Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The CPI in period 1 is 200 and the CPI in period 2 is 150. The rate of inflation between period 1 and period 2 is

Accepted Answer

A)  75%. 
B)  -25%. 
C)  -50%. 
D)  -75%. 
A)  75%. 
B)  -25%. 
C)  -50%. 
D)  -75%.

Question 3

During recessions, the number of discouraged workers ________ and this ________ the unemployment rate.

Accepted Answer

A)  falls; reduces 
B)  decreases; increases 
C)  increases; reduces 
D)  increases; increases 
A)  falls; reduces 
B)  decreases; increases 
C)  increases; reduces 
D)  increases; increases

Question 4

The number of people classified as employed is 390,000 and the number of people classified as unemployed is 70,000. The size of the labor force

Accepted Answer

A)  equals 320,000. 
B)  equals 390,000. 
C)  equals 460,000. 
D)  equals 480,000. 
A)  equals 320,000. 
B)  equals 390,000. 
C)  equals 460,000. 
D)  equals 480,000.

Question 5

For the 1952-2014 period in the United States, productivity

Accepted Answer

A)  decreased during the 1960s. 
B)  increased at a constant rate. 
C)  showed the largest increase during the 1980s. 
D)  fluctuated in the short run around an upward trend. 
A)  decreased during the 1960s. 
B)  increased at a constant rate. 
C)  showed the largest increase during the 1980s. 
D)  fluctuated in the short run around an upward trend.

Question 6

Bob is unemployed if he

Accepted Answer

A)  is temporarily laid off. 
B)  is not looking for a job. 
C)  has looked for a job for two months and then quit looking. 
D)  A and C are correct 
A)  is temporarily laid off. 
B)  is not looking for a job. 
C)  has looked for a job for two months and then quit looking. 
D)  A and C are correct

Question 7

An inflation rate that is lower than expected benefits creditors.

Accepted Answer

A) True 
 B)False

Question 8

Most economists consider the ________ as the best overall indicator of inflationary pressures in the economy.

Accepted Answer

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

Question 9

Related to the Economics in Practice on p. 125: Survey data suggests that during the recession of 2008-2009, the hours that those who were unemployed lost to the formal market were primarily spent on

Accepted Answer

A)  job search. 
B)  increased education. 
C)  leisure activities. 
D)  non-market work. 
A)  job search. 
B)  increased education. 
C)  leisure activities. 
D)  non-market work.

Question 10

Annabel retired from the fire department. She started volunteering two hours a day at an unpaid job in the local hospital. Annabel is

Accepted Answer

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

Question 11

The unemployment rate that occurs in a normal functioning economy is often referred to as

Accepted Answer

A)  cyclical unemployment. 
B)  the natural rate of unemployment. 
C)  seasonal unemployment. 
D)  labor force unemployment. 
A)  cyclical unemployment. 
B)  the natural rate of unemployment. 
C)  seasonal unemployment. 
D)  labor force unemployment.

Question 12

Which of the following statements is false?

Accepted Answer

A)  An individual living on a fixed income is always made worse off as a result of inflation. 
B)  Those individuals receiving welfare benefits have been harmed by inflation because increases in welfare payments have not kept pace with inflation. 
C)  Inflation will have no effect on an individual whose income is indexed to the inflation rate. 
D)  Some people in society benefit from inflation. 
A)  An individual living on a fixed income is always made worse off as a result of inflation. 
B)  Those individuals receiving welfare benefits have been harmed by inflation because increases in welfare payments have not kept pace with inflation. 
C)  Inflation will have no effect on an individual whose income is indexed to the inflation rate. 
D)  Some people in society benefit from inflation.

Question 13

A man is fired from his job because he was late for work too many times. While he is searching for another job he would be classified as

Accepted Answer

A)  not in the labor force because his employer had a legitimate reason for firing him. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  frictionally unemployed. 
A)  not in the labor force because his employer had a legitimate reason for firing him. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  frictionally unemployed.

Question 14

Which of the following statements is false?

