Question 1

One way the consumer price index (CPI) differs from the GDP chain price index is that the CPI:

Accepted Answer

A)  uses current-year quantities of goods and services. 
B)  includes separate market baskets of goods and services for both base and current years. 
C)  includes only goods and services bought by typical urban consumers. 
D)  is bias-free. 
A)  uses current-year quantities of goods and services. 
B)  includes separate market baskets of goods and services for both base and current years. 
C)  includes only goods and services bought by typical urban consumers. 
D)  is bias-free.

Question 2

The source of demand-pull inflation is a:

Accepted Answer

A)  lack of expectations. 
B)  shortage of demand. 
C)  excess of demand. 
D)  high cost of production. 
A)  lack of expectations. 
B)  shortage of demand. 
C)  excess of demand. 
D)  high cost of production.

Question 3

Real income is:

Accepted Answer

A)  any number of dollars received over the period of time. 
B)  the real number of dollars received over the period of time, adjusted for changes in the GDP. 
C)  the actual number of dollars received over the period of time, adjusted for changes in the GDP. 
D)  the actual number of dollars received over the period of time, adjusted for changes in the CPI. 
A)  any number of dollars received over the period of time. 
B)  the real number of dollars received over the period of time, adjusted for changes in the GDP. 
C)  the actual number of dollars received over the period of time, adjusted for changes in the GDP. 
D)  the actual number of dollars received over the period of time, adjusted for changes in the CPI.

Question 4

Which of the following can create demand-pull inflation?

Accepted Answer

A)  Excessive aggregate spending. 
B)  Sharply rising oil prices. 
C)  Higher labour costs. 
D)  Recessions and depressions. 
A)  Excessive aggregate spending. 
B)  Sharply rising oil prices. 
C)  Higher labour costs. 
D)  Recessions and depressions.

Question 5

Last year the Jones family earned $40 000. This year their income is $42 000. In an economy with an inflation rate of 10 per cent, which of the following is correct?

Accepted Answer

A)  The Jones' nominal income and real income have both fallen. 
B)  The Jones' nominal income and real income have both risen. 
C)  The Jones' nominal income has increased and their real income has fallen. 
D)  The Jones' nominal income has decreased and their real income has risen. 
A)  The Jones' nominal income and real income have both fallen. 
B)  The Jones' nominal income and real income have both risen. 
C)  The Jones' nominal income has increased and their real income has fallen. 
D)  The Jones' nominal income has decreased and their real income has risen.

Question 6

Which one of the following people is not a member of the labour force?

Accepted Answer

A)  Relief teacher who works 2 hours a week. 
B)  A person who works 30 hours a week at McDonalds and goes to school at night. 
C)  The man who was fired last week and is searching for a new job. 
D)  A full-time student who devotes all her time to her classes. 
A)  Relief teacher who works 2 hours a week. 
B)  A person who works 30 hours a week at McDonalds and goes to school at night. 
C)  The man who was fired last week and is searching for a new job. 
D)  A full-time student who devotes all her time to her classes.

Question 7

The highest unemployment rate in the 20th century was:

Accepted Answer

A)  over 5 per cent. 
B)  over 15 per cent. 
C)  over 25 per cent. 
D)  less than 20 per cent. 
A)  over 5 per cent. 
B)  over 15 per cent. 
C)  over 25 per cent. 
D)  less than 20 per cent.

Question 8

Cost-push inflation is a result of an increase in overspending.

Accepted Answer

A) True 
 B)False

Question 9

Demand-pull inflation:

Accepted Answer

A)  is a shortage in demand. 
B)  is a lack of demand for local goods. 
C)  is an excess in nominal demand across many markets. 
D)  is an oversupply of imported goods. 
A)  is a shortage in demand. 
B)  is a lack of demand for local goods. 
C)  is an excess in nominal demand across many markets. 
D)  is an oversupply of imported goods.

Question 10

One way the consumer price index (CPI) differs from the GDP chain price index is that it:

Accepted Answer

A)  is based on all final goods and services. 
B)  uses only current-year quantities. 
C)  includes preferences of all consumers. 
D)  includes purchases of items bought by typical urban consumers. 
A)  is based on all final goods and services. 
B)  uses only current-year quantities. 
C)  includes preferences of all consumers. 
D)  includes purchases of items bought by typical urban consumers.

Question 11

The CPI (using a 1982 base year) for 1951 is 26. Suppose a household's annual take home pay in 1951 was $8320. What would be an equivalent home pay in 1982?

Accepted Answer

A)  $10 483. 
B)  $21 632. 
C)  $23 680. 
D)  $32 000. 
A)  $10 483. 
B)  $21 632. 
C)  $23 680. 
D)  $32 000.

Question 12

Narrbegin Exhibit 13.1 Consumer price index
 $$\begin{array} {| c | c |} 
\hline \text { Year } & \text { Consumer price index } \
\hline 1 & 100 \
\hline 2 & 100 \
\hline 3 & 105 \
\hline 4 & 125 \
\hline 5 & 150 \
\hline
\end{array}$$
-As shown in Exhibit 13.1, the rate of inflation for Year 4 is:

Accepted Answer

A)  5 per cent. 
B)  10 per cent. 
C)  19 per cent. 
D)  20 per cent. 
A)  5 per cent. 
B)  10 per cent. 
C)  19 per cent. 
D)  20 per cent.

Question 13

Frictional unemployment is:

Accepted Answer

A)  long-term unemployment. 
B)  a rare type of unemployment. 
C)  the largest type of unemployment. 
D)  short-term unemployment. 
A)  long-term unemployment. 
B)  a rare type of unemployment. 
C)  the largest type of unemployment. 
D)  short-term unemployment.

