Question 1

If inflationary expectations are increasing,we would expect that the nominal interest rate would also be increasing,holding all else constant.

Accepted Answer

A) True 
 B)False

Question 2

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2013.You know that average prices have risen steadily since 1961.You earn

Accepted Answer

A) 5 times as much as your grandfather in terms of real income. 
B) more than 5 times as much as your grandfather in terms of real income. 
C) less than 5 times as much as your grandfather in terms of real income. 
D) less than 5 times as much as your grandfather in terms of nominal income. 
A) 5 times as much as your grandfather in terms of real income. 
B) more than 5 times as much as your grandfather in terms of real income. 
C) less than 5 times as much as your grandfather in terms of real income. 
D) less than 5 times as much as your grandfather in terms of nominal income.

Question 3

Eliminating frictional unemployment would be good for the economy.

Accepted Answer

A) True 
 B)False

Question 4

Discouraged workers are classified by the BLS as

Accepted Answer

A) part of the labor force. 
B) out of the labor force. 
C) unemployed. 
D) employed. 
E) part-time employees. 
A) part of the labor force. 
B) out of the labor force. 
C) unemployed. 
D) employed. 
E) part-time employees.

Question 5

The labor force participation rate equals the

Accepted Answer

A) (number of employed divided by the labor force)× 100. 
B) (labor force divided by the number of people not in the labor force)× 100. 
C) (labor force divided by working-age population)× 100. 
D) (labor force divided by the total population)× 100. 
A) (number of employed divided by the labor force)× 100. 
B) (labor force divided by the number of people not in the labor force)× 100. 
C) (labor force divided by working-age population)× 100. 
D) (labor force divided by the total population)× 100.

Question 6

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

Accepted Answer

A) True 
 B)False

Question 7

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

Accepted Answer

A) True 
 B)False

Question 8

The costs to firms of changing prices are called

Accepted Answer

A) redistribution costs. 
B) menu costs. 
C) anticipation costs. 
D) money illusion costs. 
A) redistribution costs. 
B) menu costs. 
C) anticipation costs. 
D) money illusion costs.

Question 9

The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as ________ bias and results in ________.

Accepted Answer

A) outlet; the CPI underestimating the true change in the cost of living 
B) new product; the CPI overestimating the true change in the cost of living 
C) outlet; the CPI overestimating the true change in the cost of living 
D) net product; the CPI underestimating the true change in the cost of living 
A) outlet; the CPI underestimating the true change in the cost of living 
B) new product; the CPI overestimating the true change in the cost of living 
C) outlet; the CPI overestimating the true change in the cost of living 
D) net product; the CPI underestimating the true change in the cost of living

Question 10

In 1986,an Apple IIe computer with 65 kilobytes of memory cost around $1,500.Today,a $1,500 iMac computer (also made by Apple)comes with 8 gigabytes of memory.This illustrates the potential for what kind of bias in CPI calculations?

Accepted Answer

A) new product bias 
B) increase in quality bias 
C) substitution bias 
D) outlet bias 
A) new product bias 
B) increase in quality bias 
C) substitution bias 
D) outlet bias

Question 11

The United States has ________ social insurance programs,and generally has a ________ unemployment rate,as compared to Canada and Western Europe.

Accepted Answer

A) less generous; lower 
B) less generous; greater 
C) more generous; lower 
D) more generous; greater 
A) less generous; lower 
B) less generous; greater 
C) more generous; lower 
D) more generous; greater

Question 12

Which of the following causes the unemployment rate to understate the true extent of joblessness?

Accepted Answer

A) Many full time workers really want to be part time workers. 
B) Persons who collect unemployment benefits report themselves to be searching for a job. 
C) Discouraged workers are not counted as unemployed. 
D) A drug dealer reports herself as unemployed. 
E) Discouraged workers are counted as unemployed. 
A) Many full time workers really want to be part time workers. 
B) Persons who collect unemployment benefits report themselves to be searching for a job. 
C) Discouraged workers are not counted as unemployed. 
D) A drug dealer reports herself as unemployed. 
E) Discouraged workers are counted as unemployed.

Question 13

In 2013,Caterpillar laid off employees.The employees who were laid off due to the business cycle would be considered

Accepted Answer

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

Question 14

The producer price index tracks the prices firms receive for goods and services at all stages of production.

Accepted Answer

A) True 
 B)False

Question 15

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

Accepted Answer

A) True 
 B)False

Question 16

In recent years,economists have come to rely more on the establishment survey rather than the household survey to analyze current labor market statistics.