Accepted Answer

A)  Whether you gain or lose during a period of inflation depends on whether your income rises faster or slower than the prices of the things you buy. 
B)  Inflation that is higher than expected benefits debtors, and inflation that is lower than expected benefits creditors. 
C)  There are no costs or losses associated with anticipated inflation. 
D)  When unanticipated inflation occurs regularly, the degree of risk associated with investments in the economy increases. 
A)  Whether you gain or lose during a period of inflation depends on whether your income rises faster or slower than the prices of the things you buy. 
B)  Inflation that is higher than expected benefits debtors, and inflation that is lower than expected benefits creditors. 
C)  There are no costs or losses associated with anticipated inflation. 
D)  When unanticipated inflation occurs regularly, the degree of risk associated with investments in the economy increases.

Question 15

If 2015 is the base year, the bundle price of goods in 2015 is $750, and the bundle price of goods in 2016 is $1,000, the 2016 price index is

Accepted Answer

A)  75. 
B)  125. 
C)  133.3. 
D)  166.7. 
A)  75. 
B)  125. 
C)  133.3. 
D)  166.7.

Question 16

Julio borrows $250 from Ricky. Ricky wants to make a 5% real return on his money, so they both agree on a 5% interest rate paid next year. Both don't anticipate the 5% inflation next year. In this case

Accepted Answer

A)  Ricky is better off. 
B)  Julio will pay $15 a year from now on. 
C)  Julio is better off. 
D)  Ricky will receive more than 5% of real rate of return a year from now. 
A)  Ricky is better off. 
B)  Julio will pay $15 a year from now on. 
C)  Julio is better off. 
D)  Ricky will receive more than 5% of real rate of return a year from now.

Question 17

If the number of people employed is 240,000 and the labor force is 250,000, the unemployment rate is

Accepted Answer

A)  2.4%. 
B)  2.9%. 
C)  4.0%. 
D)  4.7%. 
A)  2.4%. 
B)  2.9%. 
C)  4.0%. 
D)  4.7%.

Question 18

Related to the Economics in Practice on p. 127: In the U.S. from 1955 to 1996, the labor force participation rate ________ for men and ________ for women.

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

Question 19

If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is

Accepted Answer

A)  28%. 
B)  4%. 
C)  -3%. 
D)  -7%. 
A)  28%. 
B)  4%. 
C)  -3%. 
D)  -7%.

Question 20

Anyone 16 years of age or older who is not classified as employed is classified as unemployed.

Accepted Answer

A) True 
 B)False

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

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

The CPI in period 1 is 200 and the CPI in period 2 is 150. The rate of inflation between period 1 and period 2 is

During recessions, the number of discouraged workers ________ and this ________ the unemployment rate.

The number of people classified as employed is 390,000 and the number of people classified as unemployed is 70,000. The size of the labor force

For the 1952-2014 period in the United States, productivity

Bob is unemployed if he

An inflation rate that is lower than expected benefits creditors.

Most economists consider the ________ as the best overall indicator of inflationary pressures in the economy.

Related to the Economics in Practice on p. 125: Survey data suggests that during the recession of 2008-2009, the hours that those who were unemployed lost to the formal market were primarily spent on

Annabel retired from the fire department. She started volunteering two hours a day at an unpaid job in the local hospital. Annabel is

The unemployment rate that occurs in a normal functioning economy is often referred to as

Which of the following statements is false?

A man is fired from his job because he was late for work too many times. While he is searching for another job he would be classified as

Which of the following statements is false?

If 2015 is the base year, the bundle price of goods in 2015 is $750, and the bundle price of goods in 2016 is $1,000, the 2016 price index is

Julio borrows $250 from Ricky. Ricky wants to make a 5% real return on his money, so they both agree on a 5% interest rate paid next year. Both don't anticipate the 5% inflation next year. In this case

If the number of people employed is 240,000 and the labor force is 250,000, the unemployment rate is

Related to the Economics in Practice on p. 127: In the U.S. from 1955 to 1996, the labor force participation rate ________ for men and ________ for women.

If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is

Anyone 16 years of age or older who is not classified as employed is classified as unemployed.

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

During recessions, the number of discouraged workers and this the unemployment rate.

Related to the Economics in Practice on p. 127: In the U.S. from 1955 to 1996, the labor force participation rate for men and for women.