Question 1

The labor force consists of all

Accepted Answer

A) the people in the economy who are not retired 
B) people in the economy over 16 years of age 
C) the adults in the economy between 18 and 65 years old who are able to work 
D) the noninstitutionalized population over 16 in the economy who hold jobs or are looking for them 
E) the citizens in the economy who are graduates of high school 
A) the people in the economy who are not retired 
B) people in the economy over 16 years of age 
C) the adults in the economy between 18 and 65 years old who are able to work 
D) the noninstitutionalized population over 16 in the economy who hold jobs or are looking for them 
E) the citizens in the economy who are graduates of high school

Question 2

Which of the following groups has historically had the highest unemployment rate?

Accepted Answer

A) professional workers 
B) white teenagers 
C) black teenagers 
D) black adults 
E) white adults 
A) professional workers 
B) white teenagers 
C) black teenagers 
D) black adults 
E) white adults

Question 3

The labor force participation rate climbs with education.

Accepted Answer

A) True 
 B)False

Question 4

Different demographic groups

Accepted Answer

A) have identical durations of unemployment 
B) have identical unemployment rates 
C) are weighted equally in the official unemployment rate 
D) have different unemployment rates 
E) are weighted more heavily in the official unemployment rate if they have larger unemployment rates 
A) have identical durations of unemployment 
B) have identical unemployment rates 
C) are weighted equally in the official unemployment rate 
D) have different unemployment rates 
E) are weighted more heavily in the official unemployment rate if they have larger unemployment rates

Question 5

Frictional unemployment refers to unemployment that results from

Accepted Answer

A) a mismatch of skills 
B) being in the wrong geographical location 
C) taking the time to find the best job 
D) seasonal decreases in demand for labor 
E) a recession in the economy 
A) a mismatch of skills 
B) being in the wrong geographical location 
C) taking the time to find the best job 
D) seasonal decreases in demand for labor 
E) a recession in the economy

Question 6

Suppose the price levels in four successive years are 100,120,133,and 140.Which of the following is true?

Accepted Answer

A) The economy is experiencing hyperinflation. 
B) The economy is experiencing deflation. 
C) The economy is experiencing inflation. 
D) The economy is experiencing increasing inflation. 
E) The economy is experiencing reflation. 
A) The economy is experiencing hyperinflation. 
B) The economy is experiencing deflation. 
C) The economy is experiencing inflation. 
D) The economy is experiencing increasing inflation. 
E) The economy is experiencing reflation.

Question 7

Which of the following is not an effect of hyperinflation?

Accepted Answer

A) Price differences among sellers of the same product become smaller. 
B) People hold on to currency only for very short periods of time. 
C) People tend to exchange the currency that is subject to high inflation for a more stable currency. 
D) Resources are wasted by constant attention to inflation's effects. 
E) Inflation-induced activity that is rational for individuals often has detrimental effects on the economy as a whole. 
A) Price differences among sellers of the same product become smaller. 
B) People hold on to currency only for very short periods of time. 
C) People tend to exchange the currency that is subject to high inflation for a more stable currency. 
D) Resources are wasted by constant attention to inflation's effects. 
E) Inflation-induced activity that is rational for individuals often has detrimental effects on the economy as a whole.

Question 8

If the aggregate demand curve shifts rightward,

Accepted Answer

A) the price level increases and output decreases 
B) the resulting increase in the price level is usually called cost-push inflation 
C) the resulting increase in the price level is usually called demand-pull inflation 
D) the price level increases only if there is also a leftward shift of the aggregate supply curve 
E) the price level decreases and output decreases 
A) the price level increases and output decreases 
B) the resulting increase in the price level is usually called cost-push inflation 
C) the resulting increase in the price level is usually called demand-pull inflation 
D) the price level increases only if there is also a leftward shift of the aggregate supply curve 
E) the price level decreases and output decreases

Question 9

A discouraged worker is one who

Accepted Answer

A) is underqualified for his current job 
B) dislikes his current job but is afraid to quit 
C) drops out of the labor force because he cannot find a job 
D) quits his job because the possibility of advancement was very low 
E) is overqualified for his current job 
A) is underqualified for his current job 
B) dislikes his current job but is afraid to quit 
C) drops out of the labor force because he cannot find a job 
D) quits his job because the possibility of advancement was very low 
E) is overqualified for his current job

Question 10

Suppose the official unemployment rate is 10 percent.We can conclude without question that

Accepted Answer

A) the same 10 percent of the people in the economy were out of work for the entire year 
B) one of every ten people in the labor force is currently unemployed 
C) the same 10 percent of the people in the labor force were out of work for the entire year 
D) every person in the labor force was out of work for 10 percent of the year 
E) 10 percent of the people in the economy were each out of work for 10 percent of the year 
A) the same 10 percent of the people in the economy were out of work for the entire year 
B) one of every ten people in the labor force is currently unemployed 
C) the same 10 percent of the people in the labor force were out of work for the entire year 
D) every person in the labor force was out of work for 10 percent of the year 
E) 10 percent of the people in the economy were each out of work for 10 percent of the year

Question 11

Consider an economy made up of 100 people,60 of whom hold jobs,10 of whom are looking for work,and 15 of whom are retired.The number of people in the labor force is

Accepted Answer

A) 30 
B) 60 
C) 85 
D) 90 
E) 70 
A) 30 
B) 60 
C) 85 
D) 90 
E) 70

Question 12

Which of the following people would be counted in the labor force?