Accepted Answer

A) True 
 B)False

Question 17

In 2013,Caterpillar laid off employees who produced mining machinery at its South Milwaukee plant.The laid-off employees who were not able to find jobs at another factory due to a permanent decline in demand in the mining industry would be considered

Accepted Answer

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

Question 18

If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket,then

Accepted Answer

A) changes in the CPI accurately reflect the true rate of inflation. 
B) changes in the CPI understate the true rate of inflation. 
C) changes in the CPI overstate the true rate of inflation. 
D) changes in the CPI are unrelated to the true rate of inflation. 
A) changes in the CPI accurately reflect the true rate of inflation. 
B) changes in the CPI understate the true rate of inflation. 
C) changes in the CPI overstate the true rate of inflation. 
D) changes in the CPI are unrelated to the true rate of inflation.

Question 19

When the labor market is at full employment

Accepted Answer

A) there is only cyclical unemployment in the economy. 
B) there is only structural unemployment in the economy. 
C) the unemployment rate is 0%. 
D) there is no cyclical unemployment in the economy. 
A) there is only cyclical unemployment in the economy. 
B) there is only structural unemployment in the economy. 
C) the unemployment rate is 0%. 
D) there is no cyclical unemployment in the economy.

Question 20

Which of the following describes a situation in which the person is hurt by inflation?

Accepted Answer

A) a retiree whose pension is adjusted for inflation 
B) a person who borrows money during a period when inflation is under-predicted 
C) a person who lends money during a period when inflation is over-predicted 
D) a person paid a fixed income during an inflationary period 
A) a retiree whose pension is adjusted for inflation 
B) a person who borrows money during a period when inflation is under-predicted 
C) a person who lends money during a period when inflation is over-predicted 
D) a person paid a fixed income during an inflationary period

If inflationary expectations are increasing,we would expect that the nominal interest rate would also be increasing,holding all else constant.

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2013.You know that average prices have risen steadily since 1961.You earn

Eliminating frictional unemployment would be good for the economy.

Discouraged workers are classified by the BLS as

The labor force participation rate equals the

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

The costs to firms of changing prices are called

The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as bias and results in .

In 1986,an Apple IIe computer with 65 kilobytes of memory cost around $1,500.Today,a $1,500 iMac computer (also made by Apple)comes with 8 gigabytes of memory.This illustrates the potential for what kind of bias in CPI calculations?

The United States has social insurance programs,and generally has a unemployment rate,as compared to Canada and Western Europe.

Which of the following causes the unemployment rate to understate the true extent of joblessness?

In 2013,Caterpillar laid off employees.The employees who were laid off due to the business cycle would be considered

The producer price index tracks the prices firms receive for goods and services at all stages of production.

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

In recent years,economists have come to rely more on the establishment survey rather than the household survey to analyze current labor market statistics.

In 2013,Caterpillar laid off employees who produced mining machinery at its South Milwaukee plant.The laid-off employees who were not able to find jobs at another factory due to a permanent decline in demand in the mining industry would be considered

If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket,then

When the labor market is at full employment

Which of the following describes a situation in which the person is hurt by inflation?

Economics: Foundations and Models

Trade-Offs,comparative Advantage,and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 9: Unemployment and Inflation

If inflationary expectations are increasing,we would expect that the nominal interest rate would also be increasing,holding all else constant.

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2013.You know that average prices have risen steadily since 1961.You earn

Eliminating frictional unemployment would be good for the economy.

Discouraged workers are classified by the BLS as

The labor force participation rate equals the

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

The costs to firms of changing prices are called

The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as ________ bias and results in ________.

In 1986,an Apple IIe computer with 65 kilobytes of memory cost around $1,500.Today,a $1,500 iMac computer (also made by Apple)comes with 8 gigabytes of memory.This illustrates the potential for what kind of bias in CPI calculations?

The United States has ________ social insurance programs,and generally has a ________ unemployment rate,as compared to Canada and Western Europe.

Which of the following causes the unemployment rate to understate the true extent of joblessness?

In 2013,Caterpillar laid off employees.The employees who were laid off due to the business cycle would be considered

The producer price index tracks the prices firms receive for goods and services at all stages of production.

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

In recent years,economists have come to rely more on the establishment survey rather than the household survey to analyze current labor market statistics.

In 2013,Caterpillar laid off employees who produced mining machinery at its South Milwaukee plant.The laid-off employees who were not able to find jobs at another factory due to a permanent decline in demand in the mining industry would be considered

If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket,then

When the labor market is at full employment

Which of the following describes a situation in which the person is hurt by inflation?

Economics: Foundations and Models

Trade-Offs,comparative Advantage,and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as bias and results in .

The United States has social insurance programs,and generally has a unemployment rate,as compared to Canada and Western Europe.