  creates massive economic disruptions and should be eliminated as quickly as feasible. 
B)  should be eliminated whatever the cost. 
C)  no longer exists because increased unemployment benefits have generally solved this problem. 
D)  cannot and probably should not be eliminated.

Question 6

The seasonally adjusted unemployment rate

Accepted Answer

A)  reports only seasonal unemployment. 
B)  removes the seasonal variation from the unemployment rate. 
C)  is impossible to compute since no one knows what the seasonal component equals. 
D)  is another name for structural unemployment. 
A)  reports only seasonal unemployment. 
B)  removes the seasonal variation from the unemployment rate. 
C)  is impossible to compute since no one knows what the seasonal component equals. 
D)  is another name for structural unemployment.

Question 7

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is ________ and the new unemployment rate is ________.

Accepted Answer

A)  100.1 million; 5.8 percent. 
B)  100 million; 6.1 percent. 
C)  94.1 million; 5.9 percent. 
D)  93.9 million; 6.1 percent. 
A)  100.1 million; 5.8 percent. 
B)  100 million; 6.1 percent. 
C)  94.1 million; 5.9 percent. 
D)  93.9 million; 6.1 percent.

Question 8

An increase in the labor force participation rate

Accepted Answer

A)  implies that the unemployment rate must fall. 
B)  implies that the unemployment rate must rise. 
C)  means there are more discouraged workers. 
D)  is consistent with either a rise or a fall in the unemployment rate. 
A)  implies that the unemployment rate must fall. 
B)  implies that the unemployment rate must rise. 
C)  means there are more discouraged workers. 
D)  is consistent with either a rise or a fall in the unemployment rate.

Question 9

The labor force includes individuals who are: I. Employed
II) Unemployed
III) Discouraged workers

Accepted Answer

A)  I only. 
B)  Both I and II. 
C)  Both I and III. 
D)  All I, II and III.. 
A)  I only. 
B)  Both I and II. 
C)  Both I and III. 
D)  All I, II and III..

Question 10

The formula for computing a basic price index is

Accepted Answer

A)  (cost of market basket today/cost of market basket in base year) × 100. 
B)  (cost of market basket in base year/100) × cost of market basket today. 
C)  (cost of market basket in base year/cost of market basket today) × 100. 
D)  (100/cost of market basket in base year) + cost of market basket today. 
A)  (cost of market basket today/cost of market basket in base year) × 100. 
B)  (cost of market basket in base year/100) × cost of market basket today. 
C)  (cost of market basket in base year/cost of market basket today) × 100. 
D)  (100/cost of market basket in base year) + cost of market basket today.

Question 11

In a small country, the population equals 5,000. There are 4,000 people in the labor force and 3,000 people are employed. The unemployment rate equals

Accepted Answer

A)  0.25 
B)  0.6 
C)  0.75 
D)  an undetermined amount given the lack of information. 
A)  0.25 
B)  0.6 
C)  0.75 
D)  an undetermined amount given the lack of information.

Question 12

To be counted as unemployed in the United States a person has to be

Accepted Answer

A)  at least 16 and out of work. 
B)  at least 16, out of work, and actively seeking employment. 
C)  at least 16 and less than 65 and actively seeking employment. 
D)  out of work and actively seeking employment. 
A)  at least 16 and out of work. 
B)  at least 16, out of work, and actively seeking employment. 
C)  at least 16 and less than 65 and actively seeking employment. 
D)  out of work and actively seeking employment.

Question 13

In 2009, policy makers in the United States were dealing with a recession. Workers who were laid off due to the economic slowdown would be

Accepted Answer

A)  frictionally unemployed. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  seasonally unemployed. 
A)  frictionally unemployed. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  seasonally unemployed.

Question 14

A recent accounting graduate from a major business school is searching for a place to begin his career as an accountant. This individual is

Accepted Answer

A)  structurally unemployed. 
B)  seasonally unemployed. 
C)  cyclically unemployed. 
D)  frictionally unemployed. 
A)  structurally unemployed. 
B)  seasonally unemployed. 
C)  cyclically unemployed. 
D)  frictionally unemployed.

Question 15

A period in which the level of business is consistently less than its long-term trend is known as

Accepted Answer

A)  depression. 
B)  recession. 
C)  business cycle. 
D)  growth trend. 
A)  depression. 
B)  recession. 
C)  business cycle. 
D)  growth trend.

Question 16

Last year you purchased 20 CDs at $12 a piece, 10 shirts at $15 each, and 5 sweaters at $30 each (total spending equals $540). This year you buy 18 CDs at $15 each, 10 shirts at $16 each, and 6 sweaters at $36 each (total spending equals $640). If last year's index was 100, this year's index

Accepted Answer

A)  is 119.6. 
B)  is 118.5. 
C)  is 83.6. 
D)  is 30. 
A)  is 119.6. 
B)  is 118.5. 
C)  is 83.6. 
D)  is 30.

Question 17

Which of the following can cause official unemployment figures to underestimate the true unemployment rate?

Accepted Answer

A)  Some people get discouraged and quit looking for a job. 
B)  Some people engage in illegal activities. 
C)  Some people work "off the books." 
D)  Some people work overtime. 
A)  Some people get discouraged and quit looking for a job. 
B)  Some people engage in illegal activities. 
C)  Some people work "off the books." 
D)  Some people work overtime.

Question 18

The real rate of interest equals 8%, and the expected rate of inflation equals 2%. The nominal rate of interest is

Accepted Answer

A)  2%. 
B)  6%. 
C)  8%. 
D)  10%. 
A)  2%. 
B)  6%. 
C)  8%. 
D)  10%.

Question 19

Which one of the following is true?

Accepted Answer

A)  Inflation increases the real value of money. 
B)  In the base year, the value of a price index is 100. 
C)  The consumer price index measures changes in the average income of consumers. 
D)  The market basket defined for the consumer price index contains more items than does the market basket defined for the GDP deflator. 
A)  Inflation increases the real value of money. 
B)  In the base year, the value of a price index is 100. 
C)  The consumer price index measures changes in the average income of consumers. 
D)  The market basket defined for the consumer price index contains more items than does the market basket defined for the GDP deflator.

Question 20

When the economy is experiencing a contraction, there is an increase in

Accepted Answer

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

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

Which of the following individuals is NOT counted as unemployed?

A period of time in which the overall business activity is rising at a rapid rate is known as

Most of the problems caused by inflation are caused by the fact that

If all prices in the economy go up from one year to the next, the CPI index, using the previous year as the base would

Many economists would argue that some frictional unemployment

The seasonally adjusted unemployment rate

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is ________ and the new unemployment rate is ________.

An increase in the labor force participation rate

The labor force includes individuals who are: I. Employed II) Unemployed III) Discouraged workers

The formula for computing a basic price index is

In a small country, the population equals 5,000. There are 4,000 people in the labor force and 3,000 people are employed. The unemployment rate equals

To be counted as unemployed in the United States a person has to be

In 2009, policy makers in the United States were dealing with a recession. Workers who were laid off due to the economic slowdown would be

A recent accounting graduate from a major business school is searching for a place to begin his career as an accountant. This individual is

A period in which the level of business is consistently less than its long-term trend is known as

Last year you purchased 20 CDs at $12 a piece, 10 shirts at $15 each, and 5 sweaters at $30 each (total spending equals $540). This year you buy 18 CDs at $15 each, 10 shirts at $16 each, and 6 sweaters at $36 each (total spending equals $640). If last year's index was 100, this year's index

Which of the following can cause official unemployment figures to underestimate the true unemployment rate?

The real rate of interest equals 8%, and the expected rate of inflation equals 2%. The nominal rate of interest is

Which one of the following is true?

When the economy is experiencing a contraction, there is an increase in

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

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is and the new unemployment rate is .