Question 1

The nominal interest rate plus the inflation rate equals the real interest rate.

Accepted Answer

A) True 
 B)False

Question 2

The stated interest rate on a loan is the

Accepted Answer

A) real interest rate. 
B) nominal interest rate. 
C) actual inflation rate. 
D) expected inflation rate. 
A) real interest rate. 
B) nominal interest rate. 
C) actual inflation rate. 
D) expected inflation rate.

Question 3

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

Accepted Answer

A) employed. 
B) unemployed. 
C) not in the labor force. 
D) not in the working-age population. 
A) employed. 
B) unemployed. 
C) not in the labor force. 
D) not in the working-age population.

Question 4

Explain how the CPI is constructed.

Accepted Answer

The Bureau of Labor statistics surveys 1

Question 5

Which of the following has a tendency to raise the unemployment rate?

Accepted Answer

A) implementing a minimum wage in an economy 
B) reducing unemployment insurance in an economy 
C) offering wages at the market-clearing rate 
D) reducing labor union membership in an economy 
A) implementing a minimum wage in an economy 
B) reducing unemployment insurance in an economy 
C) offering wages at the market-clearing rate 
D) reducing labor union membership in an economy

Question 6

What is outlet bias?

Accepted Answer

A) the tendency for households to spend more money over time 
B) the tendency for households to spend their money at discount stores as prices rise 
C) the tendency for the quality of products to improve over time even though the CPI does not measure changes in quality 
D) the tendency for consumers to purchase newer,more technologically advanced products even though they have higher prices 
A) the tendency for households to spend more money over time 
B) the tendency for households to spend their money at discount stores as prices rise 
C) the tendency for the quality of products to improve over time even though the CPI does not measure changes in quality 
D) the tendency for consumers to purchase newer,more technologically advanced products even though they have higher prices

Question 7

Which of the following policies would reduce structural unemployment?

Accepted Answer

A) an increase in the minimum wage 
B) a job retraining program 
C) implementing an unemployment insurance policy 
D) building an online job database that helps workers find jobs 
A) an increase in the minimum wage 
B) a job retraining program 
C) implementing an unemployment insurance policy 
D) building an online job database that helps workers find jobs

Question 8

The advice to "retrain" would be most appropriate for which of the following types of unemployment?

Accepted Answer

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

Question 9

If you have trouble finding a job because of a slowdown in the overall economy,we would say that you are

Accepted Answer

A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) seasonally unemployed. 
A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) seasonally unemployed.

Question 10

You borrow $10,000 from a bank for one year at a nominal interest rate of 5%.If inflation over the year is 2%,what is the real interest rate you are paying?

Accepted Answer

A) 2% 
B) 2.5% 
C) 3% 
D) 5% 
A) 2% 
B) 2.5% 
C) 3% 
D) 5%

Question 11

The labor force participation rate is defined as

Accepted Answer

A) the percentage of the working-age population that is employed. 
B) the percentage of the working-age population that is unemployed. 
C) the percentage of the labor force that is employed. 
D) the percentage of the labor force that is unemployed. 
E) the percentage of the working-age population in the labor force. 
A) the percentage of the working-age population that is employed. 
B) the percentage of the working-age population that is unemployed. 
C) the percentage of the labor force that is employed. 
D) the percentage of the labor force that is unemployed. 
E) the percentage of the working-age population in the labor force.

Question 12

The labor force participation rates of men have gradually increased since 1948.

Accepted Answer

A) True 
 B)False

Question 13

Full employment is not considered to be zero unemployment,because

Accepted Answer

A) some cyclical unemployment always exists. 
B) some people do not want a job. 
C) there are not enough jobs for everyone who wants one. 
D) people do not find jobs instantaneously. 
A) some cyclical unemployment always exists. 
B) some people do not want a job. 
C) there are not enough jobs for everyone who wants one. 
D) people do not find jobs instantaneously.

Question 14

An unemployment insurance program has which of the following effects?

Accepted Answer

A) It decreases the amount of personal income of the unemployed. 
B) It contributes to the severity of a recession or economic downturn. 
C) It increases the amount of time spent searching for a job. 
D) It lowers the overall unemployment rate. 
A) It decreases the amount of personal income of the unemployed. 
B) It contributes to the severity of a recession or economic downturn. 
C) It increases the amount of time spent searching for a job. 
D) It lowers the overall unemployment rate.

Question 15

If inflation increases unexpectedly,then

Accepted Answer

A) borrowers pay a higher real interest rate than they expected. 
B) lenders receive a lower real interest rate than they expected. 
C) lenders gain and borrowers gain. 
D) neither borrowers nor lenders lose. 
A) borrowers pay a higher real interest rate than they expected. 
B) lenders receive a lower real interest rate than they expected. 
C) lenders gain and borrowers gain. 
D) neither borrowers nor lenders lose.

Question 16

Explain whether you agree or disagree with the following statement: "The reason that inflation is bad is because it increases the cost of living-the costs of goods and services we buy-without increasing income in general."

Accepted Answer

Disagree.Inflation,in general,must incre

Question 17

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

Accepted Answer

A) unemployment rate 
B) discouraged-worker ratio 
C) labor force participation rate 
D) the ratio of minimum wage to inflation 
A) unemployment rate 
B) discouraged-worker ratio 
C) labor force participation rate 
D) the ratio of minimum wage to inflation

Question 18

A student who just graduated from college but has not found a job would most likely be

Accepted Answer

A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) seasonally unemployed. 
A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) seasonally unemployed.

Question 19

Efficiency wage is another name for the minimum wage.

Accepted Answer

A) True 
 B)False

Question 20

Table 20-22
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal Average Hourly } \
\text { Earnings }
\end{array} & \begin{array} { c } 
\text { CPI } \
( \mathbf { 1 9 8 2 - 1 9 8 4 } = \mathbf { 1 0 0 } )
\end{array} \
\hline 2014 & \$ 10 & 100 \
\hline 2015 & 11 & 105 \
\hline 2016 & 12 & 110 \
\hline
\end{array}$$
-Refer to Table 20-22.Using the above table,calculate real average hourly earnings for 2014,2015,and 2016.Calculate the rate of growth of real average hourly earnings from 2015 to 2016.

Accepted Answer

Real average hourly earnings in 2014 are

Exam 20: Unemployment and Inflation

The nominal interest rate plus the inflation rate equals the real interest rate.

The stated interest rate on a loan is the

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

Explain how the CPI is constructed.

Which of the following has a tendency to raise the unemployment rate?

What is outlet bias?

Which of the following policies would reduce structural unemployment?

The advice to "retrain" would be most appropriate for which of the following types of unemployment?

If you have trouble finding a job because of a slowdown in the overall economy,we would say that you are

You borrow $10,000 from a bank for one year at a nominal interest rate of 5%.If inflation over the year is 2%,what is the real interest rate you are paying?

The labor force participation rate is defined as

The labor force participation rates of men have gradually increased since 1948.

Full employment is not considered to be zero unemployment,because

An unemployment insurance program has which of the following effects?

If inflation increases unexpectedly,then

Explain whether you agree or disagree with the following statement: "The reason that inflation is bad is because it increases the cost of living-the costs of goods and services we buy-without increasing income in general."

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

A student who just graduated from college but has not found a job would most likely be

Efficiency wage is another name for the minimum wage.

Table 20-22 Year Nominal Average Hourly Earnings CPI (=) 2014 \ 10 100 2015 11 105 2016 12 110 -Refer to Table 20-22.Using the above table,calculate real average hourly earnings for 2014,2015,and 2016.Calculate the rate of growth of real average hourly earnings from 2015 to 2016.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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