Question 1

Deflation occurs when

Accepted Answer

A) there is a sustained increase in the price level. 
B) there is a one-time increase in the price level. 
C) there is a decline in the price level. 
D) there is a decrease in the expected rate of inflation. 
A) there is a sustained increase in the price level. 
B) there is a one-time increase in the price level. 
C) there is a decline in the price level. 
D) there is a decrease in the expected rate of inflation.

Question 2

Article Summary
According to the Bureau of Labor Statistics,the unemployment rate fell from May 2015 to June 2015,and at the same time the labor force participation rate fell to its lowest level in 38 years,to 62.6 percent.The decrease in the labor force participation rate was due to a decline in the size of the workforce.Since the recession of 2007-2009,the participation rate has been falling,due in part to an aging population and increased retirement of the baby boomers.
-Refer to the Article Summary.Explain how the declining labor force could have led to the decrease in the unemployment rate.

Accepted Answer

The labor force is calculated as the sum

Question 3

If inflation is anticipated,some effects of inflation on the redistribution of income can be avoided.

Accepted Answer

A) True 
 B)False

Question 4

If an economy experiences deflation,the real interest rate

Accepted Answer

A) will be less than the nominal interest rate. 
B) will be negative when the nominal interest rate is positive. 
C) will be greater than the nominal interest rate. 
D) will be equal to the deflation rate,so long as the nominal interest rate is positive. 
A) will be less than the nominal interest rate. 
B) will be negative when the nominal interest rate is positive. 
C) will be greater than the nominal interest rate. 
D) will be equal to the deflation rate,so long as the nominal interest rate is positive.

Question 5

A full-time student who is not working is categorized as

Accepted Answer

A) unemployed. 
B) employed. 
C) not in the labor force. 
D) a discouraged worker. 
E) frictionally unemployed. 
A) unemployed. 
B) employed. 
C) not in the labor force. 
D) a discouraged worker. 
E) frictionally unemployed.

Question 6

Table 20-19
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal Average Hourly } \
\text { Earnings }
\end{array} & \begin{array} { c } 
\text { CPI } \
( \mathbf { 1 9 8 2 - 1 9 8 4 } = \mathbf { 1 0 0 } )
\end{array} \
\hline 2014 & \$ 10 & 100 \
\hline 2015 & 10 & 105 \
\hline 2016 & 12 & 110 \
\hline
\end{array}$$
-Refer to Table 20-19.Looking at the table above,what is the approximate rate of growth of real average hourly earnings from 2014 to 2015?

Accepted Answer

A) 15% 
B) 4.4% 
C) -1.5% 
D) -4.8% 
A) 15% 
B) 4.4% 
C) -1.5% 
D) -4.8%

Question 7

Which of the following would be the best measure of the cost of living?

Accepted Answer

A) real GDP 
B) real GDP per person 
C) GDP deflator 
D) consumer price index 
A) real GDP 
B) real GDP per person 
C) GDP deflator 
D) consumer price index

Question 8

The CPI is also referred to as

Accepted Answer

A) the GDP deflator. 
B) the inflation-consumption index. 
C) the cost-of-living index. 
D) the producer price index. 
A) the GDP deflator. 
B) the inflation-consumption index. 
C) the cost-of-living index. 
D) the producer price index.

Question 9

The real wage equals the nominal wage ________ the CPI,all times 100.

Accepted Answer

A) divided by 
B) times 
C) minus 
D) plus 
A) divided by 
B) times 
C) minus 
D) plus

Question 10

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.Inflation during that year is 5%.As a result,you will receive ________ at the end of the year,but that money has a purchasing power of ________.

Accepted Answer

A) $5,050;$5,025 
B) $5,100;$5,050 
C) $5,500;$5,250 
D) $6,000;$5,500 
A) $5,050;$5,025 
B) $5,100;$5,050 
C) $5,500;$5,250 
D) $6,000;$5,500

Question 11

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2016.You know that average prices have risen steadily since 1961.You earn

Accepted Answer

A) 5 times as much as your grandfather in terms of real income. 
B) more than 5 times as much as your grandfather in terms of real income. 
C) less than 5 times as much as your grandfather in terms of real income. 
D) less than 5 times as much as your grandfather in terms of nominal income. 
A) 5 times as much as your grandfather in terms of real income. 
B) more than 5 times as much as your grandfather in terms of real income. 
C) less than 5 times as much as your grandfather in terms of real income. 
D) less than 5 times as much as your grandfather in terms of nominal income.

Question 12

Which of the following is an example of a worker experiencing frictional unemployment?

Accepted Answer

A) A worker quits his job at the Post Office to find more interesting work. 
B) A computer programmer loses her job because it is outsourced to India. 
C) An employee is laid off because the economy is suffering a recession. 
D) A United Airlines pilot loses her job because of lack of demand for air travel. 
A) A worker quits his job at the Post Office to find more interesting work. 
B) A computer programmer loses her job because it is outsourced to India. 
C) An employee is laid off because the economy is suffering a recession. 
D) A United Airlines pilot loses her job because of lack of demand for air travel.

