Question 1

In the United States, most often the ________ changes first, and the ________ follows.

Accepted Answer

A)  CPI; PPI 
B)  GDP deflator; CPI 
C)  PPI; CPI 
D)  PCE; CPI 
A)  CPI; PPI 
B)  GDP deflator; CPI 
C)  PPI; CPI 
D)  PCE; CPI

Question 2

How has the pattern of movements in the U.S. price level changed since World War II?

Accepted Answer

A)  Periods of inflation have largely been eliminated. 
B)  Periods of deflation have largely been eliminated. 
C)  The annual rate of inflation has never risen above 3 percent. 
D)  The price level has become more volatile. 
A)  Periods of inflation have largely been eliminated. 
B)  Periods of deflation have largely been eliminated. 
C)  The annual rate of inflation has never risen above 3 percent. 
D)  The price level has become more volatile.

Question 3

An economy recovering from a recession moves

Accepted Answer

A)  up from its trough to a period of expansion. 
B)  up from its peak to a period of expansion. 
C)  down from its trough to a period of depression. 
D)  down from its peak to a period of expansion. 
A)  up from its trough to a period of expansion. 
B)  up from its peak to a period of expansion. 
C)  down from its trough to a period of depression. 
D)  down from its peak to a period of expansion.

Question 4

According to the Bureau of Labor Statistics, if you voluntarily leave your job to search for another job, then you

Accepted Answer

A)  are classified as unemployed. 
B)  are eligible for unemployment compensation. 
C)  may not re-enter the labor force for six months. 
D)  are classified as a job loser. 
A)  are classified as unemployed. 
B)  are eligible for unemployment compensation. 
C)  may not re-enter the labor force for six months. 
D)  are classified as a job loser.

Question 5

A clause in a contract that automatically increases wages to account for increases in the price level is

Accepted Answer

A)  the GDP deflation. 
B)  the PCE index. 
C)  a COLA. 
D)  the real rate of interest. 
A)  the GDP deflation. 
B)  the PCE index. 
C)  a COLA. 
D)  the real rate of interest.

Question 6

Robert received a $100 gift certificate to a bookstore a year ago. The economy has been in an inflationary period for the last year. This gift certificate is

Accepted Answer

A)  expressed in real terms and is worth more. 
B)  expressed in nominal terms and is worth less. 
C)  not expressed in either real or nominal terms since it is not money. 
D)  adjusted in terms of the CPI. 
A)  expressed in real terms and is worth more. 
B)  expressed in nominal terms and is worth less. 
C)  not expressed in either real or nominal terms since it is not money. 
D)  adjusted in terms of the CPI.

Question 7

The purchasing power of the dollar

Accepted Answer

A)  increases as the price of basic goods and services increases. 
B)  is the amount of goods and services that can be purchased with the dollar. 
C)  has been rising in the United States since 1945. 
D)  has remained unchanged in the last 20 years. 
A)  increases as the price of basic goods and services increases. 
B)  is the amount of goods and services that can be purchased with the dollar. 
C)  has been rising in the United States since 1945. 
D)  has remained unchanged in the last 20 years.

Question 8

Suppose that you borrow $5,000 from the bank to purchase some land and you agree to pay 9 percent interest on the loan. If the loan must be repaid in 12 months and the inflation rate is 13 percent during the year, then

Accepted Answer

A)  you will repay the bank with dollars with more purchasing power than you initially borrowed. 
B)  you will repay the bank with fewer dollars than the bank initially loaned you. 
C)  you will repay the bank with dollars with less purchasing power than it initially loaned you. 
D)  the bank will receive fewer dollars, because of inflation, than it had initially expected to receive. 
A)  you will repay the bank with dollars with more purchasing power than you initially borrowed. 
B)  you will repay the bank with fewer dollars than the bank initially loaned you. 
C)  you will repay the bank with dollars with less purchasing power than it initially loaned you. 
D)  the bank will receive fewer dollars, because of inflation, than it had initially expected to receive.

Question 9

Unemployment that results from a mismatch of workers' abilities and skills with current requirements of employers is

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 10

You receive a five percent raise in your hourly wage. The inflation rate is four percent. Your purchasing power has

Accepted Answer

A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  is indeterminate. 
A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  is indeterminate.

Question 11

The annual rate of inflation averaged 2 percent during the past decade, but borrowers and lenders anticipate that the price level will rise at a rate of 3 percent next year. The current nominal interest rate is 7 percent. The real rate of interest is

Accepted Answer

A)  10 percent. 
B)  9 percent. 
C)  5 percent. 
D)  4 percent. 
A)  10 percent. 
B)  9 percent. 
C)  5 percent. 
D)  4 percent.

Question 12

The labor-force participation rate shows the percentage of

Accepted Answer

A)  people not working, but who want to work. 
B)  people who are not actively participating in meaningful economic activity. 
C)  new entrants into the labor force. 
D)  non-institutionalized working-age people who are actually working or seeking employment. 
A)  people not working, but who want to work. 
B)  people who are not actively participating in meaningful economic activity. 
C)  new entrants into the labor force. 
D)  non-institutionalized working-age people who are actually working or seeking employment.

