Question 1

Which of the following increases the real interest rate?

Accepted Answer

A)  a decrease in the nominal interest rate, holding the inflation rate constant 
B)  an increase in both the nominal interest rate and the inflation rate by the same percentage points 
C)  a decrease in the inflation rate, holding the nominal interest rate constant 
D)  a decrease in both the nominal interest rate and the inflation rate by the same percentage points 
A)  a decrease in the nominal interest rate, holding the inflation rate constant 
B)  an increase in both the nominal interest rate and the inflation rate by the same percentage points 
C)  a decrease in the inflation rate, holding the nominal interest rate constant 
D)  a decrease in both the nominal interest rate and the inflation rate by the same percentage points

Question 2

You want to make a 10% real return on a loan that you are planning to make, and the expected inflation rate during the period of the loan is 4%. You should charge a nominal interest rate of

Accepted Answer

A)  -6%. 
B)  6%. 
C)  10%. 
D)  14%. 
A)  -6%. 
B)  6%. 
C)  10%. 
D)  14%.

Question 3

Which of the following is considered economic capital?

Accepted Answer

A)  a U.S. Treasury bond 
B)  500 shares of Google stock 
C)  the knowledge an individual acquires through education 
D)  20,000 Swiss francs 
A)  a U.S. Treasury bond 
B)  500 shares of Google stock 
C)  the knowledge an individual acquires through education 
D)  20,000 Swiss francs

Question 4

If more workers have more capital to work with, then production will increase.

Accepted Answer

A) True 
 B)False

Question 5

The index used most often to measure inflation is the

Accepted Answer

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

Question 6

Refer to the information provided in Table 7.2 below to answer the questions that follow.
Table 7.2  
-Refer to Table 7.2. The total number of people employed is

Accepted Answer

A)  180 million. 
B)  153 million. 
C)  135 million. 
D)  117 million. 
A)  180 million. 
B)  153 million. 
C)  135 million. 
D)  117 million.

Question 7

Which of the following statements is false?

Accepted Answer

A)  One problem with any fixed-bundle index as a measure of the cost of living is that it does not account for substitutions that consumers might make in response to price changes. 
B)  The producer price index is considered to be a leading indicator of future inflation rates. 
C)  The best overall indicator of inflationary pressures in the economy is the GDP deflator. 
D)  The consumer price index somewhat understates changes in the cost of living. 
A)  One problem with any fixed-bundle index as a measure of the cost of living is that it does not account for substitutions that consumers might make in response to price changes. 
B)  The producer price index is considered to be a leading indicator of future inflation rates. 
C)  The best overall indicator of inflationary pressures in the economy is the GDP deflator. 
D)  The consumer price index somewhat understates changes in the cost of living.

Question 8

The economy is in an expansion and the housing market is growing. As a result of this, a home builder doubles his sales force. This would be best described as an example of a reduction in

Accepted Answer

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

Question 9

If Samantha quits her job voluntarily and actively searches for other work, then she is considered

Accepted Answer

A)  structurally unemployed. 
B)  frictionally unemployed. 
C)  cyclically unemployed. 
D)  not to be unemployed. 
A)  structurally unemployed. 
B)  frictionally unemployed. 
C)  cyclically unemployed. 
D)  not to be unemployed.

Question 10

The unemployment that occurs during recessions and depressions is

Accepted Answer

A)  the natural rate of unemployment. 
B)  cyclical unemployment. 
C)  frictional unemployment. 
D)  structural unemployment. 
A)  the natural rate of unemployment. 
B)  cyclical unemployment. 
C)  frictional unemployment. 
D)  structural unemployment.

Question 11

Refer to the information provided in Table 7.3 below to answer the questions that follow.
Table 7.3  
-Refer to Table 7.3. The labor-force participation rate is approximately

Accepted Answer

A)  12%. 
B)  56%. 
C)  80%. 
D)  95%. 
A)  12%. 
B)  56%. 
C)  80%. 
D)  95%.

Question 12

The natural rate of unemployment in the economy is determined by the Congress and the president of the country.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following groups over the age of 19 had the lowest unemployment rate in the United States in 2015?

