Question 1

If the expected inflation rate is high,the nominal interest rate will be low.

Accepted Answer

A) True 
 B)False

Question 2

In addition to Brazil,another country recently suffering from hyperinflation is

Accepted Answer

A) Zimbabwe 
B) Japan 
C) Ireland 
D) South Africa 
E) Canada 
A) Zimbabwe 
B) Japan 
C) Ireland 
D) South Africa 
E) Canada

Question 3

Since the end of World War II,the U.S.unemployment rate

Accepted Answer

A) has displayed a downward trend 
B) has displayed an upward trend 
C) has remained almost constant from year to year 
D) was generally higher during the 1970s than during the 1990s 
E) has not displayed any clear pattern 
A) has displayed a downward trend 
B) has displayed an upward trend 
C) has remained almost constant from year to year 
D) was generally higher during the 1970s than during the 1990s 
E) has not displayed any clear pattern

Question 4

Since World War II,the U.S.economy has experienced

Accepted Answer

A) a decrease in the civilian labor force 
B) a decrease in the number of unemployed persons 
C) a decrease in the number of employed persons 
D) an increase in the labor force participation rate of women 
E) a declining unemployment rate as a general trend 
A) a decrease in the civilian labor force 
B) a decrease in the number of unemployed persons 
C) a decrease in the number of employed persons 
D) an increase in the labor force participation rate of women 
E) a declining unemployment rate as a general trend

Question 5

Suppose you received a 5 percent increase in your nominal wage.Over the year,inflation ran about 2 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 your 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 your nominal and real wages increased.

Question 6

If the CPI in 2003 was 150 and the CPI in 2004 was 160,the inflation rate over the year was 10 percent.

Accepted Answer

A) True 
 B)False

Question 7

Since the end of World War II,the U.S.price level has

Accepted Answer

A) increased eightfold 
B) increased by an average of 10 percent each year 
C) increased and decreased with equal regularity,leaving the price level almost constant 
D) increased by 50 percent 
E) doubled 
A) increased eightfold 
B) increased by an average of 10 percent each year 
C) increased and decreased with equal regularity,leaving the price level almost constant 
D) increased by 50 percent 
E) doubled

Question 8

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 unanticipated. 
C) Accurate anticipation of inflation is possible for everyone who is well informed about economic events. 
D) Those who lend money at a rate above the rate of inflation suffer economic losses. 
E) If people accurately anticipate inflation,their actions will prevent it. 
A) Inflation promotes social harmony by uniting people against the government. 
B) Inflation is more damaging if it is unanticipated. 
C) Accurate anticipation of inflation is possible for everyone who is well informed about economic events. 
D) Those who lend money at a rate above the rate of inflation suffer economic losses. 
E) If people accurately anticipate inflation,their actions will prevent it.

Question 9

During inflationary times,which of the following is unlikely to happen?

Accepted Answer

A) People change their expectations about the inflation rate. 
B) Workers try to get increases in nominal wages. 
C) People are willing to lend money for longer periods. 
D) Relative price changes become harder to recognize. 
E) People buy physical assets as a hedge against rising prices. 
A) People change their expectations about the inflation rate. 
B) Workers try to get increases in nominal wages. 
C) People are willing to lend money for longer periods. 
D) Relative price changes become harder to recognize. 
E) People buy physical assets as a hedge against rising prices.

Question 10

If nominal wages increase 7 percent while the price level rises by 5 percent,real wages rise.

Accepted Answer

A) True 
 B)False

Question 11

The real interest rate can be negative.

Accepted Answer

A) True 
 B)False

Question 12

Deflation refers to

Accepted Answer

A) decreasing relative prices 
B) a decreasing price level 
C) a slowing down of the rate of inflation 
D) a slowing down of the rate of relative price decreases 
E) a federal government policy of running budget surpluses 
A) decreasing relative prices 
B) a decreasing price level 
C) a slowing down of the rate of inflation 
D) a slowing down of the rate of relative price decreases 
E) a federal government policy of running budget surpluses

Question 13

During which of the following decades was the U.S.inflation rate highest?