Question 14

The real interest rate is the annual percentage amount of money that is earned on a sum loaned or deposited in a bank.

Accepted Answer

A) True 
 B)False

Question 15

If the consumer price index (CPI) in 2001 was 200 and the CPI in 2002 was 215, the rate of inflation was:

Accepted Answer

A)  215 per cent. 
B)  15 per cent. 
C)  5 per cent. 
D)  7.5 per cent. 
A)  215 per cent. 
B)  15 per cent. 
C)  5 per cent. 
D)  7.5 per cent.

Question 16

Cost-push inflation is due to:

Accepted Answer

A)  labour cost decreases. 
B)  higher spending. 
C)  raw material cost decreases. 
D)  an increase in input prices. 
A)  labour cost decreases. 
B)  higher spending. 
C)  raw material cost decreases. 
D)  an increase in input prices.

Question 17

Since the recession in the early 1990s, inflation in Australia has been:

Accepted Answer

A)  volatile. 
B)  low and stable. 
C)  high but stable. 
D)  zero. 
A)  volatile. 
B)  low and stable. 
C)  high but stable. 
D)  zero.

Question 18

Price indexes like the CPI are calculated using a base year. The term 'base year' refers to:

Accepted Answer

A)  the first year that price data are available. 
B)  any year in which inflation was higher than 5 per cent. 
C)  the most recent year in which the business cycle hit the trough. 
D)  an arbitrarily chosen reference year. 
A)  the first year that price data are available. 
B)  any year in which inflation was higher than 5 per cent. 
C)  the most recent year in which the business cycle hit the trough. 
D)  an arbitrarily chosen reference year.

Question 19

The real interest rate is defined as the:

Accepted Answer

A)  actual interest rate. 
B)  fixed rate on consumer loans. 
C)  nominal interest rate minus the inflation rate. 
D)  expected interest rate minus the inflation rate. 
A)  actual interest rate. 
B)  fixed rate on consumer loans. 
C)  nominal interest rate minus the inflation rate. 
D)  expected interest rate minus the inflation rate.

Question 20

Which of the following is correct?

Accepted Answer

A)  People whose nominal incomes rise slower than the rate of inflation gain purchasing power. 
B)  Real income equals nominal income multiplied by the CPI as a decimal. 
C)  The percentage change in real income equals the percentage change in nominal income plus the percentage change in CPI. 
D)  The actual number of dollars received is called a nominal income. 
A)  People whose nominal incomes rise slower than the rate of inflation gain purchasing power. 
B)  Real income equals nominal income multiplied by the CPI as a decimal. 
C)  The percentage change in real income equals the percentage change in nominal income plus the percentage change in CPI. 
D)  The actual number of dollars received is called a nominal income.

One way the consumer price index (CPI) differs from the GDP chain price index is that the CPI:

The source of demand-pull inflation is a:

Real income is:

Which of the following can create demand-pull inflation?

Last year the Jones family earned $40 000. This year their income is $42 000. In an economy with an inflation rate of 10 per cent, which of the following is correct?

Which one of the following people is not a member of the labour force?

The highest unemployment rate in the 20th century was:

Cost-push inflation is a result of an increase in overspending.

Demand-pull inflation:

One way the consumer price index (CPI) differs from the GDP chain price index is that it:

The CPI (using a 1982 base year) for 1951 is 26. Suppose a household's annual take home pay in 1951 was $8320. What would be an equivalent home pay in 1982?

Narrbegin Exhibit 13.1 Consumer price index Year Consumer price index 1 100 2 100 3 105 4 125 5 150 -As shown in Exhibit 13.1, the rate of inflation for Year 4 is:

Frictional unemployment is:

The real interest rate is the annual percentage amount of money that is earned on a sum loaned or deposited in a bank.

If the consumer price index (CPI) in 2001 was 200 and the CPI in 2002 was 215, the rate of inflation was:

Cost-push inflation is due to:

Since the recession in the early 1990s, inflation in Australia has been:

Price indexes like the CPI are calculated using a base year. The term 'base year' refers to:

The real interest rate is defined as the:

Which of the following is correct?

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Exam 14: Inflation and Unemployment

One way the consumer price index (CPI) differs from the GDP chain price index is that the CPI:

The source of demand-pull inflation is a:

Real income is:

Which of the following can create demand-pull inflation?

Last year the Jones family earned $40 000. This year their income is $42 000. In an economy with an inflation rate of 10 per cent, which of the following is correct?

Which one of the following people is not a member of the labour force?

The highest unemployment rate in the 20th century was:

Cost-push inflation is a result of an increase in overspending.

Demand-pull inflation:

One way the consumer price index (CPI) differs from the GDP chain price index is that it:

The CPI (using a 1982 base year) for 1951 is 26. Suppose a household's annual take home pay in 1951 was $8320. What would be an equivalent home pay in 1982?

Narrbegin Exhibit 13.1 Consumer price index Year Consumer price index 1 100 2 100 3 105 4 125 5 150 -As shown in Exhibit 13.1, the rate of inflation for Year 4 is:

Frictional unemployment is:

The real interest rate is the annual percentage amount of money that is earned on a sum loaned or deposited in a bank.

If the consumer price index (CPI) in 2001 was 200 and the CPI in 2002 was 215, the rate of inflation was:

Cost-push inflation is due to:

Since the recession in the early 1990s, inflation in Australia has been:

Price indexes like the CPI are calculated using a base year. The term 'base year' refers to:

The real interest rate is defined as the:

Which of the following is correct?

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters