Question 1

If money income remains the same while the average price level doubles:

Accepted Answer

A) nominal income will fall. 
B) real income will fall. 
C) interest rates will fall. 
D) purchasing power will increase. 
A) nominal income will fall. 
B) real income will fall. 
C) interest rates will fall. 
D) purchasing power will increase.

Question 2

The real rate of interest is the nominal rate of interest times the inflation rate.

Accepted Answer

A) True 
 B)False

Question 3

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 8 old dollars, then a mortgage of $200,000 would become a debt of 25,000 new dollars.

Accepted Answer

A) True 
 B)False

Question 4

Unemployment rates are usually higher in Europe than in the United States because:

Accepted Answer

A) the minimum wage is higher in the United States than in Europe. 
B) U.S. economic policy is much more effective than European economic policy. 
C) there are more unskilled, uneducated workers in Europe than in the United States. 
D) unemployment benefits are more generous in Europe than in the United States. 
A) the minimum wage is higher in the United States than in Europe. 
B) U.S. economic policy is much more effective than European economic policy. 
C) there are more unskilled, uneducated workers in Europe than in the United States. 
D) unemployment benefits are more generous in Europe than in the United States.

Question 5

Annie's credit union charges a fee for transferring funds from her money market account to her checking account. The rate of inflation has been 12% lately, so Annie has transferred funds from her money market account to her checking account more often than usual. This cost is an example of the _____ cost of high inflation.

Accepted Answer

A) unit-of-account 
B) menu 
C) shoe-leather 
D) redistributive 
A) unit-of-account 
B) menu 
C) shoe-leather 
D) redistributive

Question 6

According to the Bureau of Labor Statistics, the actual unemployment rate was 8.3% in February 2012 and the natural rate of unemployment was 5.2%. The _____ unemployment rate was _____.

Accepted Answer

A) frictional; 4% 
B) cyclical; 3.1% 
C) structural; 4% 
D) cyclical; 14% 
A) frictional; 4% 
B) cyclical; 3.1% 
C) structural; 4% 
D) cyclical; 14%

Question 7

Unit-of-account costs refer to the:

Accepted Answer

A) increase in prices during inflation. 
B) decrease in the value of money during inflation. 
C) loss of the reliability of money as a relative unit of measurement. 
D) increased costs of servicing bank accounts during inflation. 
A) increase in prices during inflation. 
B) decrease in the value of money during inflation. 
C) loss of the reliability of money as a relative unit of measurement. 
D) increased costs of servicing bank accounts during inflation.

Question 8

An example of the frictionally unemployed is a(n):

Accepted Answer

A) autoworker who is temporarily laid off because of a decline in sales. 
B) geologist who is permanently laid off from an oil company because of a technological advance. 
C) worker at a fast-food restaurant who quits work and attends college. 
D) real estate agent who leaves a job in Texas and searches for a similar higher-paying job in California. 
A) autoworker who is temporarily laid off because of a decline in sales. 
B) geologist who is permanently laid off from an oil company because of a technological advance. 
C) worker at a fast-food restaurant who quits work and attends college. 
D) real estate agent who leaves a job in Texas and searches for a similar higher-paying job in California.

Question 9

Use the following to answer questions:  
-(Table: Labor Force Data) Look at the table Labor Force Data. If the labor force participation rate is 70%, the unemployment rate is:

Accepted Answer

A) 7.6%. 
B) 5%. 
C) 4%. 
D) 3%. 
A) 7.6%. 
B) 5%. 
C) 4%. 
D) 3%.

Question 10

Use the following to answer questions :  
-(Table: Labor Force Distribution) Look at the table Labor Force Distribution. The total population is:

Accepted Answer

A) 486 million. 
B) 253 million. 
C) 278 million. 
D) 283 million. 
A) 486 million. 
B) 253 million. 
C) 278 million. 
D) 283 million.

Question 11

Structural unemployment can be caused by all of the following EXCEPT:

Accepted Answer

A) minimum wages. 
B) labor unions. 
C) efficiency wages. 
D) fluctuations in the business cycle. 
A) minimum wages. 
B) labor unions. 
C) efficiency wages. 
D) fluctuations in the business cycle.

Question 12

Unless deflation occurs, the nominal interest rate will always be greater than or equal to the real interest rate.

Accepted Answer

A) True 
 B)False

Question 13

The unemployment rate is the ratio of the unemployed to the labor force.

Accepted Answer

A) True 
 B)False

Question 14

Real income is income divided by the price level.

Accepted Answer

A) True 
 B)False

Question 15

Use the following to answer questions :
Table: Unemployment and Employment Data  
-(Table: Unemployment and Employment Data) Look at the table Unemployment and Employment Data. The labor force in this economy is:

Accepted Answer

A) 170 million. 
B) 140 million. 
C) 100 million. 
D) 98 million. 
A) 170 million. 
B) 140 million. 
C) 100 million. 
D) 98 million.

Question 16

Which pair of policies is likely to reduce the natural rate of unemployment?

