Question 1

The most significant real economic cost of high unemployment is:

Accepted Answer

A)  the money cost of unemployment insurance payments to the unemployed. 
B)  the lost tax revenue that might have been paid by persons if they had worked. 
C)  the difference in income between a person's lost job and new job. 
D)  the potential goods and services that might have been produced but weren't. 
A)  the money cost of unemployment insurance payments to the unemployed. 
B)  the lost tax revenue that might have been paid by persons if they had worked. 
C)  the difference in income between a person's lost job and new job. 
D)  the potential goods and services that might have been produced but weren't.

Question 2

During an inflationary period,those most likely to suffer reduced wealth are those who are holding their wealth in:

Accepted Answer

A)  gold. 
B)  real estate. 
C)  currency. 
D)  stocks. 
A)  gold. 
B)  real estate. 
C)  currency. 
D)  stocks.

Question 3

Exhibit 18-1   Refer to Exhibit 18-1.From the data provided,the unemployment rate is approximately ____ percent.

Accepted Answer

A)  4.5 
B)  7.7 
C)  9.2 
D)  5.4 
A)  4.5 
B)  7.7 
C)  9.2 
D)  5.4

Question 4

The index of leading economic indicators:

Accepted Answer

A)  provide accurate information on the duration of downturns in the economy. 
B)  virtually always predicts downturns in the economy with a lead time of six months. 
C)  can result in a self-fulfilling prophecy if business firms respond to leading economic indicator predictions. 
D)  provide accurate information on the depth of downturns in the economy. 
A)  provide accurate information on the duration of downturns in the economy. 
B)  virtually always predicts downturns in the economy with a lead time of six months. 
C)  can result in a self-fulfilling prophecy if business firms respond to leading economic indicator predictions. 
D)  provide accurate information on the depth of downturns in the economy.

Question 5

Cyclical unemployment rises and falls with fluctuations in the macroeconomy.

Accepted Answer

A) True 
 B)False

Question 6

The term full employment implies an unemployment rate of:

Accepted Answer

A)  zero 
B)  approximately 5% 
C)  approximately 10% 
D)  100% 
A)  zero 
B)  approximately 5% 
C)  approximately 10% 
D)  100%

Question 7

Inflation:

Accepted Answer

A)  can cause a redistribution of income from creditors to borrowers. 
B)  may discourage investment and economic growth. 
C)  can decrease the value of a nation's currency relative to other nations. 
D)  may result in any of the above. 
A)  can cause a redistribution of income from creditors to borrowers. 
B)  may discourage investment and economic growth. 
C)  can decrease the value of a nation's currency relative to other nations. 
D)  may result in any of the above.

Question 8

Roughly 60 percent of women participate in the labor force today.

Accepted Answer

A) True 
 B)False

Question 9

A price index can be constructed by:

Accepted Answer

A)  dividing the value of a market basket by the rate of inflation. 
B)  dividing the current-year value of a market basket by the base-year value of the same market basket and multiplying by 100. 
C)  multiplying the value of a market basket by the rate of inflation. 
D)  multiplying the current-year value of a market basket by the base-year value of the same market basket and dividing by 100. 
A)  dividing the value of a market basket by the rate of inflation. 
B)  dividing the current-year value of a market basket by the base-year value of the same market basket and multiplying by 100. 
C)  multiplying the value of a market basket by the rate of inflation. 
D)  multiplying the current-year value of a market basket by the base-year value of the same market basket and dividing by 100.

Question 10

Exhibit 18-2 Assume that 2010 is the base year with a price index of 100 and that one of each good is included in the market basket.
  Refer to Exhibit 18-2.What would the price index equal in 2011?

Accepted Answer

A)  88.3 
B)  101.1 
C)  113.2 
D)  126.5 
A)  88.3 
B)  101.1 
C)  113.2 
D)  126.5

Question 11

Suzie Homemaker works in her home as a full-time caretaker and homemaker.Officially,she is:

Accepted Answer

A)  employed. 
B)  unemployed. 
C)  not in the labor force. 
D)  a discouraged worker. 
A)  employed. 
B)  unemployed. 
C)  not in the labor force. 
D)  a discouraged worker.

Question 12

Nearly every society desires to achieve the macroeconomic goals of high employment,a stable price level,and high economic growth.

