Question 1

The unemployment rate can increase when

Accepted Answer

A)  the number of job finders increases. 
B)  the size of the military increases. 
C)  the proportion of 18-22 year olds that go to college increases. 
D)  the number of unemployed workers increases. 
A)  the number of job finders increases. 
B)  the size of the military increases. 
C)  the proportion of 18-22 year olds that go to college increases. 
D)  the number of unemployed workers increases.

Question 2

Which one of the following is TRUE?

Accepted Answer

A)  Inflation increases the real value of money. 
B)  In the base year, the value of a price index is 100. 
C)  The consumer price index measures changes in the average income of consumers. 
D)  The market basket defined for the consumer price index contains more items than does the market basket defined for the GDP deflator. 
A)  Inflation increases the real value of money. 
B)  In the base year, the value of a price index is 100. 
C)  The consumer price index measures changes in the average income of consumers. 
D)  The market basket defined for the consumer price index contains more items than does the market basket defined for the GDP deflator.

Question 3

If all prices in the economy go up from one year to the next, the CPI index, using the previous year as the base would

Accepted Answer

A)  be less than 100. 
B)  be greater than 100. 
C)  not be influenced since quantities have remained unchanged. 
D)  not be determined since enough information is given. 
A)  be less than 100. 
B)  be greater than 100. 
C)  not be influenced since quantities have remained unchanged. 
D)  not be determined since enough information is given.

Question 4

-If 2017 is the base year, what is the price index for a market basket of goods for 2018 in the above table?

Accepted Answer

A)  97.3 
B)  102.8 
C)  128.0 
D)  Zero, since the price of CDs fell and the price of gasoline increased 
A)  97.3 
B)  102.8 
C)  128.0 
D)  Zero, since the price of CDs fell and the price of gasoline increased

Question 5

The seasonally adjusted unemployment rate

Accepted Answer

A)  reports only seasonal unemployment. 
B)  removes the seasonal variation from the unemployment rate. 
C)  is impossible to compute since no one knows what the seasonal component equals. 
D)  is another name for structural unemployment. 
A)  reports only seasonal unemployment. 
B)  removes the seasonal variation from the unemployment rate. 
C)  is impossible to compute since no one knows what the seasonal component equals. 
D)  is another name for structural unemployment.

Question 6

A worker who has quit her job to obtain a higher paying job would be included in which unemployment category?

Accepted Answer

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

Question 7

The value of an item expressed in purchasing power that varies with the overall price level is known as

Accepted Answer

A)  inflation. 
B)  deflation. 
C)  the nominal value. 
D)  the real value. 
A)  inflation. 
B)  deflation. 
C)  the nominal value. 
D)  the real value.

Question 8

Who are discouraged workers, and how do they affect labor force participation and unemployment rates?

Accepted Answer

Discouraged workers are people who have

Question 9

The broadest indication of economy-wide inflation is captured by the

Accepted Answer

A)  Consumer Price Index. 
B)  Gross Domestic Product (GDP) deflator. 
C)  Producer Price Index. 
D)  Personal Consumption Expenditure Index. 
A)  Consumer Price Index. 
B)  Gross Domestic Product (GDP) deflator. 
C)  Producer Price Index. 
D)  Personal Consumption Expenditure Index.

Question 10

Annie had a job as a human resource manager of a restaurant chain that went out of business due to a downturn in the economy. This is an example of

Accepted Answer

A)  cyclical unemployment. 
B)  structural unemployment. 
C)  seasonal unemployment. 
D)  technological unemployment. 
A)  cyclical unemployment. 
B)  structural unemployment. 
C)  seasonal unemployment. 
D)  technological unemployment.

Question 11

The index that is NOT based on a fixed market basket of goods and services is the

Accepted Answer

A)  CPI. 
B)  PPI. 
C)  Wholesale Price Index. 
D)  GDP Price Deflator. 
A)  CPI. 
B)  PPI. 
C)  Wholesale Price Index. 
D)  GDP Price Deflator.

Question 12

A period of time in which the overall pace of business activity is falling is known as

Accepted Answer

A)  inflation. 
B)  deflation. 
C)  an expansion. 
D)  a contraction. 
A)  inflation. 
B)  deflation. 
C)  an expansion. 
D)  a contraction.

