Question 1

The formula for calculating the CPI is

Accepted Answer

A)  (Expenditures in the current year/Expenditures in the base year) × 100. 
B)  (Expenditures in the current year × Expenditures in the base year)/100. 
C)  (Expenditures in the base year/Expenditures in the current year). 
D)  (Expenditures in the base year × 100)/(Expenditures in the current year). 
A)  (Expenditures in the current year/Expenditures in the base year) × 100. 
B)  (Expenditures in the current year × Expenditures in the base year)/100. 
C)  (Expenditures in the base year/Expenditures in the current year). 
D)  (Expenditures in the base year × 100)/(Expenditures in the current year).

Question 2

Of the market basket that makes up CPI,which of the following is the largest portion?

Accepted Answer

A)  Health 
B)  Clothing and footwear 
C)  Housing 
D)  Communication 
A)  Health 
B)  Clothing and footwear 
C)  Housing 
D)  Communication

Question 3

The 'inflation rate' measures the percentage increase in the price level from one year to the next.

Accepted Answer

A) True 
 B)False

Question 4

Except for recessions,the duration of unemployment for the typical person in Australia lasts

Accepted Answer

A)  less than six months. 
B)  over two years. 
C)  between six and nine months. 
D)  over one year. 
A)  less than six months. 
B)  over two years. 
C)  between six and nine months. 
D)  over one year.

Question 5

How is a 'retired person' classified?

Accepted Answer

A)  As unemployed 
B)  As under-employed 
C)  As not in the labour force 
D)  As part-time employed 
A)  As unemployed 
B)  As under-employed 
C)  As not in the labour force 
D)  As part-time employed

Question 6

Financial institutions who have loaned money at a fixed rate of interest will most likely

Accepted Answer

A)  experience losses if the inflation rate is higher than anticipated. 
B)  experience losses if the inflation rate is lower than anticipated. 
C)  earn an increased profit margin between the interest paid on deposits and the interest received on loans. 
D)  benefit if the inflation rate is higher than anticipated. 
A)  experience losses if the inflation rate is higher than anticipated. 
B)  experience losses if the inflation rate is lower than anticipated. 
C)  earn an increased profit margin between the interest paid on deposits and the interest received on loans. 
D)  benefit if the inflation rate is higher than anticipated.

Question 7

How would the unemployment rate and the labour force participation rate change if discouraged workers were counted as 'unemployed' rather than as being in the 'not-in-the-labour force' category? Show this using the formula for both measurements.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The unemployment rate is calculated as:

Question 8

Which of the following is a correct description of 'inflation'?

Accepted Answer

A)  Inflation refers to an increase in relative prices throughout the economy. 
B)  Inflation is the change in the price level from one year to another. 
C)  Inflation is a sustained increase in the price level. 
D)  Inflation is when there is a one-time jump in the price level. 
A)  Inflation refers to an increase in relative prices throughout the economy. 
B)  Inflation is the change in the price level from one year to another. 
C)  Inflation is a sustained increase in the price level. 
D)  Inflation is when there is a one-time jump in the price level.

Question 9

An increase in real wages shifts the aggregate supply curve to the left,always resulting in cost-push inflation.

Accepted Answer

A) True 
 B)False

Question 10

If the nominal rate of interest is 6% and the inflation rate is 3%,what is the real rate of interest?

Accepted Answer

A)  -9.5% 
B)  -305% 
C)  1.5% 
D)  3% 
A)  -9.5% 
B)  -305% 
C)  1.5% 
D)  3%

Question 11

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%. 
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%.

Question 12

The nominal interest rate will be less than the real interest rate when the

Accepted Answer

A)  rate of inflation is positive but decreasing. 
B)  rate of inflation is positive and increasing. 
C)  rate of inflation is negative. 
D)  real interest rate is negative. 
A)  rate of inflation is positive but decreasing. 
B)  rate of inflation is positive and increasing. 
C)  rate of inflation is negative. 
D)  real interest rate is negative.

Question 13

The 'real rate' of interest is the

Accepted Answer

A)  nominal interest rate plus the expected inflation rate. 
B)  nominal interest rate minus the expected inflation rate. 
C)  interest rate determined by the supply and demand in the money market. 
D)  nominal interest rate. 
A)  nominal interest rate plus the expected inflation rate. 
B)  nominal interest rate minus the expected inflation rate. 
C)  interest rate determined by the supply and demand in the money market. 
D)  nominal interest rate.