Accepted Answer

A) 1920s 
B) 1930s 
C) 1950s 
D) 1970s 
E) 1980s 
A) 1920s 
B) 1930s 
C) 1950s 
D) 1970s 
E) 1980s

Question 14

If the nominal interest rate is 6 percent and the inflation rate is 4 percent,

Accepted Answer

A) the real interest rate is 10 percent 
B) the real interest rate is 2 percent 
C) the real interest rate is -2 percent 
D) the real interest rate is -10 percent 
E) there is insufficient information to determine the real rate of interest 
A) the real interest rate is 10 percent 
B) the real interest rate is 2 percent 
C) the real interest rate is -2 percent 
D) the real interest rate is -10 percent 
E) there is insufficient information to determine the real rate of interest

Question 15

Since World War II,the average duration of unemployment in the U.S.

Accepted Answer

A) increased 
B) decreased 
C) has shown no change 
D) decreased until 1972,then increased down to the present 
E) decreased until 1984,then increased down to the present 
A) increased 
B) decreased 
C) has shown no change 
D) decreased until 1972,then increased down to the present 
E) decreased until 1984,then increased down to the present

Question 16

The unemployment rate is the

Accepted Answer

A) percentage of people in the economy who do not hold jobs 
B) percentage of the labor force that does not have a job 
C) number of people in the economy who have given up looking for employment 
D) number of people in the labor force without jobs 
E) ratio of unemployed to employed high school graduates in the economy 
A) percentage of people in the economy who do not hold jobs 
B) percentage of the labor force that does not have a job 
C) number of people in the economy who have given up looking for employment 
D) number of people in the labor force without jobs 
E) ratio of unemployed to employed high school graduates in the economy

Question 17

Unemployment arising from mismatch of skills is called

Accepted Answer

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

Question 18

The best example of a frictionally unemployed worker is one who

Accepted Answer

A) reduces productivity by causing frictions in a business 
B) is laid off during a recessionary period in the economy 
C) is in the process of voluntarily switching jobs 
D) is discouraged and not actively seeking work 
E) cannot find a job that matches with his skills 
A) reduces productivity by causing frictions in a business 
B) is laid off during a recessionary period in the economy 
C) is in the process of voluntarily switching jobs 
D) is discouraged and not actively seeking work 
E) cannot find a job that matches with his skills

Question 19

Inflation rates differ across regions mostly because of differences in housing prices.

Accepted Answer

A) True 
 B)False

Question 20

Which period in U.S.economic history was not characterized by inflation?

Accepted Answer

A) 1917-1920 
B) 1929-1933 
C) 1947 
D) 1978-1980 
E) 1980-1989 
A) 1917-1920 
B) 1929-1933 
C) 1947 
D) 1978-1980 
E) 1980-1989

Exam 7: Unemployment and Inflation

If the expected inflation rate is high,the nominal interest rate will be low.

In addition to Brazil,another country recently suffering from hyperinflation is

Since the end of World War II,the U.S.unemployment rate

Since World War II,the U.S.economy has experienced

Suppose you received a 5 percent increase in your nominal wage.Over the year,inflation ran about 2 percent.Which of the following is true?

If the CPI in 2003 was 150 and the CPI in 2004 was 160,the inflation rate over the year was 10 percent.

Since the end of World War II,the U.S.price level has

Which of the following is true about inflation?

During inflationary times,which of the following is unlikely to happen?

If nominal wages increase 7 percent while the price level rises by 5 percent,real wages rise.

The real interest rate can be negative.

Deflation refers to

During which of the following decades was the U.S.inflation rate highest?

If the nominal interest rate is 6 percent and the inflation rate is 4 percent,

Since World War II,the average duration of unemployment in the U.S.

The unemployment rate is the

Unemployment arising from mismatch of skills is called

The best example of a frictionally unemployed worker is one who

Inflation rates differ across regions mostly because of differences in housing prices.

Which period in U.S.economic history was not characterized by 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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