Question 13

Which federal agency publishes the United States' unemployment figures?

Accepted Answer

A)  Health and Human Services 
B)  The Bureau of Labor Statistics 
C)  The Federal Reserve 
D)  The Senate Committee on Labor Relations 
A)  Health and Human Services 
B)  The Bureau of Labor Statistics 
C)  The Federal Reserve 
D)  The Senate Committee on Labor Relations

Question 14

Last month 100 million people were in the labor force with 6 million being unemployed. 200,000 people lost their jobs last month and 300,000 found jobs. Distinguishing between stock measures and flow measures, the stock measures are

Accepted Answer

A)  the labor force only. 
B)  the number of people who lost their jobs and the number of people who found jobs only. 
C)  the total number of people who are unemployed only. 
D)  the total number in the labor force and the total number of people who are unemployed only. 
A)  the labor force only. 
B)  the number of people who lost their jobs and the number of people who found jobs only. 
C)  the total number of people who are unemployed only. 
D)  the total number in the labor force and the total number of people who are unemployed only.

Question 15

If Tim works at home taking care of the household,

Accepted Answer

A)  he is part of the labor force. 
B)  he is not part of the labor force. 
C)  he is considered to be employed. 
D)  he is considered to be unemployed. 
A)  he is part of the labor force. 
B)  he is not part of the labor force. 
C)  he is considered to be employed. 
D)  he is considered to be unemployed.

Question 16

A decline in business activity is called

Accepted Answer

A)  a recession. 
B)  a trough. 
C)  an expansion. 
D)  a peak. 
A)  a recession. 
B)  a trough. 
C)  an expansion. 
D)  a peak.

Question 17

Unanticipated positive inflation will create

Accepted Answer

A)  losses for creditors and gains for debtors. 
B)  losses for both creditors and debtors. 
C)  gains for both creditors and debtors. 
D)  gains for creditors and losses for debtors. 
A)  losses for creditors and gains for debtors. 
B)  losses for both creditors and debtors. 
C)  gains for both creditors and debtors. 
D)  gains for creditors and losses for debtors.

Question 18

Discouraged workers

Accepted Answer

A)  are considered part of the unemployed because they are not working. 
B)  are considered part of the unemployed because they are still in the labor force. 
C)  are not considered part of the unemployed because they quit their jobs voluntarily. 
D)  are not considered part of the unemployed because they are not actively seeking work. 
A)  are considered part of the unemployed because they are not working. 
B)  are considered part of the unemployed because they are still in the labor force. 
C)  are not considered part of the unemployed because they quit their jobs voluntarily. 
D)  are not considered part of the unemployed because they are not actively seeking work.

Question 19

The duration of unemployment tends to

Accepted Answer

A)  increase when business activity decreases. 
B)  increase when employment increases. 
C)  increase when the labor force shrinks. 
D)  stay consistently the same over long periods of time. 
A)  increase when business activity decreases. 
B)  increase when employment increases. 
C)  increase when the labor force shrinks. 
D)  stay consistently the same over long periods of time.

Question 20

The labor force is defined as

Accepted Answer

A)  all individuals who are currently employed. 
B)  all individuals who are at least 16 years old and are currently employed. 
C)  all individuals who are at least 16 years old and are currently employed or unemployed. 
D)  all individuals who are at least 16 years old and are employed, looking for work or not looking for work. 
A)  all individuals who are currently employed. 
B)  all individuals who are at least 16 years old and are currently employed. 
C)  all individuals who are at least 16 years old and are currently employed or unemployed. 
D)  all individuals who are at least 16 years old and are employed, looking for work or not looking for work.

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

In the United States, most often the ________ changes first, and the ________ follows.

How has the pattern of movements in the U.S. price level changed since World War II?

An economy recovering from a recession moves

According to the Bureau of Labor Statistics, if you voluntarily leave your job to search for another job, then you

A clause in a contract that automatically increases wages to account for increases in the price level is

Robert received a $100 gift certificate to a bookstore a year ago. The economy has been in an inflationary period for the last year. This gift certificate is

The purchasing power of the dollar

Suppose that you borrow $5,000 from the bank to purchase some land and you agree to pay 9 percent interest on the loan. If the loan must be repaid in 12 months and the inflation rate is 13 percent during the year, then

Unemployment that results from a mismatch of workers' abilities and skills with current requirements of employers is

You receive a five percent raise in your hourly wage. The inflation rate is four percent. Your purchasing power has

The annual rate of inflation averaged 2 percent during the past decade, but borrowers and lenders anticipate that the price level will rise at a rate of 3 percent next year. The current nominal interest rate is 7 percent. The real rate of interest is

The labor-force participation rate shows the percentage of

Which federal agency publishes the United States' unemployment figures?

Last month 100 million people were in the labor force with 6 million being unemployed. 200,000 people lost their jobs last month and 300,000 found jobs. Distinguishing between stock measures and flow measures, the stock measures are

If Tim works at home taking care of the household,

A decline in business activity is called

Unanticipated positive inflation will create

Discouraged workers

The duration of unemployment tends to

The labor force is defined as

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

In the United States, most often the changes first, and the follows.