Question 1

Which of the following is not a cost of unemployment?

Accepted Answer

A) Unemployed individuals suffer a loss of income. 
B) Unemployed individuals are more likely to have emotional or psychological problems. 
C) Unemployed individuals can lose their job skills over time. 
D) Unemployment causes production to decrease from what it could be. 
E) The opportunity cost of unemployment is a higher inflation rate. 
A) Unemployed individuals suffer a loss of income. 
B) Unemployed individuals are more likely to have emotional or psychological problems. 
C) Unemployed individuals can lose their job skills over time. 
D) Unemployment causes production to decrease from what it could be. 
E) The opportunity cost of unemployment is a higher inflation rate.

Question 2

Demand-pull inflation is typically caused by rapidly rising costs of production.

Accepted Answer

A) True 
 B)False

Question 3

Suppose U = the number of adults who are unemployed; E = the number of adults who are employed; and NLF = the number of adults not in the labor force.Which expression would equal the labor force participation rate?

Accepted Answer

A) U/(U + 
E)  
B) E/(U + 
E)  
C) U/(U + E + NLF) 
D) E/(U + E + NLF) 
E) (U + 
E) /(U + E + NLF) 
A) U/(U + 
E)  
B) E/(U + 
E)  
C) U/(U + E + NLF) 
D) E/(U + E + NLF) 
E) (U + 
E) /(U + E + NLF)

Question 4

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 for long 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 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 for long 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 a detrimental effect on the economy as a whole.

Question 5

People who are not currently employed,but say they want a job,are counted as unemployed only if they

Accepted Answer

A) have previously held a job 
B) are actively seeking employment 
C) are willing to accept a reasonable offer 
D) are between 16 and 65 years of age 
E) are willing to accept any offer of employment 
A) have previously held a job 
B) are actively seeking employment 
C) are willing to accept a reasonable offer 
D) are between 16 and 65 years of age 
E) are willing to accept any offer of employment

Question 6

The official unemployment rate would be higher if it included the existence of hidden unemployment or individuals who are

Accepted Answer

A) on unemployment compensation 
B) not working 
C) working part-time but prefer full-time work 
D) voluntarily retired 
E) unemployed and looking for work 
A) on unemployment compensation 
B) not working 
C) working part-time but prefer full-time work 
D) voluntarily retired 
E) unemployed and looking for work

Question 7

Which of the following groups tends to have the highest unemployment rate in the United States?

Accepted Answer

A) black teenagers 
B) black men 
C) white women 
D) black women 
E) white teenagers 
A) black teenagers 
B) black men 
C) white women 
D) black women 
E) white teenagers

Question 8

Since World War II,the Consumer Price Index has increased by an average of

Accepted Answer

A) 1.4% per year 
B) 2.1% per year 
C) 6.4% per year 
D) 5.6% per year 
E) 3.9% per year 
A) 1.4% per year 
B) 2.1% per year 
C) 6.4% per year 
D) 5.6% per year 
E) 3.9% per year

Question 9

A person whose skills do not match the available job openings is considered frictionally unemployed.

Accepted Answer

A) True 
 B)False

Question 10

Since 1980,a country that has experienced deflation is

Accepted Answer

A) the U.S. 
B) France 
C) Germany 
D) Japan 
E) Italy 
A) the U.S. 
B) France 
C) Germany 
D) Japan 
E) Italy

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 counted as unemployed is

Accepted Answer

A) 10 
B) 15 
C) 40 
D) 30 
E) 90 
A) 10 
B) 15 
C) 40 
D) 30 
E) 90

Question 12

Which type of unemployment is likely to increase the most in a recession?

Accepted Answer

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

Question 13

Suppose U = the number of adults who are unemployed; E = the number of adults who are employed; and NLF = the number of adults not in the labor force.Which expression would equal the unemployment rate?

Accepted Answer

A) U/(E + NLF) 
B) U/E 
C) U/(U + 
E)  
D) U/(E + NLF). 
E) U/(U + E - NLF) 
A) U/(E + NLF) 
B) U/E 
C) U/(U + 
E)  
D) U/(E + NLF). 
E) U/(U + E - NLF)

Question 14

If future price changes were perfectly anticipated by both borrowers and lenders,what would happen to the real interest rate in the future if the price level changed?

Accepted Answer

A) it would increase 
B) it would decrease 
C) it would decrease by the amount of the price increase 
D) it would increase by the amount of the price increase 
E) it would not change 
A) it would increase 
B) it would decrease 
C) it would decrease by the amount of the price increase 
D) it would increase by the amount of the price increase 
E) it would not change

Question 15

Government fiscal policies that attempt to stimulate aggregate demand are often aimed at reducing cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 16

The nominal interest rate is determined in the market for loanable funds.

Accepted Answer

A) True 
 B)False

Question 17

An increase in the interest rate will increase the demand for loanable funds.

Accepted Answer

A) True 
 B)False

Question 18

If the official unemployment rate increases in January from its December level because the Christmas season is over,we can conclude that __________ unemployment is responsible for the increase.

Accepted Answer

A) seasonal 
B) cyclical 
C) structural 
D) frictional 
E) any one of the causes of 
A) seasonal 
B) cyclical 
C) structural 
D) frictional 
E) any one of the causes of

Question 19

Inflation can only be caused by an increase in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 20

Full employment is considered a major economic goal because

Accepted Answer

A) specialization is not possible without full employment 
B) economic growth can only occur when there is full employment 
C) the opportunity cost of unemployment is lost production 
D) comparative advantage is not possible without full employment 
E) inflation will be lower when full employment is achieved 
A) specialization is not possible without full employment 
B) economic growth can only occur when there is full employment 
C) the opportunity cost of unemployment is lost production 
D) comparative advantage is not possible without full employment 
E) inflation will be lower when full employment is achieved

Exam 7: Unemployment and Inflation

Which of the following is not a cost of unemployment?

Demand-pull inflation is typically caused by rapidly rising costs of production.

Suppose U = the number of adults who are unemployed; E = the number of adults who are employed; and NLF = the number of adults not in the labor force.Which expression would equal the labor force participation rate?

Which of the following is not an effect of hyperinflation?

People who are not currently employed,but say they want a job,are counted as unemployed only if they

The official unemployment rate would be higher if it included the existence of hidden unemployment or individuals who are

Which of the following groups tends to have the highest unemployment rate in the United States?

Since World War II,the Consumer Price Index has increased by an average of

A person whose skills do not match the available job openings is considered frictionally unemployed.

Since 1980,a country that has experienced deflation is

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 counted as unemployed is

Which type of unemployment is likely to increase the most in a recession?

Suppose U = the number of adults who are unemployed; E = the number of adults who are employed; and NLF = the number of adults not in the labor force.Which expression would equal the unemployment rate?

If future price changes were perfectly anticipated by both borrowers and lenders,what would happen to the real interest rate in the future if the price level changed?

Government fiscal policies that attempt to stimulate aggregate demand are often aimed at reducing cyclical unemployment.

The nominal interest rate is determined in the market for loanable funds.

An increase in the interest rate will increase the demand for loanable funds.

If the official unemployment rate increases in January from its December level because the Christmas season is over,we can conclude that __________ unemployment is responsible for the increase.

Inflation can only be caused by an increase in aggregate demand.

Full employment is considered a major economic goal because

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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