Question 1

As a result of hyperinflation in Zimbabwe,

Accepted Answer

A) prices were 150 million times higher at the end of 2008 than they were at the beginning 
B) the price level fell by 50 percent in 2008 
C) real GDP rose there faster than did nominal GDP 
D) the "shoe-leather cost" (of looking for the lowest price)was very high 
E) many Zimbabweans migrated to neighboring countries 
A) prices were 150 million times higher at the end of 2008 than they were at the beginning 
B) the price level fell by 50 percent in 2008 
C) real GDP rose there faster than did nominal GDP 
D) the "shoe-leather cost" (of looking for the lowest price)was very high 
E) many Zimbabweans migrated to neighboring countries

Question 2

A worker would be hurt least by inflation when the

Accepted Answer

A) worker anticipates inflation and increases savings at the bank 
B) worker is protected by a cost-of-living adjustment clause in an employment contract 
C) the price level increases but at a decreasing rate 
D) worker is protected by fixed annual increases in wages and benefits it an employment contract 
E) government increases the level of social security retirement benefits to correct for the effects of unanticipated inflation 
A) worker anticipates inflation and increases savings at the bank 
B) worker is protected by a cost-of-living adjustment clause in an employment contract 
C) the price level increases but at a decreasing rate 
D) worker is protected by fixed annual increases in wages and benefits it an employment contract 
E) government increases the level of social security retirement benefits to correct for the effects of unanticipated inflation

Question 3

A decrease in the interest rate,other things constant,will

Accepted Answer

A) shift the supply of loanable funds curve to the left 
B) shift the supply of loanable funds curve to the right 
C) decrease the quantity of loanable funds demanded 
D) decrease the quantity of loanable funds supplied 
E) shift the demand for loanable funds curve to the right 
A) shift the supply of loanable funds curve to the left 
B) shift the supply of loanable funds curve to the right 
C) decrease the quantity of loanable funds demanded 
D) decrease the quantity of loanable funds supplied 
E) shift the demand for loanable funds curve to the right

Question 4

Ginger quits her job as a secretary because she cannot handle the stress.It takes her three weeks of solid effort to land a job as a receptionist.Over these three weeks,she would be considered frictionally unemployed.

Accepted Answer

A) True 
 B)False

Question 5

The labor force participation rate is the number of people

Accepted Answer

A) employed divided by the adult population 
B) employed divided by the number of people in the labor force 
C) in the labor force divided by the adult population 
D) unemployed divided by the number of people in the labor force 
E) in the labor force divided by the number of people employed 
A) employed divided by the adult population 
B) employed divided by the number of people in the labor force 
C) in the labor force divided by the adult population 
D) unemployed divided by the number of people in the labor force 
E) in the labor force divided by the number of people employed

Question 6

Which of the following is not an effect of hyperinflation?

Accepted Answer

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

Question 7

Suppose you received a 3 percent increase in your nominal wage.Over the year,inflation ran about 6 percent.Which of the following is true?

Accepted Answer

A) Your real wage fell. 
B) Your nominal wage fell. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell,your real wage increased. 
E) Both nominal and real wages increased. 
A) Your real wage fell. 
B) Your nominal wage fell. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell,your real wage increased. 
E) Both nominal and real wages increased.

Question 8

Sharon was being treated unfairly by her boss,so she stormed off the job and two weeks later found another position.For two weeks Sharon experienced

Accepted Answer

A) cyclical unemployment 
B) structural unemployment 
C) seasonal unemployment 
D) frictional unemployment 
E) being out of the labor force 
A) cyclical unemployment 
B) structural unemployment 
C) seasonal unemployment 
D) frictional unemployment 
E) being out of the labor force

Question 9

The only job Justin ever holds is preparing income tax forms at H&R Block from January 2 to April 15.In March,while he is still working,he sends his resume to prospective employers.In March,he was counted as

Accepted Answer

A) cyclically unemployed 
B) structurally unemployed 
C) frictionally unemployed 
D) part of the labor force 
E) out of the labor force 
A) cyclically unemployed 
B) structurally unemployed 
C) frictionally unemployed 
D) part of the labor force 
E) out of the labor force

Question 10

Most of the unemployment during the Great Depression was cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 11

In times of rapid inflation,

Accepted Answer

A) money loses its use as a store of value 
B) money becomes an attractive store of wealth 
C) people postpone purchases as long as possible 
D) people spend less in transactions costs 
E) people tend to save more money 
A) money loses its use as a store of value 
B) money becomes an attractive store of wealth 
C) people postpone purchases as long as possible 
D) people spend less in transactions costs 
E) people tend to save more money

Question 12

Jamal lost his job as a shipbuilder during 2004.His shipyard never reopened,and so his very specialized skills are no longer in demand.Jamal's unemployment is best classified as

Accepted Answer

A) cyclical 
B) structural 
C) seasonal 
D) frictional 
E) voluntary 
A) cyclical 
B) structural 
C) seasonal 
D) frictional 
E) voluntary

Question 13

When workers are over-qualified for their current jobs or can find only part-time work,we say they are

Accepted Answer

A) unemployed 
B) discouraged workers 
C) not in the labor force 
D) overemployed 
E) underemployed 
A) unemployed 
B) discouraged workers 
C) not in the labor force 
D) overemployed 
E) underemployed

