Question 1

There are no costs associated with inflation if the inflation rate is unanticipated.

Accepted Answer

A) True 
 B)False

Question 2

In the United States in 2015, the highest employment rate was for ________ and the lowest was for ________.

Accepted Answer

A)  white men; white women 
B)  white men; African-American women 
C)  white women; African-American teenagers 
D)  African-American women; white men 
A)  white men; white women 
B)  white men; African-American women 
C)  white women; African-American teenagers 
D)  African-American women; white men

Question 3

Which of the following statements is true?

Accepted Answer

A)  The unemployment rate does not tell us anything about the duration of unemployment. 
B)  The duration of unemployment decreases during recessions. 
C)  The duration of unemployment increases during economic expansions. 
D)  The median duration of unemployment is usually greater than the average duration. 
A)  The unemployment rate does not tell us anything about the duration of unemployment. 
B)  The duration of unemployment decreases during recessions. 
C)  The duration of unemployment increases during economic expansions. 
D)  The median duration of unemployment is usually greater than the average duration.

Question 4

Celia wants to make an 8% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge an interest rate of

Accepted Answer

A)  3%. 
B)  5%. 
C)  8%. 
D)  13%. 
A)  3%. 
B)  5%. 
C)  8%. 
D)  13%.

Question 5

Deflation is an decrease in

Accepted Answer

A)  the price of one item. 
B)  the overall price level. 
C)  the average income level. 
D)  real gross national product. 
A)  the price of one item. 
B)  the overall price level. 
C)  the average income level. 
D)  real gross national product.

Question 6

There are no costs associated with inflation if the inflation rate is perfectly anticipated.

Accepted Answer

A) True 
 B)False

Question 7

A recession ________ output in the future and inflation ________ output in the future.

Accepted Answer

A)  will reduce; will not affect 
B)  may reduce; may reduce 
C)  may reduce; will increase 
D)  will reduce; will reduce 
A)  will reduce; will not affect 
B)  may reduce; may reduce 
C)  may reduce; will increase 
D)  will reduce; will reduce

Question 8

Refer to the information provided in Table 7.1 below to answer the questions that follow.
Table 7.1  
-Refer to Table 7.1. The labor force equals

Accepted Answer

A)  14,000 people. 
B)  17,000 people. 
C)  18,000 people. 
D)  21,000 people. 
A)  14,000 people. 
B)  17,000 people. 
C)  18,000 people. 
D)  21,000 people.

Question 9

Any unemployment that is above frictional plus structural is called cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 10

If the population is growing faster the economy, then per-capita output is falling.

Accepted Answer

A) True 
 B)False

Question 11

When unanticipated inflation occurs regularly, the degree of risk associated with investments in the economy

Accepted Answer

A)  increases. 
B)  decreases. 
C)  remains stable. 
D)  falls to zero. 
A)  increases. 
B)  decreases. 
C)  remains stable. 
D)  falls to zero.

Question 12

When an individual quits his/her job and decides to stay at home for a while, the labor-force participation rate

Accepted Answer

A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  may increase or decrease, depending on the length of time he/she stays at home. 
A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  may increase or decrease, depending on the length of time he/she stays at home.

Question 13

If the number of unemployed equals 125,000 and the number of employed equals 275,000, the labor-force participation rate

Accepted Answer

A)  is 31.2%. 
B)  is 68.8%. 
C)  is 75%. 
D)  cannot be determined from this information. 
A)  is 31.2%. 
B)  is 68.8%. 
C)  is 75%. 
D)  cannot be determined from this information.

Question 14

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 2014 is the base year, the inflation rate between 2014 and 2015 is

Accepted Answer

A)  3.9%. 
B)  6.1%. 
C)  7.4%. 
D)  10.2%. 
A)  3.9%. 
B)  6.1%. 
C)  7.4%. 
D)  10.2%.

Question 15

Diane lost her job and immediately started looking for another job. As a result the

Accepted Answer

A)  unemployment rate increases. 
B)  labor force increases. 
C)  labor force decreases. 
D)  unemployment rate remains constant. 
A)  unemployment rate increases. 
B)  labor force increases. 
C)  labor force decreases. 
D)  unemployment rate remains constant.

Question 16

Which of the following is a cost of anticipated inflation?

Accepted Answer

A)  Debtors are made worse off. 
B)  If people are not fully informed about the price level changes, resources will be misallocated. 
C)  The degree of risk associated with investments in the economy increases. 
D)  Creditors are made worse off. 
A)  Debtors are made worse off. 
B)  If people are not fully informed about the price level changes, resources will be misallocated. 
C)  The degree of risk associated with investments in the economy increases. 
D)  Creditors are made worse off.

Question 17

Refer to the information provided in Table 7.6 below to answer the questions that follow.
Table 7.6  
-Refer to Table 7.6. 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 18

If 2015 is the base year and the inflation rate between 2015 and 2016 is 6.4%, the price index in 2016 is

Accepted Answer

A)  106.4. 
B)  64.0. 
C)  16.4. 
D)  cannot be determined from this information because the index in the base year is not given 
A)  106.4. 
B)  64.0. 
C)  16.4. 
D)  cannot be determined from this information because the index in the base year is not given

Question 19

In the CPI market basket, the category which has the largest weight is

Accepted Answer

A)  housing. 
B)  food and beverages. 
C)  transportation. 
D)  medical care. 
A)  housing. 
B)  food and beverages. 
C)  transportation. 
D)  medical care.

Question 20

If the labor market becomes more efficient so that the unemployed are more quickly matched with jobs, then

Accepted Answer

A)  the natural rate of unemployment will increase. 
B)  the natural rate of unemployment will decrease. 
C)  the natural rate of unemployment will not change. 
D)  the natural rate of unemployment could either increase or decrease. 
A)  the natural rate of unemployment will increase. 
B)  the natural rate of unemployment will decrease. 
C)  the natural rate of unemployment will not change. 
D)  the natural rate of unemployment could either increase or decrease.

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

There are no costs associated with inflation if the inflation rate is unanticipated.

In the United States in 2015, the highest employment rate was for ________ and the lowest was for ________.

Which of the following statements is true?

Celia wants to make an 8% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge an interest rate of

Deflation is an decrease in

There are no costs associated with inflation if the inflation rate is perfectly anticipated.

A recession ________ output in the future and inflation ________ output in the future.

Refer to the information provided in Table 7.1 below to answer the questions that follow. Table 7.1 -Refer to Table 7.1. The labor force equals

Any unemployment that is above frictional plus structural is called cyclical unemployment.

If the population is growing faster the economy, then per-capita output is falling.

When unanticipated inflation occurs regularly, the degree of risk associated with investments in the economy

When an individual quits his/her job and decides to stay at home for a while, the labor-force participation rate

If the number of unemployed equals 125,000 and the number of employed equals 275,000, the labor-force participation rate

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 2014 is the base year, the inflation rate between 2014 and 2015 is

Diane lost her job and immediately started looking for another job. As a result the

Which of the following is a cost of anticipated inflation?

Refer to the information provided in Table 7.6 below to answer the questions that follow. Table 7.6 -Refer to Table 7.6. If 2015 is the base year, the price index in 2015 is

If 2015 is the base year and the inflation rate between 2015 and 2016 is 6.4%, the price index in 2016 is

In the CPI market basket, the category which has the largest weight is

If the labor market becomes more efficient so that the unemployed are more quickly matched with jobs, then

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

Filters

In the United States in 2015, the highest employment rate was for and the lowest was for .

A recession output in the future and inflation output in the future.