Question 1

During the Great Depression

Accepted Answer

A)  the unemployment rate was not unusually high, but wage levels were low. 
B)  unemployment statistics were not collected. 
C)  the U.S. unemployment rate reached its historical highest. 
D)  most people who couldn't find work left the labor force, so the official unemployment rate remained low. 
A)  the unemployment rate was not unusually high, but wage levels were low. 
B)  unemployment statistics were not collected. 
C)  the U.S. unemployment rate reached its historical highest. 
D)  most people who couldn't find work left the labor force, so the official unemployment rate remained low.

Question 2

-Using the above table, the employment rate is

Accepted Answer

A)  65.6 percent. 
B)  48.5 percent. 
C)  95.0 percent. 
D)  69.1 percent. 
A)  65.6 percent. 
B)  48.5 percent. 
C)  95.0 percent. 
D)  69.1 percent.

Question 3

Last year a pair of jeans had a price of $20 and this year the price is $25. Which of the following expresses this price change accurately?

Accepted Answer

A)  If this year is the base year, the index number for last year would be 120. 
B)  If last year is the base year, the index number for this year would be 120. 
C)  If this year is the base year, the index number for last year would be 80. 
D)  If last year is the base year, the index number for this year would be 80. 
A)  If this year is the base year, the index number for last year would be 120. 
B)  If last year is the base year, the index number for this year would be 120. 
C)  If this year is the base year, the index number for last year would be 80. 
D)  If last year is the base year, the index number for this year would be 80.

Question 4

Unemployment statistics are often criticized for

Accepted Answer

A)  understating the number of people out of work, because discouraged workers are excluded in the statistics. 
B)  overstating the number of people out of work, because retirees are included in the statistics. 
C)  understating the number people out of work, because full-time college students are excluded. 
D)  overstating the number of people out of work, because the unemployment statistics include all low-income workers. 
A)  understating the number of people out of work, because discouraged workers are excluded in the statistics. 
B)  overstating the number of people out of work, because retirees are included in the statistics. 
C)  understating the number people out of work, because full-time college students are excluded. 
D)  overstating the number of people out of work, because the unemployment statistics include all low-income workers.

Question 5

If a person loses her job because her abilities and skills are a poor match with current requirements of employers, this person is considered

Accepted Answer

A)  structurally unemployed. 
B)  frictionally unemployed. 
C)  a discouraged worker. 
D)  seasonally unemployed. 
A)  structurally unemployed. 
B)  frictionally unemployed. 
C)  a discouraged worker. 
D)  seasonally unemployed.

Question 6

During a period of unanticipated inflation, the group that is most likely to benefit is

Accepted Answer

A)  debtors. 
B)  savers. 
C)  creditors. 
D)  retired individuals. 
A)  debtors. 
B)  savers. 
C)  creditors. 
D)  retired individuals.

Question 7

Unanticipated inflation benefits

Accepted Answer

A)  people or businesses who owe funds. 
B)  people or businesses who lend funds. 
C)  people who live on a fixed income. 
D)  people with CDs (certificates of deposits) in the bank. 
A)  people or businesses who owe funds. 
B)  people or businesses who lend funds. 
C)  people who live on a fixed income. 
D)  people with CDs (certificates of deposits) in the bank.

Question 8

The real rate of interest is the

Accepted Answer

A)  nominal rate of interest minus the anticipated rate of inflation. 
B)  current rate actually paid by the borrower. 
C)  difference between the bank's lending and savings rates. 
D)  current rate which the government pays on its debt. 
A)  nominal rate of interest minus the anticipated rate of inflation. 
B)  current rate actually paid by the borrower. 
C)  difference between the bank's lending and savings rates. 
D)  current rate which the government pays on its debt.

Question 9

For the CPI. the value of the index in the base year

Accepted Answer

A)  always equals 100. 
B)  depends upon price and quantity that are constantly changing. 
C)  is always greater than 100. 
D)  depends upon what prices did the year before. 
A)  always equals 100. 
B)  depends upon price and quantity that are constantly changing. 
C)  is always greater than 100. 
D)  depends upon what prices did the year before.

Question 10

The labor force is defined as

Accepted Answer

A)  the number of people over 16 years of age. 
B)  the number of people who are working. 
C)  the sum of the employed and the unemployed. 
D)  the number of people in blue-collar jobs. 
A)  the number of people over 16 years of age. 
B)  the number of people who are working. 
C)  the sum of the employed and the unemployed. 
D)  the number of people in blue-collar jobs.