Question 13

Jasime voluntarily quit her job and is now searching for a new position. Jasime is classified as a

Accepted Answer

A)  job loser. 
B)  job reentrant. 
C)  job leaver. 
D)  new entrant. 
A)  job loser. 
B)  job reentrant. 
C)  job leaver. 
D)  new entrant.

Question 14

The faster the drop in the purchasing power of money, the faster the

Accepted Answer

A)  drop in the inflation rate. 
B)  drop in the deflation rate. 
C)  increase in the deflation rate. 
D)  increase in the inflation rate. 
A)  drop in the inflation rate. 
B)  drop in the deflation rate. 
C)  increase in the deflation rate. 
D)  increase in the inflation rate.

Question 15

If a person is laid off from a job, he is considered by the Bureau of Labor Statistics to be a

Accepted Answer

A)  job loser. 
B)  reentrant. 
C)  job leaver. 
D)  new entrant. 
A)  job loser. 
B)  reentrant. 
C)  job leaver. 
D)  new entrant.

Question 16

The year that is chosen as the point of reference for comparison of prices in other years is known as the

Accepted Answer

A)  base year. 
B)  price index. 
C)  purchasing power. 
D)  consumer price index. 
A)  base year. 
B)  price index. 
C)  purchasing power. 
D)  consumer price index.

Question 17

A price index shows

Accepted Answer

A)  the current cost of a basket of goods. 
B)  the relative price of necessities. 
C)  the price of goods in the future. 
D)  the cost of today's goods expressed in terms of the cost of goods in a base year. 
A)  the current cost of a basket of goods. 
B)  the relative price of necessities. 
C)  the price of goods in the future. 
D)  the cost of today's goods expressed in terms of the cost of goods in a base year.

Question 18

Inflation can cause a misallocation of resources because

Accepted Answer

A)  inflation doesn't proceed evenly which means that people have a difficult time determining when a price change signals a change in relative prices. 
B)  firms have to change their price labels at unusual times. 
C)  the nominal rate of inflation doesn't equal the real rate of inflation. 
D)  people are encouraged to borrow too much. 
A)  inflation doesn't proceed evenly which means that people have a difficult time determining when a price change signals a change in relative prices. 
B)  firms have to change their price labels at unusual times. 
C)  the nominal rate of inflation doesn't equal the real rate of inflation. 
D)  people are encouraged to borrow too much.

Question 19

How has the pattern of movements in the U.S. price level changed since World War II?

Accepted Answer

A)  Periods of inflation have largely been eliminated. 
B)  Periods of deflation have largely been eliminated. 
C)  The annual rate of inflation has never risen above 3 percent. 
D)  The price level has become more volatile. 
A)  Periods of inflation have largely been eliminated. 
B)  Periods of deflation have largely been eliminated. 
C)  The annual rate of inflation has never risen above 3 percent. 
D)  The price level has become more volatile.

Question 20

The estimate of the current natural rate of unemployment rate in the United States is approximately

Accepted Answer

A)  0 percent. 
B)  0.5 percent. 
C)  10 percent. 
D)  none of the above. 
A)  0 percent. 
B)  0.5 percent. 
C)  10 percent. 
D)  none of the above.

Exam 7: The Macroeconomy: Unemployment, Inflation, and Deflation

The unemployment rate can increase when

Which one of the following is TRUE?

If all prices in the economy go up from one year to the next, the CPI index, using the previous year as the base would

-If 2017 is the base year, what is the price index for a market basket of goods for 2018 in the above table?

The seasonally adjusted unemployment rate

A worker who has quit her job to obtain a higher paying job would be included in which unemployment category?

The value of an item expressed in purchasing power that varies with the overall price level is known as

Who are discouraged workers, and how do they affect labor force participation and unemployment rates?

The broadest indication of economy-wide inflation is captured by the

Annie had a job as a human resource manager of a restaurant chain that went out of business due to a downturn in the economy. This is an example of

The index that is NOT based on a fixed market basket of goods and services is the

A period of time in which the overall pace of business activity is falling is known as

Jasime voluntarily quit her job and is now searching for a new position. Jasime is classified as a

The faster the drop in the purchasing power of money, the faster the

If a person is laid off from a job, he is considered by the Bureau of Labor Statistics to be a

The year that is chosen as the point of reference for comparison of prices in other years is known as the

A price index shows

Inflation can cause a misallocation of resources because

How has the pattern of movements in the U.S. price level changed since World War II?

The estimate of the current natural rate of unemployment rate in the United States is approximately

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters