Question 1

Many economists believe that skill-biased technical change has increased the incomes of both highly skilled workers and low-skill workers

Accepted Answer

A) True 
 B)False

Question 2

What would happen to the real interest rate if originally the nominal interest rate was 14% and the inflation rate was 10%, then the nominal interest rate fell to 7% as the inflation rate fell to 4%? It would go from:

Accepted Answer

A) ​24% to 11%. 
B) ​11% to 24%. 
C) ​4% to 3%. 
D) 3% to 4%. 
A) ​24% to 11%. 
B) ​11% to 24%. 
C) ​4% to 3%. 
D) 3% to 4%.

Question 3

If the nominal interest rate is 6% and the inflation rate is 3%, the real interest rate is

Accepted Answer

A) ​2% 
B) ​3% 
C) ​6% 
D) ​9% 
A) ​2% 
B) ​3% 
C) ​6% 
D) ​9%

Question 4

If a worker was miscategorized as structurally unemployed when he was really frictionally unemployed, that would not change the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 5

Economists believe that the Consumer Price Index tends to overstate the actual rate of inflation.

Accepted Answer

A) True 
 B)False

Question 6

The official unemployment rate may not reflect the true state of unemployment because:

Accepted Answer

A) ​part-time employees who want to work more hours are treated the same statistically as those who hold full-time jobs. 
B) ​some individuals who want to work may become discouraged and cease actively looking for work. 
C) ​workers laid off from their jobs and looking for new ones are not counted among the unemployed. 
D) ​(a) and (b) only. 
A) ​part-time employees who want to work more hours are treated the same statistically as those who hold full-time jobs. 
B) ​some individuals who want to work may become discouraged and cease actively looking for work. 
C) ​workers laid off from their jobs and looking for new ones are not counted among the unemployed. 
D) ​(a) and (b) only.

Question 7

Given a fixed nominal interest rate on a loan, unanticipated deflation:

Accepted Answer

A) ​decreases the burden of paying off the loan. 
B) ​increases the burden of paying off the loan. 
C) ​does not alter the burden of paying off the loan. 
D) has an indeterminate effect on the burden of paying off the loan. 
A) ​decreases the burden of paying off the loan. 
B) ​increases the burden of paying off the loan. 
C) ​does not alter the burden of paying off the loan. 
D) has an indeterminate effect on the burden of paying off the loan.

Question 8

The unemployment rate may underestimate the true extent of unemployment if:

Accepted Answer

A) ​many part-time employees would like to work full-time, but are unable to get the additional work. 
B) ​employees increase the number of hours they work overtime. 
C) ​there are a large number of people working in the underground economy. 
D) ​any of the above occur. 
A) ​many part-time employees would like to work full-time, but are unable to get the additional work. 
B) ​employees increase the number of hours they work overtime. 
C) ​there are a large number of people working in the underground economy. 
D) ​any of the above occur.

Question 9

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:

Accepted Answer

A) ​11 percent. 
B) ​14.4 percent. 
C) ​16.8 percent. 
D) ​10.2 percent. 
A) ​11 percent. 
B) ​14.4 percent. 
C) ​16.8 percent. 
D) ​10.2 percent.

Question 10

Which of the following observations concerning phases of a business cycle is incorrect?

Accepted Answer

A) ​The maximum amount of unemployment occurs exactly at the trough. 
B) ​The expansion phase is measured from the trough to the peak. 
C) ​The trough is the point in time when output stops declining. 
D) ​The contraction phase is also called recession. 
A) ​The maximum amount of unemployment occurs exactly at the trough. 
B) ​The expansion phase is measured from the trough to the peak. 
C) ​The trough is the point in time when output stops declining. 
D) ​The contraction phase is also called recession.

Question 11

Hometown, USA, has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is:

Accepted Answer

A) ​5.3 percent. 
B) ​5.6 percent. 
C) ​6.0 percent. 
D) ​none of the above. 
A) ​5.3 percent. 
B) ​5.6 percent. 
C) ​6.0 percent. 
D) ​none of the above.

Question 12

In the nineteenth century, U.S. farmers were ordinarily debtors. Farmers typically borrowed from banks to develop new acreage and to be able to purchase necessary inputs prior to each growing season. Why did farmers generally support public policies that were inflationary?
​

Accepted Answer

In times of unanticipated inflation, far

Question 13

​Exhibit 10-1  
-Refer to Exhibit 10-1. According to the data provided, ____ people constitute the labor force.

Accepted Answer

A) ​100 million. 
B) ​195 million. 
C) ​85 million. 
D) ​180 million. 
A) ​100 million. 
B) ​195 million. 
C) ​85 million. 
D) ​180 million.