Question 13

Suppose the labor force stays constant,and the working-age population stays constant,but a greater number of persons who were unemployed become employed.The labor force participation rate will

Accepted Answer

A) increase. 
B) decrease. 
C) remain constant. 
D) not change in a way that can be predicted. 
A) increase. 
B) decrease. 
C) remain constant. 
D) not change in a way that can be predicted.

Question 14

Suppose that homemakers are included as employed in the labor force statistics,rather than being counted as out of the labor force.This would

Accepted Answer

A) increase the measured unemployment rate. 
B) increase the measured labor force participation rate. 
C) decrease the number of persons in the labor force. 
D) decrease the number of persons in the working-age population. 
A) increase the measured unemployment rate. 
B) increase the measured labor force participation rate. 
C) decrease the number of persons in the labor force. 
D) decrease the number of persons in the working-age population.

Question 15

Describe how inflation can be costly even if it is anticipated.

Accepted Answer

First,there will be redistribution as so

Question 16

The formula for calculating the CPI is

Accepted Answer

A) (Expenditures in the current year/Expenditures in the base year)× 100. 
B) (Expenditures in the current year × Expenditures in the base year)/100. 
C) (Expenditures in the base year/Expenditures in the current year). 
D) (Expenditures in the base year × 100)/(Expenditures in the current year). 
A) (Expenditures in the current year/Expenditures in the base year)× 100. 
B) (Expenditures in the current year × Expenditures in the base year)/100. 
C) (Expenditures in the base year/Expenditures in the current year). 
D) (Expenditures in the base year × 100)/(Expenditures in the current year).

Question 17

Table 20-19
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal Average Hourly } \
\text { Earnings }
\end{array} & \begin{array} { c } 
\text { CPI } \
( \mathbf { 1 9 8 2 - 1 9 8 4 } = \mathbf { 1 0 0 } )
\end{array} \
\hline 2014 & \$ 10 & 100 \
\hline 2015 & 10 & 105 \
\hline 2016 & 12 & 110 \
\hline
\end{array}$$
-Refer to Table 20-19.Looking at the table above,what is the rate of growth of the average price level from 2015 to 2016?

Accepted Answer

A) 1% 
B) 2% 
C) 3.5% 
D) 4.76% 
E) 5.25% 
A) 1% 
B) 2% 
C) 3.5% 
D) 4.76% 
E) 5.25%

Question 18

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers;60 have full-time employment;20 have part-time employment;20 do not have employment,but are actively looking for employment;and 10 would like employment but do not have employment and are not actively looking for employment.The official unemployment rate as calculated by the U.S.Bureau of Labor would equal

Accepted Answer

A) (20/60)× 100. 
B) (20/80)× 100. 
C) (30/80)× 100. 
D) (20/100)× 100. 
A) (20/60)× 100. 
B) (20/80)× 100. 
C) (30/80)× 100. 
D) (20/100)× 100.

Question 19

Inflation that is ________ than what is expected benefits ________ and hurts ________.

Accepted Answer

A) less;lenders;borrowers 
B) less;borrowers;lenders 
C) greater;lenders;borrowers 
D) greater;lenders;no one 
A) less;lenders;borrowers 
B) less;borrowers;lenders 
C) greater;lenders;borrowers 
D) greater;lenders;no one

Question 20

Since 1948,the labor force participation rate for adult men has ________ and for adult women has ________.

Accepted Answer

A) increased;increased 
B) increased;decreased 
C) decreased;increased 
D) decreased;decreased 
A) increased;increased 
B) increased;decreased 
C) decreased;increased 
D) decreased;decreased

Exam 20: Unemployment and Inflation

Deflation occurs when

If inflation is anticipated,some effects of inflation on the redistribution of income can be avoided.

If an economy experiences deflation,the real interest rate

A full-time student who is not working is categorized as

Table 20-19 Year Nominal Average Hourly Earnings CPI (=) 2014 \ 10 100 2015 10 105 2016 12 110 -Refer to Table 20-19.Looking at the table above,what is the approximate rate of growth of real average hourly earnings from 2014 to 2015?

Which of the following would be the best measure of the cost of living?

The CPI is also referred to as

The real wage equals the nominal wage ________ the CPI,all times 100.

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.Inflation during that year is 5%.As a result,you will receive ________ at the end of the year,but that money has a purchasing power of ________.

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2016.You know that average prices have risen steadily since 1961.You earn

Which of the following is an example of a worker experiencing frictional unemployment?

Suppose the labor force stays constant,and the working-age population stays constant,but a greater number of persons who were unemployed become employed.The labor force participation rate will

Suppose that homemakers are included as employed in the labor force statistics,rather than being counted as out of the labor force.This would

Describe how inflation can be costly even if it is anticipated.

The formula for calculating the CPI is

Table 20-19 Year Nominal Average Hourly Earnings CPI (=) 2014 \ 10 100 2015 10 105 2016 12 110 -Refer to Table 20-19.Looking at the table above,what is the rate of growth of the average price level from 2015 to 2016?

Inflation that is ________ than what is expected benefits ________ and hurts ________.

Since 1948,the labor force participation rate for adult men has ________ and for adult women has ________.

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

Filters

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.Inflation during that year is 5%.As a result,you will receive at the end of the year,but that money has a purchasing power of .

Inflation that is than what is expected benefits and hurts .

Since 1948,the labor force participation rate for adult men has and for adult women has .