Question 1

The deviations from the natural rate of unemployment in the actual rate of unemployment are:

Accepted Answer

A) seasonal. 
B) frictional. 
C) cyclical. 
D) structural. 
A) seasonal. 
B) frictional. 
C) cyclical. 
D) structural.

Question 2

Sam, who is 55 years old and has been a steelworker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is _____ unemployed.

Accepted Answer

A) cyclically 
B) permanently 
C) frictionally 
D) structurally 
A) cyclically 
B) permanently 
C) frictionally 
D) structurally

Question 3

The official unemployment rate reported by the government may tend to understate the amount of unemployment because it:

Accepted Answer

A) includes discouraged workers. 
B) excludes discouraged workers. 
C) includes people over 65 who aren't retired. 
D) excludes teenagers. 
A) includes discouraged workers. 
B) excludes discouraged workers. 
C) includes people over 65 who aren't retired. 
D) excludes teenagers.

Question 4

The labor demand curve is negatively sloped because:

Accepted Answer

A) more people are willing to work at low wages than at high wages. 
B) more people are willing to work at high wages than at low wages. 
C) employers are willing to hire more people at low wages. 
D) employers are willing to hire more people at high wages. 
A) more people are willing to work at low wages than at high wages. 
B) more people are willing to work at high wages than at low wages. 
C) employers are willing to hire more people at low wages. 
D) employers are willing to hire more people at high wages.

Question 5

Use the following to answer questions:
Figure: The Labor Market  
-(Figure: The Labor Market) Look at the figure The Labor Market. The size of the labor force at the equilibrium wage rate is:

Accepted Answer

A) 80,000. 
B) 110,000. 
C) 100,000. 
D) 200,000. 
A) 80,000. 
B) 110,000. 
C) 100,000. 
D) 200,000.

Question 6

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

Accepted Answer

A) 1,200 million. 
B) 50 million. 
C) 105 million. 
D) 400 million. 
A) 1,200 million. 
B) 50 million. 
C) 105 million. 
D) 400 million.

Question 7

What do economists mean by the natural rate of unemployment? How would it be affected by a permanent influx of younger, predominantly unskilled immigrant workers?

Accepted Answer

The natural rate of unemployment is the

Question 8

Cyclical unemployment:

Accepted Answer

A) rises during a recession. 
B) falls during a recession. 
C) rises during an expansion. 
D) is a part of natural unemployment. 
A) rises during a recession. 
B) falls during a recession. 
C) rises during an expansion. 
D) is a part of natural unemployment.

Question 9

Efficiency wages are:

Accepted Answer

A) above equilibrium to encourage better performance. 
B) below equilibrium to encourage better performance to get a raise. 
C) responsible for all structural unemployment. 
D) above equilibrium to encourage better performance and are responsible for all structural unemployment. 
A) above equilibrium to encourage better performance. 
B) below equilibrium to encourage better performance to get a raise. 
C) responsible for all structural unemployment. 
D) above equilibrium to encourage better performance and are responsible for all structural unemployment.

Question 10

When the rate of inflation is high, people usually transfer money from interest-bearing accounts into checking accounts more often than when inflation is low. This is an example of a menu cost.

Accepted Answer

A) True 
 B)False

Question 11

Menu costs are the:

Accepted Answer

A) costs of money becoming less reliable. 
B) real costs of changing listed prices. 
C) increase in the transaction costs caused by inflation. 
D) adjustments to the cost of living. 
A) costs of money becoming less reliable. 
B) real costs of changing listed prices. 
C) increase in the transaction costs caused by inflation. 
D) adjustments to the cost of living.

Question 12

Cyclical unemployment is a result of recessions and economic downturns and is not considered a part of the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 13

If actual unemployment is 6.2% and the natural rate is 4%, cyclical unemployment is:

Accepted Answer

A) 6.2%. 
B) 10.2%. 
C) 4%. 
D) 2.2%. 
A) 6.2%. 
B) 10.2%. 
C) 4%. 
D) 2.2%.

Question 14

A worker classified as frictionally unemployed is one who is:

Accepted Answer

A) laid off during a recession. 
B) discouraged and has dropped out of the labor force. 
C) unemployed while looking for a job that demands his or her skills. 
D) working part-time but would prefer to work full-time. 
A) laid off during a recession. 
B) discouraged and has dropped out of the labor force. 
C) unemployed while looking for a job that demands his or her skills. 
D) working part-time but would prefer to work full-time.

Question 15

Increases in the average level of prices are called:

Accepted Answer

A) depreciation. 
B) deflation. 
C) inflation. 
D) expectations. 
A) depreciation. 
B) deflation. 
C) inflation. 
D) expectations.

Question 16

If the actual inflation rate is less than the expected inflation rate:

Accepted Answer

A) lenders gain and borrowers lose. 
B) borrowers gain and lenders lose. 
C) everyone benefits. 
D) everyone is worse off. 
A) lenders gain and borrowers lose. 
B) borrowers gain and lenders lose. 
C) everyone benefits. 
D) everyone is worse off.

