Question 1

The population of individuals at least 16 years of age can be broken into 3 groups. They are

Accepted Answer

A)  the unemployed, discouraged workers, and retirees. 
B)  those employed full-time, those employed only part-time, and the unemployed. 
C)  those working in the for-profit sector, those working in the nonprofit sector, and individuals who are unemployed. 
D)  none of the above. 
A)  the unemployed, discouraged workers, and retirees. 
B)  those employed full-time, those employed only part-time, and the unemployed. 
C)  those working in the for-profit sector, those working in the nonprofit sector, and individuals who are unemployed. 
D)  none of the above.

Question 2

The largest major change in the U.S. labor force participation rate during the last few decades has been

Accepted Answer

A)  the number of prisoners dropping out of the labor force. 
B)  the increase in the number of working women. 
C)  the decrease in the number of working women. 
D)  the increase in the number of illegal immigrants in the United States. 
A)  the number of prisoners dropping out of the labor force. 
B)  the increase in the number of working women. 
C)  the decrease in the number of working women. 
D)  the increase in the number of illegal immigrants in the United States.

Question 3

Reductions in employment in the U.S. auto industry caused by the increased adoption of new technologies to produce cars more efficiently is an example of

Accepted Answer

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

Question 4

Suppose the rate of inflation unexpectedly decreases from 7% to 4%. Which one of the following would most likely benefit from this unexpected reduction in the rate of inflation?

Accepted Answer

A)  creditors. 
B)  a borrower whose loan has a fixed nominal interest rate. 
C)  debtors. 
D)  workers who are covered by a COLA agreement. 
A)  creditors. 
B)  a borrower whose loan has a fixed nominal interest rate. 
C)  debtors. 
D)  workers who are covered by a COLA agreement.

Question 5

Structural unemployment is

Accepted Answer

A)  due to the fact that workers must search for appropriate job offers. 
B)  a result of a poor match of worker's abilities and skills with current requirements of employers. 
C)  a result of business recessions that occur when aggregate demand is insufficient to create full employment. 
D)  a result of the seasonal pattern of work in specific industries. 
A)  due to the fact that workers must search for appropriate job offers. 
B)  a result of a poor match of worker's abilities and skills with current requirements of employers. 
C)  a result of business recessions that occur when aggregate demand is insufficient to create full employment. 
D)  a result of the seasonal pattern of work in specific industries.

Question 6

In the United States, the labor-force participation rate since 1960 has been

Accepted Answer

A)  increasing for females. 
B)  declining for females. 
C)  declining for both males and females. 
D)  unchanged for both males and females. 
A)  increasing for females. 
B)  declining for females. 
C)  declining for both males and females. 
D)  unchanged for both males and females.

Question 7

In 2018, the price for a market basket of consumer goods is $1,300. In the base year, the cost of the identical market basket was $1,000. The price index in this case is

Accepted Answer

A)  13.0. 
B)  130.0. 
C)  200.0. 
D)  160.0. 
A)  13.0. 
B)  130.0. 
C)  200.0. 
D)  160.0.

Question 8

The Personal Consumption Expenditure Index (PCE) is a

Accepted Answer

A)  statistical measure of a weighted average of prices of a specific set of goods and services purchased by wage earners in urban areas. 
B)  statistical measure of a weighted average of prices of commodities that firms produce and sell. 
C)  price index measuring the changes in prices of all new goods and services produced in the economy. 
D)  statistical measure of average prices using annually updated weights based on surveys of consumer spending. 
A)  statistical measure of a weighted average of prices of a specific set of goods and services purchased by wage earners in urban areas. 
B)  statistical measure of a weighted average of prices of commodities that firms produce and sell. 
C)  price index measuring the changes in prices of all new goods and services produced in the economy. 
D)  statistical measure of average prices using annually updated weights based on surveys of consumer spending.

Question 9

Suppose that Lee quits a job with the AAA Corporation in order to look for more rewarding employment. Lee would be

Accepted Answer

A)  counted as still being employed. 
B)  included in the economy's "hidden employment." 
C)  counted as frictionally unemployed. 
D)  counted as cyclically unemployed. 
A)  counted as still being employed. 
B)  included in the economy's "hidden employment." 
C)  counted as frictionally unemployed. 
D)  counted as cyclically unemployed.

Question 10

How is inflation related to interest rates?

Accepted Answer

People base their decisions on borrowing

Question 11

Which of the following would be considered a member of the labor force?

Accepted Answer

A)  an engineer who has been laid off a year ago and since then has not looked for work 
B)  an inmate in a state prison making license plates 
C)  a person in a mental institution 
D)  a computer programmer looking for work 
A)  an engineer who has been laid off a year ago and since then has not looked for work 
B)  an inmate in a state prison making license plates 
C)  a person in a mental institution 
D)  a computer programmer looking for work

Question 12

Which one of the following statements is TRUE?

Accepted Answer

A)  The existence of unemployment places the economy at a point inside its production possibilities curve. 
B)  The unemployment rate is the percentage of the population not working. 
C)  To be counted as part of the labor force, an individual must be working more than 40 hours a week. 
D)  The sum of wages lost by all unemployed workers gives an accurate, comprehensive estimate of the total cost of unemployment. 
A)  The existence of unemployment places the economy at a point inside its production possibilities curve. 
B)  The unemployment rate is the percentage of the population not working. 
C)  To be counted as part of the labor force, an individual must be working more than 40 hours a week. 
D)  The sum of wages lost by all unemployed workers gives an accurate, comprehensive estimate of the total cost of unemployment.

Question 13

The greater the inflation rate, the

Accepted Answer

A)  faster the decrease in the purchasing power of money. 
B)  slower the decrease in the purchasing power of money. 
C)  better it is to hold money as cash. 
D)  better it is to put money into savings accounts. 
A)  faster the decrease in the purchasing power of money. 
B)  slower the decrease in the purchasing power of money. 
C)  better it is to hold money as cash. 
D)  better it is to put money into savings accounts.

Question 14

An automatic increase in a wage rate found in some contracts is known as a

Accepted Answer

A)  change of labor agreement. 
B)  cost of labor arrangement. 
C)  cost of living adjustment. 
D)  charge for living amendment. 
A)  change of labor agreement. 
B)  cost of labor arrangement. 
C)  cost of living adjustment. 
D)  charge for living amendment.

Question 15

Deflation is defined as a situation in which

Accepted Answer

A)  the rate of inflation is below 2 percent. 
B)  the average of all prices of goods and services in an economy is falling. 
C)  the value of the dollar is rising relative to other currencies. 
D)  the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter. 
A)  the rate of inflation is below 2 percent. 
B)  the average of all prices of goods and services in an economy is falling. 
C)  the value of the dollar is rising relative to other currencies. 
D)  the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter.

Question 16

-Refer to the above figure. At Point B, the actual unemployment rate

Accepted Answer

A)  will decrease over time. 
B)  is negative. 
C)  tends to be higher than the natural unemployment rate. 
D)  tends to be lower than the natural unemployment rate. 
A)  will decrease over time. 
B)  is negative. 
C)  tends to be higher than the natural unemployment rate. 
D)  tends to be lower than the natural unemployment rate.

Question 17

Costs of unemployment include

Accepted Answer

A)  structural unemployment. 
B)  the output lost due to the fact that the economy is not running at full employment. 
C)  reduction in the labor force. 
D)  higher wages. 
A)  structural unemployment. 
B)  the output lost due to the fact that the economy is not running at full employment. 
C)  reduction in the labor force. 
D)  higher wages.

Question 18

If the rate of inflation is 6 percent and the real interest rate is 2 percent, the nominal interest rate should be

Accepted Answer

A)  2 percent. 
B)  4 percent. 
C)  8 percent. 
D)  -2 percent. 
A)  2 percent. 
B)  4 percent. 
C)  8 percent. 
D)  -2 percent.

Question 19

Full employment is defined by the Council of Economic Advisers as

Accepted Answer

A)  a zero percent unemployment rate. 
B)  every adult who wants to work has a job. 
C)  the unemployment rate associated with zero inflation. 
D)  the unemployment rate associated with the normal frictions in the labor market. 
A)  a zero percent unemployment rate. 
B)  every adult who wants to work has a job. 
C)  the unemployment rate associated with zero inflation. 
D)  the unemployment rate associated with the normal frictions in the labor market.

Question 20

The Consumer Price Index (CPI) is a

Accepted Answer

A)  statistical measure of a weighted average of prices of a specific set of goods and services purchased by consumers in urban areas. 
B)  statistical measure of a weighted average of prices of commodities that firms produce and sell. 
C)  price index measuring the changes in prices of all new goods and services produced in the economy. 
D)  statistical measure of average prices using annually updated weights based on surveys of consumer spending. 
A)  statistical measure of a weighted average of prices of a specific set of goods and services purchased by consumers in urban areas. 
B)  statistical measure of a weighted average of prices of commodities that firms produce and sell. 
C)  price index measuring the changes in prices of all new goods and services produced in the economy. 
D)  statistical measure of average prices using annually updated weights based on surveys of consumer spending.

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

The population of individuals at least 16 years of age can be broken into 3 groups. They are

The largest major change in the U.S. labor force participation rate during the last few decades has been

Reductions in employment in the U.S. auto industry caused by the increased adoption of new technologies to produce cars more efficiently is an example of

Suppose the rate of inflation unexpectedly decreases from 7% to 4%. Which one of the following would most likely benefit from this unexpected reduction in the rate of inflation?

Structural unemployment is

In the United States, the labor-force participation rate since 1960 has been

In 2018, the price for a market basket of consumer goods is $1,300. In the base year, the cost of the identical market basket was $1,000. The price index in this case is

The Personal Consumption Expenditure Index (PCE) is a

Suppose that Lee quits a job with the AAA Corporation in order to look for more rewarding employment. Lee would be

How is inflation related to interest rates?

Which of the following would be considered a member of the labor force?

Which one of the following statements is TRUE?

The greater the inflation rate, the

An automatic increase in a wage rate found in some contracts is known as a

Deflation is defined as a situation in which

-Refer to the above figure. At Point B, the actual unemployment rate

Costs of unemployment include

If the rate of inflation is 6 percent and the real interest rate is 2 percent, the nominal interest rate should be

Full employment is defined by the Council of Economic Advisers as

The Consumer Price Index (CPI) is a

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

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