Question 1

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 loaned money at an interest rate below the rate of inflation suffer economic losses. 
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 loaned money at an interest rate below the rate of inflation suffer economic losses. 
E) If people anticipate inflation,their actions will prevent the inflation.

Question 2

The Consumer Price Index measures the cost of

Accepted Answer

A) all goods and services produced in the U.S.economy 
B) all goods produced in the U.S.economy 
C) a fixed market basket of consumer goods and services produced in the U.S.economy 
D) a fixed market basket of producer goods and services 
E) food and energy in the U.S.economy 
A) all goods and services produced in the U.S.economy 
B) all goods produced in the U.S.economy 
C) a fixed market basket of consumer goods and services produced in the U.S.economy 
D) a fixed market basket of producer goods and services 
E) food and energy in the U.S.economy

Question 3

Inmates from the county prison who are on work release are counted as part of the labor force.

Accepted Answer

A) True 
 B)False

Question 4

Some economists have argued that inflation during the 1970s contributed to the U.S.economy's relatively slow growth rate.What is the basis for this view?

Accepted Answer

A) Inflation usually lowers employment,thus slowing growth. 
B) If inflation is anticipated,it is particularly harmful because cost of living increases are built into wage settlements,which only worsens the problem. 
C) High and variable inflation rates increased uncertainty,thus making business decisions more difficult. 
D) Lenders were less interested in making short-term loans than in making long-term loans. 
E) Inflation during the 1970s created increased activity on Wall Street,which drew funds that could have been used for truly productive purposes. 
A) Inflation usually lowers employment,thus slowing growth. 
B) If inflation is anticipated,it is particularly harmful because cost of living increases are built into wage settlements,which only worsens the problem. 
C) High and variable inflation rates increased uncertainty,thus making business decisions more difficult. 
D) Lenders were less interested in making short-term loans than in making long-term loans. 
E) Inflation during the 1970s created increased activity on Wall Street,which drew funds that could have been used for truly productive purposes.

Question 5

The type of unemployment most likely to be experienced by a touring professional golfer is

Accepted Answer

A) frictional unemployment 
B) structural unemployment 
C) seasonal unemployment 
D) cyclical unemployment 
E) discouraged-worker unemployment 
A) frictional unemployment 
B) structural unemployment 
C) seasonal unemployment 
D) cyclical unemployment 
E) discouraged-worker unemployment

Question 6

The official unemployment rate disguises the extent of the unemployment problem because

Accepted Answer

A) children are not counted as unemployed 
B) retired persons are not counted as unemployed 
C) full-time students are not counted as unemployed 
D) discouraged workers are counted as unemployed 
E) people overqualified for their current job are not considered unemployed 
A) children are not counted as unemployed 
B) retired persons are not counted as unemployed 
C) full-time students are not counted as unemployed 
D) discouraged workers are counted as unemployed 
E) people overqualified for their current job are not considered unemployed

Question 7

Underemployment refers to

Accepted Answer

A) seasonal unemployment 
B) people working full-time though they would rather work part-time 
C) the unemployment that occurs when the actual level of employment is less than the full employment level 
D) people working in jobs that do not fully use their skills 
E) people working part-time 
A) seasonal unemployment 
B) people working full-time though they would rather work part-time 
C) the unemployment that occurs when the actual level of employment is less than the full employment level 
D) people working in jobs that do not fully use their skills 
E) people working part-time

Question 8

The unemployment rate does not measure all of the "unemployment problem." Which of the following groups is not counted as unemployed in the official unemployment statistics?

Accepted Answer

A) the underemployed and the cyclically unemployed 
B) the underemployed and the discouraged workers 
C) the discouraged workers and the frictionally unemployed 
D) the frictionally unemployed and the structurally unemployed 
E) the cyclically unemployed and the frictionally unemployed 
A) the underemployed and the cyclically unemployed 
B) the underemployed and the discouraged workers 
C) the discouraged workers and the frictionally unemployed 
D) the frictionally unemployed and the structurally unemployed 
E) the cyclically unemployed and the frictionally unemployed

Question 9

Raul borrowed $1,000 from Marta for a year and agreed to repay her $1,050 at the end of the year.If the inflation rate was 3 percent,what is the real rate of interest Marta received?

Accepted Answer

A) 10 percent 
B) 5 percent 
C) 3 percent 
D) 2 percent 
E) -2 percent 
A) 10 percent 
B) 5 percent 
C) 3 percent 
D) 2 percent 
E) -2 percent

Question 10

When the economy is at full employment,what types of unemployment may exist?