Question 14

Uncertainty about inflation

Accepted Answer

A) shifts the attention of business managers away from exchange rate movements and toward concerns about productivity 
B) reduces the difficulty of making international business decisions 
C) creates uncertainty about the value of the dollar relative to foreign currencies 
D) enhances money's importance as a link between the present and the future 
E) makes contracts easier to negotiate 
A) shifts the attention of business managers away from exchange rate movements and toward concerns about productivity 
B) reduces the difficulty of making international business decisions 
C) creates uncertainty about the value of the dollar relative to foreign currencies 
D) enhances money's importance as a link between the present and the future 
E) makes contracts easier to negotiate

Question 15

The difference between demand-pull inflation and cost-push inflation is that

Accepted Answer

A) demand-pull inflation is caused by movements of the aggregate supply curve; cost-push inflation is caused by changes in firms' costs of production 
B) cost-push inflation is caused by movements of the aggregate demand curve; demand-pull inflation is caused by cyclical activity in the economy 
C) demand-pull inflation is caused by movements of the aggregate demand curve; cost-push inflation is caused by movements of the aggregate supply curve 
D) demand-pull inflation is caused by government deficit spending; cost-push inflation is caused by firms 
E) demand-pull inflation is caused by foreign demand; cost-push inflation is caused by domestic production problems 
A) demand-pull inflation is caused by movements of the aggregate supply curve; cost-push inflation is caused by changes in firms' costs of production 
B) cost-push inflation is caused by movements of the aggregate demand curve; demand-pull inflation is caused by cyclical activity in the economy 
C) demand-pull inflation is caused by movements of the aggregate demand curve; cost-push inflation is caused by movements of the aggregate supply curve 
D) demand-pull inflation is caused by government deficit spending; cost-push inflation is caused by firms 
E) demand-pull inflation is caused by foreign demand; cost-push inflation is caused by domestic production problems

Question 16

The unemployment rate for blacks in the United States is higher than that for whites.

Accepted Answer

A) True 
 B)False

Question 17

Jacqueline,a brilliant new Ph.D.in economics,has turned down many job offers because she hopes eventually to teach at one of the top ten universities in her field.The type of unemployment she is experiencing is

Accepted Answer

A) frictional 
B) structural 
C) seasonal 
D) cyclical 
E) underemployment 
A) frictional 
B) structural 
C) seasonal 
D) cyclical 
E) underemployment

Question 18

Suppose you received a 4 percent increase in your nominal wage.Over the year,inflation runs about 7 percent.Which of the following is true?

Accepted Answer

A) Your real wage increased. 
B) Both the nominal and real wages increased. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell,your real wage increased. 
E) Although your nominal wage rose,your real wage decreased. 
A) Your real wage increased. 
B) Both the nominal and real wages increased. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell,your real wage increased. 
E) Although your nominal wage rose,your real wage decreased.

Question 19

In periods of high inflation,

Accepted Answer

A) people want to hold as much money as possible 
B) the purchasing power of money is decreasing 
C) nobody wants to work and earn income 
D) low nominal interest rates are likely to result 
E) nobody wants to buy goods and services 
A) people want to hold as much money as possible 
B) the purchasing power of money is decreasing 
C) nobody wants to work and earn income 
D) low nominal interest rates are likely to result 
E) nobody wants to buy goods and services

Question 20

Assuming the total population is 150 million,the labor force is 100 million,and 94 million workers are employed,the unemployment rate is

Accepted Answer

A) 4 percent 
B) 8 percent 
C) 6 percent 
D) 10 percent 
E) 15 percent 
A) 4 percent 
B) 8 percent 
C) 6 percent 
D) 10 percent 
E) 15 percent

Exam 7: Unemployment and Inflation

As a result of hyperinflation in Zimbabwe,

A worker would be hurt least by inflation when the

A decrease in the interest rate,other things constant,will

Ginger quits her job as a secretary because she cannot handle the stress.It takes her three weeks of solid effort to land a job as a receptionist.Over these three weeks,she would be considered frictionally unemployed.

The labor force participation rate is the number of people

Which of the following is not an effect of hyperinflation?

Suppose you received a 3 percent increase in your nominal wage.Over the year,inflation ran about 6 percent.Which of the following is true?

Sharon was being treated unfairly by her boss,so she stormed off the job and two weeks later found another position.For two weeks Sharon experienced

The only job Justin ever holds is preparing income tax forms at H&R Block from January 2 to April 15.In March,while he is still working,he sends his resume to prospective employers.In March,he was counted as

Most of the unemployment during the Great Depression was cyclical unemployment.

In times of rapid inflation,

Jamal lost his job as a shipbuilder during 2004.His shipyard never reopened,and so his very specialized skills are no longer in demand.Jamal's unemployment is best classified as

When workers are over-qualified for their current jobs or can find only part-time work,we say they are

Uncertainty about inflation

The difference between demand-pull inflation and cost-push inflation is that

The unemployment rate for blacks in the United States is higher than that for whites.

Jacqueline,a brilliant new Ph.D.in economics,has turned down many job offers because she hopes eventually to teach at one of the top ten universities in her field.The type of unemployment she is experiencing is

Suppose you received a 4 percent increase in your nominal wage.Over the year,inflation runs about 7 percent.Which of the following is true?

In periods of high inflation,

Assuming the total population is 150 million,the labor force is 100 million,and 94 million workers are employed,the unemployment rate is

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