Accepted Answer

A)  white males 
B)  African American males 
C)  white females 
D)  African American females 
A)  white males 
B)  African American males 
C)  white females 
D)  African American females

Question 14

The employment rate is calculated as

Accepted Answer

A)  (employed - labor force)/employed × 100. 
B)  (employed - unemployed)/labor force × 100. 
C)  unemployed/population × 100. 
D)  (labor force - unemployed)/labor force × 100. 
A)  (employed - labor force)/employed × 100. 
B)  (employed - unemployed)/labor force × 100. 
C)  unemployed/population × 100. 
D)  (labor force - unemployed)/labor force × 100.

Question 15

A 100% increase in the price of salt changes the CPI more than a 10% increase in rent.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the information provided in Table 7.5 below to answer the questions that follow.
Table 7.5  
-Refer to Table 7.5. If 2015 is the base year, the price index in 2015 is

Accepted Answer

A)  1000. 
B)  100. 
C)  10. 
D)  1. 
A)  1000. 
B)  100. 
C)  10. 
D)  1.

Question 17

Structural unemployment is the

Accepted Answer

A)  portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries. 
B)  unemployment that occurs during recessions and depressions. 
C)  portion of unemployment that is due to the normal working of the labor market. 
D)  unemployment that results when people become discouraged about their chances of finding a job so they stop looking for work. 
A)  portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries. 
B)  unemployment that occurs during recessions and depressions. 
C)  portion of unemployment that is due to the normal working of the labor market. 
D)  unemployment that results when people become discouraged about their chances of finding a job so they stop looking for work.

Question 18

We can safely say that total output can decrease if there is a(n)

Accepted Answer

A)  increase in the size of the labor force and an increase in the productivity of workers. 
B)  increase in the size of capital and an increase in the productivity of machines. 
C)  increase in the number of machines per worker. 
D)  decrease in the number of workers per machine. 
A)  increase in the size of the labor force and an increase in the productivity of workers. 
B)  increase in the size of capital and an increase in the productivity of machines. 
C)  increase in the number of machines per worker. 
D)  decrease in the number of workers per machine.

Question 19

If the number of people classified as unemployed is 5,000 and the number of people classified as employed is 45,000, what is the unemployment rate?

Accepted Answer

A)  4.5% 
B)  5.0% 
C)  9.5% 
D)  10% 
A)  4.5% 
B)  5.0% 
C)  9.5% 
D)  10%

Question 20

When more people who are not working start looking for jobs, the labor-force participation rate increases.

Accepted Answer

A) True 
 B)False

Exam 7: Unemployment, Inflation, and Long-Run Growth

Which of the following increases the real interest rate?

You want to make a 10% real return on a loan that you are planning to make, and the expected inflation rate during the period of the loan is 4%. You should charge a nominal interest rate of

Which of the following is considered economic capital?

If more workers have more capital to work with, then production will increase.

The index used most often to measure inflation is the

Refer to the information provided in Table 7.2 below to answer the questions that follow. Table 7.2 -Refer to Table 7.2. The total number of people employed is

Which of the following statements is false?

The economy is in an expansion and the housing market is growing. As a result of this, a home builder doubles his sales force. This would be best described as an example of a reduction in

If Samantha quits her job voluntarily and actively searches for other work, then she is considered

The unemployment that occurs during recessions and depressions is

Refer to the information provided in Table 7.3 below to answer the questions that follow. Table 7.3 -Refer to Table 7.3. The labor-force participation rate is approximately

The natural rate of unemployment in the economy is determined by the Congress and the president of the country.

Which of the following groups over the age of 19 had the lowest unemployment rate in the United States in 2015?

The employment rate is calculated as

A 100% increase in the price of salt changes the CPI more than a 10% increase in rent.

Refer to the information provided in Table 7.5 below to answer the questions that follow. Table 7.5 -Refer to Table 7.5. If 2015 is the base year, the price index in 2015 is

Structural unemployment is the

We can safely say that total output can decrease if there is a(n)

If the number of people classified as unemployed is 5,000 and the number of people classified as employed is 45,000, what is the unemployment rate?

When more people who are not working start looking for jobs, the labor-force participation rate increases.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

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