Question 17

If the real interest rate is 4% and the inflation rate is 1%, then the nominal interest rate is 5%.

Accepted Answer

A) True 
 B)False

Question 18

Since the 1960s, the U.S. price level has _____ and the inflation rate has _____.

Accepted Answer

A) remained constant; increased 
B) increased; fluctuated 
C) decreased; decreased 
D) fluctuated; remained constant 
A) remained constant; increased 
B) increased; fluctuated 
C) decreased; decreased 
D) fluctuated; remained constant

Question 19

During the mid-1980s, Israel had a high rate of inflation, and prices often rose by more than 10% per month.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that a bank wishes to make a 5% rate of return on a one-year loan but expects inflation over the course of the loan to be roughly 3%. Which of the following is TRUE?

Accepted Answer

A) As long as the bank charges a nominal interest rate of at least 5%, it will earn its expected return. 
B) If the bank charges an interest rate of 8% or higher, it will earn the expected return. 
C) If the bank charges 8% and the inflation rate is less than 3%, then the bank will have earned a higher rate of return than expected. 
D) If the bank charges 8% and the inflation rate is more than 3%, then the bank will have earned a higher rate of return than expected. 
A) As long as the bank charges a nominal interest rate of at least 5%, it will earn its expected return. 
B) If the bank charges an interest rate of 8% or higher, it will earn the expected return. 
C) If the bank charges 8% and the inflation rate is less than 3%, then the bank will have earned a higher rate of return than expected. 
D) If the bank charges 8% and the inflation rate is more than 3%, then the bank will have earned a higher rate of return than expected.

The deviations from the natural rate of unemployment in the actual rate of unemployment are:

Sam, who is 55 years old and has been a steelworker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is _____ unemployed.

The official unemployment rate reported by the government may tend to understate the amount of unemployment because it:

The labor demand curve is negatively sloped because:

Use the following to answer questions: Figure: The Labor Market -(Figure: The Labor Market) Look at the figure The Labor Market. The size of the labor force at the equilibrium wage rate is:

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

What do economists mean by the natural rate of unemployment? How would it be affected by a permanent influx of younger, predominantly unskilled immigrant workers?

Cyclical unemployment:

Efficiency wages are:

When the rate of inflation is high, people usually transfer money from interest-bearing accounts into checking accounts more often than when inflation is low. This is an example of a menu cost.

Menu costs are the:

Cyclical unemployment is a result of recessions and economic downturns and is not considered a part of the natural rate of unemployment.

If actual unemployment is 6.2% and the natural rate is 4%, cyclical unemployment is:

A worker classified as frictionally unemployed is one who is:

Increases in the average level of prices are called:

If the actual inflation rate is less than the expected inflation rate:

If the real interest rate is 4% and the inflation rate is 1%, then the nominal interest rate is 5%.

Since the 1960s, the U.S. price level has _ and the inflation rate has _.

During the mid-1980s, Israel had a high rate of inflation, and prices often rose by more than 10% per month.

Suppose that a bank wishes to make a 5% rate of return on a one-year loan but expects inflation over the course of the loan to be roughly 3%. Which of the following is TRUE?

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

The deviations from the natural rate of unemployment in the actual rate of unemployment are:

Sam, who is 55 years old and has been a steelworker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is _____ unemployed.

The official unemployment rate reported by the government may tend to understate the amount of unemployment because it:

The labor demand curve is negatively sloped because:

Use the following to answer questions: Figure: The Labor Market -(Figure: The Labor Market) Look at the figure The Labor Market. The size of the labor force at the equilibrium wage rate is:

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

What do economists mean by the natural rate of unemployment? How would it be affected by a permanent influx of younger, predominantly unskilled immigrant workers?

Cyclical unemployment:

Efficiency wages are:

When the rate of inflation is high, people usually transfer money from interest-bearing accounts into checking accounts more often than when inflation is low. This is an example of a menu cost.

Menu costs are the:

Cyclical unemployment is a result of recessions and economic downturns and is not considered a part of the natural rate of unemployment.

If actual unemployment is 6.2% and the natural rate is 4%, cyclical unemployment is:

A worker classified as frictionally unemployed is one who is:

Increases in the average level of prices are called:

If the actual inflation rate is less than the expected inflation rate:

If the real interest rate is 4% and the inflation rate is 1%, then the nominal interest rate is 5%.

Since the 1960s, the U.S. price level has _____ and the inflation rate has _____.

During the mid-1980s, Israel had a high rate of inflation, and prices often rose by more than 10% per month.

Suppose that a bank wishes to make a 5% rate of return on a one-year loan but expects inflation over the course of the loan to be roughly 3%. Which of the following is TRUE?

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

Since the 1960s, the U.S. price level has _ and the inflation rate has _.