Accepted Answer

A) none 
B) structural and frictional 
C) seasonal and cyclical 
D) frictional,cyclical,and structural 
E) cyclical 
A) none 
B) structural and frictional 
C) seasonal and cyclical 
D) frictional,cyclical,and structural 
E) cyclical

Question 11

Structural unemployment results from

Accepted Answer

A) a mismatch of skills 
B) the availability of unemployment insurance 
C) monetary cost and the time it takes to find the best job 
D) seasonal decreases in demand for labor 
E) prolonged declines in business activity 
A) a mismatch of skills 
B) the availability of unemployment insurance 
C) monetary cost and the time it takes to find the best job 
D) seasonal decreases in demand for labor 
E) prolonged declines in business activity

Question 12

An increase in the interest rate,other things constant,will

Accepted Answer

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

Question 13

An increase in the supply of loanable funds,other things constant,will increase the interest rate.

Accepted Answer

A) True 
 B)False

Question 14

Cyclical unemployment 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 15

If the nominal interest rate is 5 percent and there is no inflation,

Accepted Answer

A) the real interest rate exceeds 5 percent 
B) the real interest rate is less than 5 percent 
C) the real interest rate is 5 percent 
D) there is not enough information to determine the real interest rate 
E) the real interest rate is zero 
A) the real interest rate exceeds 5 percent 
B) the real interest rate is less than 5 percent 
C) the real interest rate is 5 percent 
D) there is not enough information to determine the real interest rate 
E) the real interest rate is zero

Question 16

Demand-pull inflation is associated with

Accepted Answer

A) decreasing aggregate demand and lower unemployment 
B) increasing aggregate demand and lower unemployment 
C) decreasing aggregate demand and greater unemployment 
D) increasing aggregate demand and greater unemployment 
E) a rising price level caused by a shift in either aggregate demand or aggregate supply 
A) decreasing aggregate demand and lower unemployment 
B) increasing aggregate demand and lower unemployment 
C) decreasing aggregate demand and greater unemployment 
D) increasing aggregate demand and greater unemployment 
E) a rising price level caused by a shift in either aggregate demand or aggregate supply

Question 17

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 unemployment rate is

Accepted Answer

A) 10% 
B) 14% 
C) 20% 
D) 25% 
E) 36% 
A) 10% 
B) 14% 
C) 20% 
D) 25% 
E) 36%

Question 18

Unanticipated inflation redistributes income across groups in society.Among the winners are

Accepted Answer

A) those who loan money 
B) those on fixed incomes 
C) small savers 
D) those who borrow at fixed interest rates 
E) those who hold large amounts of cash 
A) those who loan money 
B) those on fixed incomes 
C) small savers 
D) those who borrow at fixed interest rates 
E) those who hold large amounts of cash

Question 19

The labor force participation rate for women in the United States has

Accepted Answer

A) stayed the same over the last 30 years 
B) increased significantly since the 1950s 
C) been influenced by decreasing real wages since 1960 
D) fluctuated substantially both upward and downward since the 1950s 
E) increased only very slightly since the 1950s 
A) stayed the same over the last 30 years 
B) increased significantly since the 1950s 
C) been influenced by decreasing real wages since 1960 
D) fluctuated substantially both upward and downward since the 1950s 
E) increased only very slightly since the 1950s

Question 20

Anticipated inflation

Accepted Answer

A) allows us to eliminate the problems associated with unemployment 
B) causes more problems than unanticipated inflation 
C) causes fewer problems than unanticipated inflation 
D) is easy to predict for economists 
E) prevents workers from increasing their purchasing power 
A) allows us to eliminate the problems associated with unemployment 
B) causes more problems than unanticipated inflation 
C) causes fewer problems than unanticipated inflation 
D) is easy to predict for economists 
E) prevents workers from increasing their purchasing power

Exam 7: Unemployment and Inflation

Which of the following is true about inflation?

The Consumer Price Index measures the cost of

Inmates from the county prison who are on work release are counted as part of the labor force.

Some economists have argued that inflation during the 1970s contributed to the U.S.economy's relatively slow growth rate.What is the basis for this view?

The type of unemployment most likely to be experienced by a touring professional golfer is

The official unemployment rate disguises the extent of the unemployment problem because

Underemployment refers to

The unemployment rate does not measure all of the "unemployment problem." Which of the following groups is not counted as unemployed in the official unemployment statistics?

Raul borrowed $1,000 from Marta for a year and agreed to repay her $1,050 at the end of the year.If the inflation rate was 3 percent,what is the real rate of interest Marta received?

When the economy is at full employment,what types of unemployment may exist?

Structural unemployment results from

An increase in the interest rate,other things constant,will

An increase in the supply of loanable funds,other things constant,will increase the interest rate.

Cyclical unemployment results from

If the nominal interest rate is 5 percent and there is no inflation,

Demand-pull inflation is associated with

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 unemployment rate is

Unanticipated inflation redistributes income across groups in society.Among the winners are

The labor force participation rate for women in the United States has

Anticipated 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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