Question 1

Which of the following would be a consequence of substitution bias in the CPI?

Accepted Answer

A) Social Security payments would not adequately compensate retired workers for inflation. 
B) Businesses would over-compensate employees for inflation when giving the cost of living rises. 
C) The inflation rate based on the CPI would under-estimate the true level of inflation. 
D) Judges would award child support payments that would not adequately keep up with the true cost of inflation. 
A) Social Security payments would not adequately compensate retired workers for inflation. 
B) Businesses would over-compensate employees for inflation when giving the cost of living rises. 
C) The inflation rate based on the CPI would under-estimate the true level of inflation. 
D) Judges would award child support payments that would not adequately keep up with the true cost of inflation.

Question 2

The Bureau of Labor Statistics counts as employed people who work part-time,but would prefer to work full-time.Suppose the people who had part-time jobs,but wanted full-time jobs,were counted as unemployed.Explain how the unemployment rate and the labor force participation rate would change.

Accepted Answer

The unemployment rate would increase and

Question 3

If we want to use a measure of inflation that foreshadows price changes before they affect prices at the retail level,we would base our measure of inflation on

Accepted Answer

A) the producer price index. 
B) the consumer price index. 
C) the GDP deflator. 
D) the household price index. 
A) the producer price index. 
B) the consumer price index. 
C) the GDP deflator. 
D) the household price index.

Question 4

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed,the BLS estimates the unemployment rate in September 2011 would have ________ compared to the measured unemployment rate.

Accepted Answer

A) increased by more that 7 percentage points 
B) more than doubled 
C) decreased by less than 1 percentage point 
D) barely changed 
A) increased by more that 7 percentage points 
B) more than doubled 
C) decreased by less than 1 percentage point 
D) barely changed

Question 5

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 6

Table 13-9
  
-Refer to Table 13-9.Looking at the table above,real average hourly earnings were equal to ________ in 2010.

Accepted Answer

A) $9 
B) $9.52 
C) $10 
D) $12 
A) $9 
B) $9.52 
C) $10 
D) $12

Question 7

Housing is the largest component of the U.S.CPI market basket.

Accepted Answer

A) True 
 B)False

Question 8

Assume the average annual CPI values for 2010 and 2011 were 207.3 and 215.3,respectively.What was the percent increase in the CPI between these two years?

Accepted Answer

A) 0.96 
B) 1.04 
C) 3.86 
D) 8.0 
A) 0.96 
B) 1.04 
C) 3.86 
D) 8.0

Question 9

The Bureau of Labor Statistics has taken several steps to reduce the bias in the consumer price index.Which of the following is not one of the steps taken to reduce the bias?

Accepted Answer

A) using statistical methods to reduce the size of the quality bias 
B) updating the market basket every two years,rather than every 10 years 
C) incorporating substitutions by consumers when prices of specific products rise rapidly 
D) conducting a point-of-purchase survey to track where consumers actually make their purchases 
A) using statistical methods to reduce the size of the quality bias 
B) updating the market basket every two years,rather than every 10 years 
C) incorporating substitutions by consumers when prices of specific products rise rapidly 
D) conducting a point-of-purchase survey to track where consumers actually make their purchases

Question 10

Real interest rates at times have been negative.Why would anyone lending money agree to a negative real interest rate?

Accepted Answer

The lender did not agree to a negative r

Question 11

Discuss the likely impact of each of the following on the unemployment rate:
a.The length of time workers are eligible to receive unemployment insurance payments is cut in half.
b.The government passes a law making labor unions illegal.
c.The minimum wage is raised by 50 percent.
d.The government funds an Internet site where companies can post job openings at no charge.

Accepted Answer

a.The unemployment rate will likely decr

Question 12

Table 13-6
  
-Refer to Table 13-6.Consider the following values of the consumer price index for 1996,1997,and 1998: The inflation rate for 1997 was equal to

Accepted Answer

A) 1.2 percent. 
B) 2.0 percent. 
C) 2.5 percent. 
D) 4.0 percent. 
A) 1.2 percent. 
B) 2.0 percent. 
C) 2.5 percent. 
D) 4.0 percent.

Question 13

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time college students.This would cause

Accepted Answer

A) the unemployment rate to decrease. 
B) the labor force participation rate to decrease. 
C) the number of discouraged workers to increase. 
D) no change in the unemployment rate. 
A) the unemployment rate to decrease. 
B) the labor force participation rate to decrease. 
C) the number of discouraged workers to increase. 
D) no change in the unemployment rate.

Question 14

You earned $30,000 in 1990,and your salary rose to $80,000 in 2011.If the CPI rose from 82 to 202 between 1990 and 2011,which of the following is true?

Accepted Answer

A) There was deflation between 1990 and 2011. 
B) The purchasing power of your salary fell between 1990 and 2011. 
C) The purchasing power of your salary remained constant between 1990 and 2011. 
D) The purchasing power of your salary increased between 1900 and 2011. 
A) There was deflation between 1990 and 2011. 
B) The purchasing power of your salary fell between 1990 and 2011. 
C) The purchasing power of your salary remained constant between 1990 and 2011. 
D) The purchasing power of your salary increased between 1900 and 2011.