Accepted Answer

A) Chou,who lost his job and last looked for work three months ago 
B) Stephanie,who holds a Ph.D.in history,but can only find part-time employment at a fast-food restaurant 
C) Jordan,who would like to work as a stockbroker but is now a househusband 
D) Steffan,who thinks he could easily earn $100,000 per year,despite the opinion of the psychiatrist at the state hospital where he is a patient 
E) Monique,age 90,who is enjoying her retirement in Montana 
A) Chou,who lost his job and last looked for work three months ago 
B) Stephanie,who holds a Ph.D.in history,but can only find part-time employment at a fast-food restaurant 
C) Jordan,who would like to work as a stockbroker but is now a househusband 
D) Steffan,who thinks he could easily earn $100,000 per year,despite the opinion of the psychiatrist at the state hospital where he is a patient 
E) Monique,age 90,who is enjoying her retirement in Montana

Question 13

A major cost of unemployment is lost production.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not consistent with full employment?

Accepted Answer

A) an unemployment rate of 5 percent or 6 percent 
B) seasonal unemployment 
C) structural unemployment 
D) cyclical unemployment 
E) frictional unemployment 
A) an unemployment rate of 5 percent or 6 percent 
B) seasonal unemployment 
C) structural unemployment 
D) cyclical unemployment 
E) frictional unemployment

Question 15

Which of the following people is least likely to be hurt by inflation?

Accepted Answer

A) a salesperson who works on commission 
B) a retired couple living on a pension 
C) an individual who works under a labor contract calling for a fixed wage for the next three years 
D) an individual who contracts to lend money for a fixed rate of interest for the next three years 
E) an individual working at the minimum wage (which seldom changes) 
A) a salesperson who works on commission 
B) a retired couple living on a pension 
C) an individual who works under a labor contract calling for a fixed wage for the next three years 
D) an individual who contracts to lend money for a fixed rate of interest for the next three years 
E) an individual working at the minimum wage (which seldom changes)

Question 16

If the expected inflation rate is 4 percent and the nominal interest rate is 9 percent,the expected real interest rate is

Accepted Answer

A) 13 percent 
B) -5 percent 
C) 9 percent 
D) -13 percent 
E) 5 percent 
A) 13 percent 
B) -5 percent 
C) 9 percent 
D) -13 percent 
E) 5 percent

Question 17

Which of the following events would most likely cause the nominal interest rate to fall?

Accepted Answer

A) The supply of loanable funds decreases. 
B) Both the supply of and the demand for loanable funds increase. 
C) Both the supply of and the demand for loanable funds decrease. 
D) The supply of loanable funds increases and the demand for loanable funds decreases. 
E) The supply of loanable funds decreases and the demand for loanable funds increases. 
A) The supply of loanable funds decreases. 
B) Both the supply of and the demand for loanable funds increase. 
C) Both the supply of and the demand for loanable funds decrease. 
D) The supply of loanable funds increases and the demand for loanable funds decreases. 
E) The supply of loanable funds decreases and the demand for loanable funds increases.

Question 18

Full employment

Accepted Answer

A) exists when everyone in the economy has a job 
B) exists when everyone who wants a job has one 
C) exists when the unemployment rate is zero 
D) exists when everyone in the labor force has a job 
E) will always include some unemployment 
A) exists when everyone in the economy has a job 
B) exists when everyone who wants a job has one 
C) exists when the unemployment rate is zero 
D) exists when everyone in the labor force has a job 
E) will always include some unemployment

Question 19

Measured unemployment is calculated using unemployment compensation data.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true about inflation?

Accepted Answer

A) Inflation promotes social harmony by uniting people against the government. 
B) Inflation is more damaging if it is anticipated than if it is not anticipated. 
C) Accurate anticipation of inflation is possible for everyone who is well informed about economic events. 
D) Those who have borrowed money at an interest rate below the rate of inflation will generally benefit. 
E) If people anticipate inflation,their actions will prevent the inflation. 
A) Inflation promotes social harmony by uniting people against the government. 
B) Inflation is more damaging if it is anticipated than if it is not anticipated. 
C) Accurate anticipation of inflation is possible for everyone who is well informed about economic events. 
D) Those who have borrowed money at an interest rate below the rate of inflation will generally benefit. 
E) If people anticipate inflation,their actions will prevent the inflation.

Exam 7: Unemployment and Inflation

The labor force consists of all

Which of the following groups has historically had the highest unemployment rate?

The labor force participation rate climbs with education.

Different demographic groups

Frictional unemployment refers to unemployment that results from

Suppose the price levels in four successive years are 100,120,133,and 140.Which of the following is true?

Which of the following is not an effect of hyperinflation?

If the aggregate demand curve shifts rightward,

A discouraged worker is one who

Suppose the official unemployment rate is 10 percent.We can conclude without question that

Consider an economy made up of 100 people,60 of whom hold jobs,10 of whom are looking for work,and 15 of whom are retired.The number of people in the labor force is

Which of the following people would be counted in the labor force?

A major cost of unemployment is lost production.

Which of the following is not consistent with full employment?

Which of the following people is least likely to be hurt by inflation?

If the expected inflation rate is 4 percent and the nominal interest rate is 9 percent,the expected real interest rate is

Which of the following events would most likely cause the nominal interest rate to fall?

Full employment

Measured unemployment is calculated using unemployment compensation data.

Which of the following is true about inflation?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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