Question 14

The natural rate of unemployment

Accepted Answer

A)  always fluctuates with the rate of inflation. 
B)  is equal to cyclical unemployment. 
C)  is a constant figure of about 4%. 
D)  occurs at a full-employment equilibrium. 
A)  always fluctuates with the rate of inflation. 
B)  is equal to cyclical unemployment. 
C)  is a constant figure of about 4%. 
D)  occurs at a full-employment equilibrium.

Question 15

Describe how inflation can be costly even if it is anticipated.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

First,there will be redistribution as so

Question 16

'Cost-push inflation' is characterised by

Accepted Answer

A)  very high levels of aggregate demand pushing prices higher. 
B)  the short-run aggregate supply curve shifting to the right. 
C)  rising prices and rising unemployment. 
D)  an increase in the level of nominal wages. 
A)  very high levels of aggregate demand pushing prices higher. 
B)  the short-run aggregate supply curve shifting to the right. 
C)  rising prices and rising unemployment. 
D)  an increase in the level of nominal wages.

Question 17

The natural rate of unemployment consists of frictional unemployment plus cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 18

The rate of unemployment in Australia is higher among 15-19-year-olds than 40-44 year-olds.

Accepted Answer

A) True 
 B)False

Question 19

Describe how a lender can lose from 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 20

The 'unemployment rate' is the percentage of the

Accepted Answer

A)  labour force receiving unemployment benefits. 
B)  population that is unemployed. 
C)  working-age population that is unemployed. 
D)  labour force that is unemployed. 
A)  labour force receiving unemployment benefits. 
B)  population that is unemployed. 
C)  working-age population that is unemployed. 
D)  labour force that is unemployed.

The formula for calculating the CPI is

Of the market basket that makes up CPI,which of the following is the largest portion?

The 'inflation rate' measures the percentage increase in the price level from one year to the next.

Except for recessions,the duration of unemployment for the typical person in Australia lasts

How is a 'retired person' classified?

Financial institutions who have loaned money at a fixed rate of interest will most likely

How would the unemployment rate and the labour force participation rate change if discouraged workers were counted as 'unemployed' rather than as being in the 'not-in-the-labour force' category? Show this using the formula for both measurements. _ _

Which of the following is a correct description of 'inflation'?

An increase in real wages shifts the aggregate supply curve to the left,always resulting in cost-push inflation.

If the nominal rate of interest is 6% and the inflation rate is 3%,what is the real rate of interest?

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?

The nominal interest rate will be less than the real interest rate when the

The 'real rate' of interest is the

The natural rate of unemployment

Describe how inflation can be costly even if it is anticipated. _ _

'Cost-push inflation' is characterised by

The natural rate of unemployment consists of frictional unemployment plus cyclical unemployment.

The rate of unemployment in Australia is higher among 15-19-year-olds than 40-44 year-olds.

Describe how a lender can lose from 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? _ _

The 'unemployment rate' is the percentage of the

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 14: Unemployment and Inflation

The formula for calculating the CPI is

Of the market basket that makes up CPI,which of the following is the largest portion?

The 'inflation rate' measures the percentage increase in the price level from one year to the next.

Except for recessions,the duration of unemployment for the typical person in Australia lasts

How is a 'retired person' classified?

Financial institutions who have loaned money at a fixed rate of interest will most likely

Which of the following is a correct description of 'inflation'?

An increase in real wages shifts the aggregate supply curve to the left,always resulting in cost-push inflation.

If the nominal rate of interest is 6% and the inflation rate is 3%,what is the real rate of interest?

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?

The nominal interest rate will be less than the real interest rate when the

The 'real rate' of interest is the

The natural rate of unemployment

Describe how inflation can be costly even if it is anticipated. _____________________________________________________________________________________________ _____________________________________________________________________________________________

'Cost-push inflation' is characterised by

The natural rate of unemployment consists of frictional unemployment plus cyclical unemployment.

The rate of unemployment in Australia is higher among 15-19-year-olds than 40-44 year-olds.

The 'unemployment rate' is the percentage of the

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Describe how inflation can be costly even if it is anticipated. _ _