Question 11

A clause in a contract that automatically increases wages to account for increases in the price level is

Accepted Answer

A)  the GDP deflation. 
B)  the PCE index. 
C)  a COLA. 
D)  the real rate of interest. 
A)  the GDP deflation. 
B)  the PCE index. 
C)  a COLA. 
D)  the real rate of interest.

Question 12

A person who is unemployed because of a mismatch between the person's skills and current employment requirements is experiencing

Accepted Answer

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

Question 13

The price index that measures the changes in prices of ALL goods and services produced by the economy is the

Accepted Answer

A)  CPI. 
B)  PPI. 
C)  Gross Domestic Product (GDP) deflator. 
D)  Personal Consumption Expenditure Index. 
A)  CPI. 
B)  PPI. 
C)  Gross Domestic Product (GDP) deflator. 
D)  Personal Consumption Expenditure Index.

Question 14

The rate of inflation and the purchasing power of money are

Accepted Answer

A)  positively related. 
B)  totally unrelated. 
C)  inversely related. 
D)  randomly related. 
A)  positively related. 
B)  totally unrelated. 
C)  inversely related. 
D)  randomly related.

Question 15

Including discouraged workers in the calculation of the unemployment rate would

Accepted Answer

A)  increase the reported rate. 
B)  lower the reported rate. 
C)  not change the reported rate. 
D)  change the reported rate, but in an unpredictable manner. 
A)  increase the reported rate. 
B)  lower the reported rate. 
C)  not change the reported rate. 
D)  change the reported rate, but in an unpredictable manner.

Question 16

The term "market basket" means a

Accepted Answer

A)  collection of goods that can fit into an average shopping cart. 
B)  collection of goods that changes every year and is defined by Congress. 
C)  collection of goods that is used by a typical family. 
D)  collection of goods that is purchased during a holiday season. 
A)  collection of goods that can fit into an average shopping cart. 
B)  collection of goods that changes every year and is defined by Congress. 
C)  collection of goods that is used by a typical family. 
D)  collection of goods that is purchased during a holiday season.

Question 17

Official unemployment rates may underestimate the true rate of unemployment because the official rate

Accepted Answer

A)  includes those workers who only work part time. 
B)  may include some individuals who are not actually in the labor force. 
C)  does not include individuals receiving any type of unemployment compensation. 
D)  fails to include discouraged workers. 
A)  includes those workers who only work part time. 
B)  may include some individuals who are not actually in the labor force. 
C)  does not include individuals receiving any type of unemployment compensation. 
D)  fails to include discouraged workers.

Question 18

The duration of unemployment tends to

Accepted Answer

A)  increase when business activity decreases. 
B)  increase when employment increases. 
C)  increase when the labor force shrinks. 
D)  stay consistently the same over long periods of time. 
A)  increase when business activity decreases. 
B)  increase when employment increases. 
C)  increase when the labor force shrinks. 
D)  stay consistently the same over long periods of time.

Question 19

The natural rate of unemployment does NOT include which of the following?

Accepted Answer

A)  cyclical unemployment 
B)  frictional unemployment 
C)  seasonal unemployment 
D)  all of the above 
A)  cyclical unemployment 
B)  frictional unemployment 
C)  seasonal unemployment 
D)  all of the above

Question 20

An economy recovering from a recession moves

Accepted Answer

A)  up from its trough to a period of expansion. 
B)  up from its peak to a period of expansion. 
C)  down from its trough to a period of depression. 
D)  down from its peak to a period of expansion. 
A)  up from its trough to a period of expansion. 
B)  up from its peak to a period of expansion. 
C)  down from its trough to a period of depression. 
D)  down from its peak to a period of expansion.

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

During the Great Depression

-Using the above table, the employment rate is

Last year a pair of jeans had a price of $20 and this year the price is $25. Which of the following expresses this price change accurately?

Unemployment statistics are often criticized for

If a person loses her job because her abilities and skills are a poor match with current requirements of employers, this person is considered

During a period of unanticipated inflation, the group that is most likely to benefit is

Unanticipated inflation benefits

The real rate of interest is the

For the CPI. the value of the index in the base year

The labor force is defined as

A clause in a contract that automatically increases wages to account for increases in the price level is

A person who is unemployed because of a mismatch between the person's skills and current employment requirements is experiencing

The price index that measures the changes in prices of ALL goods and services produced by the economy is the

The rate of inflation and the purchasing power of money are

Including discouraged workers in the calculation of the unemployment rate would

The term "market basket" means a

Official unemployment rates may underestimate the true rate of unemployment because the official rate

The duration of unemployment tends to

The natural rate of unemployment does NOT include which of the following?

An economy recovering from a recession moves

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