Accepted Answer

A) True 
 B)False

Question 13

Economists believe that the Consumer Price Index tends to overstate the actual rate of inflation.

Accepted Answer

A) True 
 B)False

Question 14

The costs imposed on a firm from changing listed prices is termed:

Accepted Answer

A)  the nominal cost of inflation. 
B)  the shoe-leather cost of inflation. 
C)  the menu cost of inflation. 
D)  the implied cost of inflation. 
A)  the nominal cost of inflation. 
B)  the shoe-leather cost of inflation. 
C)  the menu cost of inflation. 
D)  the implied cost of inflation.

Question 15

Given a fixed nominal interest rate on a loan,unanticipated inflation:

Accepted Answer

A)  decreases the burden of paying off the loan. 
B)  increases the burden of paying off the loan. 
C)  does not alter the burden of paying off the loan. 
D)  benefits savers. 
A)  decreases the burden of paying off the loan. 
B)  increases the burden of paying off the loan. 
C)  does not alter the burden of paying off the loan. 
D)  benefits savers.

Question 16

Which of the following observations is false?

Accepted Answer

A)  Both CPI and GDP deflator tend to move in the same direction. 
B)  GDP deflator tends to be much more volatile than CPI. 
C)  Both CPI and GDP deflator probably overstate the inflation rate. 
D)  both a. and c. are false. 
A)  Both CPI and GDP deflator tend to move in the same direction. 
B)  GDP deflator tends to be much more volatile than CPI. 
C)  Both CPI and GDP deflator probably overstate the inflation rate. 
D)  both a. and c. are false.

Question 17

Which of the following is true?

Accepted Answer

A)  A depression is a recession that is mild and relatively brief. 
B)  The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude. 
C)  The timing of business fluctuations is regular and therefore easily predictable. 
D)  During the contractionary phase of the business cycle, the rate of unemployment is generally quite low. 
A)  A depression is a recession that is mild and relatively brief. 
B)  The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude. 
C)  The timing of business fluctuations is regular and therefore easily predictable. 
D)  During the contractionary phase of the business cycle, the rate of unemployment is generally quite low.

Question 18

A discouraged worker is someone who:

Accepted Answer

A)  has a job, but wants to get a different one. 
B)  is unemployed and looking for work. 
C)  quits a job and is unable to collect unemployment compensation. 
D)  gives up looking for work, and is no longer counted as unemployed. 
A)  has a job, but wants to get a different one. 
B)  is unemployed and looking for work. 
C)  quits a job and is unable to collect unemployment compensation. 
D)  gives up looking for work, and is no longer counted as unemployed.

Question 19

The unemployment rate measures the number of unemployed people expressed as a percentage of the total population.

Accepted Answer

A) True 
 B)False

Question 20

Unexpected inflation harms both debtors and individuals who live on fixed incomes.

Accepted Answer

A) True 
 B)False

Exam 18: Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

The most significant real economic cost of high unemployment is:

During an inflationary period,those most likely to suffer reduced wealth are those who are holding their wealth in:

Exhibit 18-1 Refer to Exhibit 18-1.From the data provided,the unemployment rate is approximately ____ percent.

The index of leading economic indicators:

Cyclical unemployment rises and falls with fluctuations in the macroeconomy.

The term full employment implies an unemployment rate of:

Inflation:

Roughly 60 percent of women participate in the labor force today.

A price index can be constructed by:

Exhibit 18-2 Assume that 2010 is the base year with a price index of 100 and that one of each good is included in the market basket. Refer to Exhibit 18-2.What would the price index equal in 2011?

Suzie Homemaker works in her home as a full-time caretaker and homemaker.Officially,she is:

Nearly every society desires to achieve the macroeconomic goals of high employment,a stable price level,and high economic growth.

Economists believe that the Consumer Price Index tends to overstate the actual rate of inflation.

The costs imposed on a firm from changing listed prices is termed:

Given a fixed nominal interest rate on a loan,unanticipated inflation:

Which of the following observations is false?

Which of the following is true?

A discouraged worker is someone who:

The unemployment rate measures the number of unemployed people expressed as a percentage of the total population.

Unexpected inflation harms both debtors and individuals who live on fixed incomes.

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

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