Accepted Answer

A) job training and employment subsidies 
B) high minimum wages and generous unemployment benefits 
C) job training and higher minimum wages 
D) employment subsidies and policies designed to strengthen labor unions 
A) job training and employment subsidies 
B) high minimum wages and generous unemployment benefits 
C) job training and higher minimum wages 
D) employment subsidies and policies designed to strengthen labor unions

Question 17

The natural rate of unemployment:

Accepted Answer

A) would increase if a larger percentage of the labor force were over 25 years old. 
B) would increase if union membership fell. 
C) would increase if unemployment benefits were increased. 
D) will always remain fixed. 
A) would increase if a larger percentage of the labor force were over 25 years old. 
B) would increase if union membership fell. 
C) would increase if unemployment benefits were increased. 
D) will always remain fixed.

Question 18

Since 1960 in the United States, the price level has:

Accepted Answer

A) fluctuated randomly by large amounts. 
B) remained the same. 
C) decreased. 
D) increased. 
A) fluctuated randomly by large amounts. 
B) remained the same. 
C) decreased. 
D) increased.

Question 19

A survey reveals that on a small island initially 1,000 people have jobs, 250 people are not working but are looking for jobs, and 450 people are neither working nor looking for work. Suppose that 150 of the 450 people who weren't looking for work now begin looking for work. There are now 400 people looking for work and 1,000 people working. The unemployment rate:

Accepted Answer

A) falls to 20%. 
B) rises to 28.6%. 
C) rises to 50%. 
D) Nothing happens to the unemployment rate, because these people weren't working before and they aren't working now. 
A) falls to 20%. 
B) rises to 28.6%. 
C) rises to 50%. 
D) Nothing happens to the unemployment rate, because these people weren't working before and they aren't working now.

Question 20

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 8 old dollars, then a mortgage of $100,000 would become a debt of _____ new dollars.

Accepted Answer

A) 12,500 
B) 99,992 
C) 100,000 
D) 800,000 
A) 12,500 
B) 99,992 
C) 100,000 
D) 800,000

If money income remains the same while the average price level doubles:

The real rate of interest is the nominal rate of interest times the inflation rate.

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 8 old dollars, then a mortgage of $200,000 would become a debt of 25,000 new dollars.

Unemployment rates are usually higher in Europe than in the United States because:

According to the Bureau of Labor Statistics, the actual unemployment rate was 8.3% in February 2012 and the natural rate of unemployment was 5.2%. The _ unemployment rate was _.

Unit-of-account costs refer to the:

An example of the frictionally unemployed is a(n):

Use the following to answer questions: -(Table: Labor Force Data) Look at the table Labor Force Data. If the labor force participation rate is 70%, the unemployment rate is:

Use the following to answer questions : -(Table: Labor Force Distribution) Look at the table Labor Force Distribution. The total population is:

Structural unemployment can be caused by all of the following EXCEPT:

Unless deflation occurs, the nominal interest rate will always be greater than or equal to the real interest rate.

The unemployment rate is the ratio of the unemployed to the labor force.

Real income is income divided by the price level.

Use the following to answer questions : Table: Unemployment and Employment Data -(Table: Unemployment and Employment Data) Look at the table Unemployment and Employment Data. The labor force in this economy is:

Which pair of policies is likely to reduce the natural rate of unemployment?

The natural rate of unemployment:

Since 1960 in the United States, the price level has:

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 8 old dollars, then a mortgage of $100,000 would become a debt of _____ new dollars.

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 8: Unemployment and Inflation

If money income remains the same while the average price level doubles:

The real rate of interest is the nominal rate of interest times the inflation rate.

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 8 old dollars, then a mortgage of $200,000 would become a debt of 25,000 new dollars.

Unemployment rates are usually higher in Europe than in the United States because:

According to the Bureau of Labor Statistics, the actual unemployment rate was 8.3% in February 2012 and the natural rate of unemployment was 5.2%. The _____ unemployment rate was _____.

Unit-of-account costs refer to the:

An example of the frictionally unemployed is a(n):

Use the following to answer questions: -(Table: Labor Force Data) Look at the table Labor Force Data. If the labor force participation rate is 70%, the unemployment rate is:

Use the following to answer questions : -(Table: Labor Force Distribution) Look at the table Labor Force Distribution. The total population is:

Structural unemployment can be caused by all of the following EXCEPT:

Unless deflation occurs, the nominal interest rate will always be greater than or equal to the real interest rate.

The unemployment rate is the ratio of the unemployed to the labor force.

Real income is income divided by the price level.

Use the following to answer questions : Table: Unemployment and Employment Data -(Table: Unemployment and Employment Data) Look at the table Unemployment and Employment Data. The labor force in this economy is:

Which pair of policies is likely to reduce the natural rate of unemployment?

The natural rate of unemployment:

Since 1960 in the United States, the price level has:

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 8 old dollars, then a mortgage of $100,000 would become a debt of _____ new dollars.

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

According to the Bureau of Labor Statistics, the actual unemployment rate was 8.3% in February 2012 and the natural rate of unemployment was 5.2%. The _ unemployment rate was _.