Question 14

Cyclical unemployment arises when:

Accepted Answer

A) ​business activity in the macroeconomy declines. 
B) ​the business cycle enters an expansionary phase. 
C) ​labor unions strike for higher wages. 
D) ​the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation's food supply. 
A) ​business activity in the macroeconomy declines. 
B) ​the business cycle enters an expansionary phase. 
C) ​labor unions strike for higher wages. 
D) ​the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation's food supply.

Question 15

Why do economists prefer using the term economic fluctuation rather than business cycle?

Accepted Answer

A) ​political correctness 
B) ​number of parameters involved 
C) ​excessive volatility of the cycles 
D) ​lack of regularity of a cycle 
A) ​political correctness 
B) ​number of parameters involved 
C) ​excessive volatility of the cycles 
D) ​lack of regularity of a cycle

Question 16

If firms offer an efficiency wage:

Accepted Answer

A) ​the quantity of labor supplied will exceed the quantity of labor demanded. 
B) ​the quantity of labor demanded will exceed the quantity of labor supplied. 
C) ​the quantity of labor supplied will equal the quantity of labor demanded. 
D) ​absenteeism is expected to increase. 
A) ​the quantity of labor supplied will exceed the quantity of labor demanded. 
B) ​the quantity of labor demanded will exceed the quantity of labor supplied. 
C) ​the quantity of labor supplied will equal the quantity of labor demanded. 
D) ​absenteeism is expected to increase.

Question 17

The CPI but not the GDP deflator takes into account.

Accepted Answer

A) ​The prices of imports that consumers buy 
B) ​Investment goods bought by businesses 
C) ​Goods bought by the government 
D) ​None of the above 
A) ​The prices of imports that consumers buy 
B) ​Investment goods bought by businesses 
C) ​Goods bought by the government 
D) ​None of the above

Question 18

The total labor force equals:

Accepted Answer

A) ​the number of officially employed persons. 
B) ​the number of officially unemployed persons. 
C) ​the number of officially employed plus unemployed persons. 
D) ​the number of persons aged sixteen and over in the population. 
A) ​the number of officially employed persons. 
B) ​the number of officially unemployed persons. 
C) ​the number of officially employed plus unemployed persons. 
D) ​the number of persons aged sixteen and over in the population.

Question 19

If, over time, a greater proportion of the labor force is comprised of middle-aged individuals, one would expect the natural rate of unemployment to rise.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a leading economic indicator?

Accepted Answer

A) ​Prices of common stock 
B) ​Number of new businesses formed 
C) ​Unemployment rate 
D) ​New orders for plants and equipment 
A) ​Prices of common stock 
B) ​Number of new businesses formed 
C) ​Unemployment rate 
D) ​New orders for plants and equipment

Exam 10: Consumer Choice Theory

Many economists believe that skill-biased technical change has increased the incomes of both highly skilled workers and low-skill workers

What would happen to the real interest rate if originally the nominal interest rate was 14% and the inflation rate was 10%, then the nominal interest rate fell to 7% as the inflation rate fell to 4%? It would go from:

If the nominal interest rate is 6% and the inflation rate is 3%, the real interest rate is

If a worker was miscategorized as structurally unemployed when he was really frictionally unemployed, that would not change the natural rate of unemployment.

Economists believe that the Consumer Price Index tends to overstate the actual rate of inflation.

The official unemployment rate may not reflect the true state of unemployment because:

Given a fixed nominal interest rate on a loan, unanticipated deflation:

The unemployment rate may underestimate the true extent of unemployment if:

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:

Which of the following observations concerning phases of a business cycle is incorrect?

Hometown, USA, has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is:

In the nineteenth century, U.S. farmers were ordinarily debtors. Farmers typically borrowed from banks to develop new acreage and to be able to purchase necessary inputs prior to each growing season. Why did farmers generally support public policies that were inflationary? ​

​Exhibit 10-1 -Refer to Exhibit 10-1. According to the data provided, ____ people constitute the labor force.

Cyclical unemployment arises when:

Why do economists prefer using the term economic fluctuation rather than business cycle?

If firms offer an efficiency wage:

The CPI but not the GDP deflator takes into account.

The total labor force equals:

If, over time, a greater proportion of the labor force is comprised of middle-aged individuals, one would expect the natural rate of unemployment to rise.

Which of the following is not a leading economic indicator?

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

In the nineteenth century, U.S. farmers were ordinarily debtors. Farmers typically borrowed from banks to develop new acreage and to be able to purchase necessary inputs prior to each growing season. Why did farmers generally support public policies that were inflationary?

Exhibit 10-1 -Refer to Exhibit 10-1. According to the data provided, ____ people constitute the labor force.