Question 15

Table 13-9
  
-Refer to Table 13-9.Looking at the table above,real average hourly earnings in 2009 were

Accepted Answer

A) $9 
B) $9.52 
C) $10 
D) $12.63 
A) $9 
B) $9.52 
C) $10 
D) $12.63

Question 16

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 17

Table 13-2
  
-Refer to Table 13-2.Assume the market basket for the consumer price index has two products - bread and milk - with the following values in 2006 and 2011 for price and quantity: The Consumer Price Index for 2011 equals

Accepted Answer

A) 118. 
B) 116. 
C) 86. 
D) 85. 
A) 118. 
B) 116. 
C) 86. 
D) 85.

Question 18

Unemployment caused by a business cycle recession is called cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 19

An advantage of the household survey over the establishment survey of the labor market is that the household survey

Accepted Answer

A) is based on actual payrolls,rather than on unverified answers. 
B) includes the number of self-employed persons. 
C) includes the number of discouraged workers. 
D) omits persons employed at newly opened firms. 
A) is based on actual payrolls,rather than on unverified answers. 
B) includes the number of self-employed persons. 
C) includes the number of discouraged workers. 
D) omits persons employed at newly opened firms.

Question 20

Which of the following would decrease the unemployment rate?

Accepted Answer

A) an increase in the minimum wage 
B) an increase in the efficiency wage 
C) an increase in labor union membership 
D) government aid to retrain unemployed workers 
A) an increase in the minimum wage 
B) an increase in the efficiency wage 
C) an increase in labor union membership 
D) government aid to retrain unemployed workers

Which of the following would be a consequence of substitution bias in the CPI?

The Bureau of Labor Statistics counts as employed people who work part-time,but would prefer to work full-time.Suppose the people who had part-time jobs,but wanted full-time jobs,were counted as unemployed.Explain how the unemployment rate and the labor force participation rate would change.

If we want to use a measure of inflation that foreshadows price changes before they affect prices at the retail level,we would base our measure of inflation on

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed,the BLS estimates the unemployment rate in September 2011 would have ________ compared to the measured unemployment rate.

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 .

Table 13-9 -Refer to Table 13-9.Looking at the table above,real average hourly earnings were equal to ________ in 2010.

Housing is the largest component of the U.S.CPI market basket.

Assume the average annual CPI values for 2010 and 2011 were 207.3 and 215.3,respectively.What was the percent increase in the CPI between these two years?

The Bureau of Labor Statistics has taken several steps to reduce the bias in the consumer price index.Which of the following is not one of the steps taken to reduce the bias?

Real interest rates at times have been negative.Why would anyone lending money agree to a negative real interest rate?

Table 13-6 -Refer to Table 13-6.Consider the following values of the consumer price index for 1996,1997,and 1998: The inflation rate for 1997 was equal to

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time college students.This would cause

You earned $30,000 in 1990,and your salary rose to $80,000 in 2011.If the CPI rose from 82 to 202 between 1990 and 2011,which of the following is true?

Table 13-9 -Refer to Table 13-9.Looking at the table above,real average hourly earnings in 2009 were

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

Table 13-2 -Refer to Table 13-2.Assume the market basket for the consumer price index has two products - bread and milk - with the following values in 2006 and 2011 for price and quantity: The Consumer Price Index for 2011 equals

Unemployment caused by a business cycle recession is called cyclical unemployment.

An advantage of the household survey over the establishment survey of the labor market is that the household survey

Which of the following would decrease the unemployment rate?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 13: Unemployment and Inflation

Which of the following would be a consequence of substitution bias in the CPI?

The Bureau of Labor Statistics counts as employed people who work part-time,but would prefer to work full-time.Suppose the people who had part-time jobs,but wanted full-time jobs,were counted as unemployed.Explain how the unemployment rate and the labor force participation rate would change.

If we want to use a measure of inflation that foreshadows price changes before they affect prices at the retail level,we would base our measure of inflation on

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed,the BLS estimates the unemployment rate in September 2011 would have ________ compared to the measured unemployment rate.

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 ________.

Table 13-9 -Refer to Table 13-9.Looking at the table above,real average hourly earnings were equal to ________ in 2010.

Housing is the largest component of the U.S.CPI market basket.

Assume the average annual CPI values for 2010 and 2011 were 207.3 and 215.3,respectively.What was the percent increase in the CPI between these two years?

The Bureau of Labor Statistics has taken several steps to reduce the bias in the consumer price index.Which of the following is not one of the steps taken to reduce the bias?

Real interest rates at times have been negative.Why would anyone lending money agree to a negative real interest rate?

Table 13-6 -Refer to Table 13-6.Consider the following values of the consumer price index for 1996,1997,and 1998: The inflation rate for 1997 was equal to

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time college students.This would cause

You earned $30,000 in 1990,and your salary rose to $80,000 in 2011.If the CPI rose from 82 to 202 between 1990 and 2011,which of the following is true?

Table 13-9 -Refer to Table 13-9.Looking at the table above,real average hourly earnings in 2009 were

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

Table 13-2 -Refer to Table 13-2.Assume the market basket for the consumer price index has two products - bread and milk - with the following values in 2006 and 2011 for price and quantity: The Consumer Price Index for 2011 equals

Unemployment caused by a business cycle recession is called cyclical unemployment.

An advantage of the household survey over the establishment survey of the labor market is that the household survey

Which of the following would decrease the unemployment rate?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

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 .