Question 1

The problem with inflation is that as prices rise,consumers can no longer afford to buy as many goods and services.

Accepted Answer

A) True 
 B)False  False

Question 2

Table 9-16
  
-Refer to Table 9-16.Looking at the table above,real wages ________ from 2014 to 2015,and real wages ________ from 2015 to 2016.

Accepted Answer

A) rose;rose 
B) rose;fell 
C) fell;rose 
D) fell;fell 
A) rose;rose 
B) rose;fell 
C) fell;rose 
D) fell;fell C

Question 3

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?

Accepted Answer

The substitution bias causes the CPI to overstate inflation and the cost of living because the CPI,being based on a fixed market basket of goods and services,implicitly assumes that consumers do not switch away from products whose prices are rising and into products whose prices are falling (or rising less).Consumers dodge some price increases by switching to other products,therefore decreasing their cost of living below what the CPI indicates.
The increase in quality bias causes the CPI to overstate inflation and the cost of living because a portion of the price increase of many goods and services is due to an increase in quality.The Bureau of Labor Statistics tries to filter out the portion of the price increase due to quality,but does not fully adjust the price increase for quality improvements.

Question 4

To understand why someone cannot get a job,it helps to know the three types of unemployment.List the three types of unemployment and explain what causes each type.What advice for finding a job would be appropriate for someone in each type of unemployment?

Accepted Answer

Frictional unemployment is the unemploym

Question 5

Upon your graduation from college,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

Accepted Answer

A) the cost of additional education is always higher during recession. 
B) high unemployment rates do not usually last for very long. 
C) looking for work is your only option. 
D) the wages of college graduates do not fall during recession. 
A) the cost of additional education is always higher during recession. 
B) high unemployment rates do not usually last for very long. 
C) looking for work is your only option. 
D) the wages of college graduates do not fall during recession.

Question 6

The unemployment rate is

Accepted Answer

A) the percentage of the labor force that is employed. 
B) the percentage of the number employed that is unemployed. 
C) the percentage of the working-age population that is unemployed. 
D) the percentage of the labor force that is unemployed. 
E) the percentage of the working-age population that is employed. 
A) the percentage of the labor force that is employed. 
B) the percentage of the number employed that is unemployed. 
C) the percentage of the working-age population that is unemployed. 
D) the percentage of the labor force that is unemployed. 
E) the percentage of the working-age population that is employed.

Question 7

The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill.

Accepted Answer

A) employed 
B) unemployed 
C) a discouraged worker 
D) out of the labor force 
A) employed 
B) unemployed 
C) a discouraged worker 
D) out of the labor force

Question 8

Efficiency wage is another name for the minimum wage.

Accepted Answer

A) True 
 B)False

Question 9

The most widely used measure of inflation is based on which of the following price indices?

Accepted Answer

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

Question 10

During the 1990s,Japan experienced periods of deflation and very low nominal interest rates,approaching zero percent.Why would lenders of money agree to a nominal interest rate of almost zero?

Accepted Answer

With the deflation,the real in

Question 11

Which of the following is true about the consumer price index?

Accepted Answer

A) It accounts for people switching to goods whose prices have fallen. 
B) It assumes that consumers purchase the same amount of each product in the market basket each month. 
C) It frequently updates the price changes of new products added to the market basket,as these have a tendency to fall. 
D) It filters out the part of price increases that occurs because of quality improvements in products. 
A) It accounts for people switching to goods whose prices have fallen. 
B) It assumes that consumers purchase the same amount of each product in the market basket each month. 
C) It frequently updates the price changes of new products added to the market basket,as these have a tendency to fall. 
D) It filters out the part of price increases that occurs because of quality improvements in products.

Question 12

If the number of unemployed workers is 19 million,the number in the working-age population is 500 million,and the unemployment rate is 4%,how many workers are in the labor force?

Accepted Answer

A) 1 million 
B) 20 million 
C) 475 million 
D) 481 million 
A) 1 million 
B) 20 million 
C) 475 million 
D) 481 million

Question 13

The average price of goods and services in the economy is also known as

Accepted Answer

A) the price level. 
B) the inflation rate. 
C) a market basket. 
D) the cost of living. 
A) the price level. 
B) the inflation rate. 
C) a market basket. 
D) the cost of living.

Question 14

Table 9-11
  
-Refer to Table 9-11.Suppose an economy has only three goods and the typical family purchases the amounts given in the table above.If 2011 is the base year,then what is the CPI for 2016?

Accepted Answer

A) 40.08 
B) 100 
C) 180 
D) 208 
A) 40.08 
B) 100 
C) 180 
D) 208

Question 15

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

Accepted Answer

A) True 
 B)False

Question 16

If inflation is completely anticipated,

Accepted Answer

A) no one loses in the economy. 
B) borrowers lose in the economy. 
C) lenders lose in the economy. 
D) firms lose because they incur menu costs. 
A) no one loses in the economy. 
B) borrowers lose in the economy. 
C) lenders lose in the economy. 
D) firms lose because they incur menu costs.

Question 17

The real interest rate equals the nominal interest rate ________ the inflation rate.

Accepted Answer

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

Question 18

The nominal interest rate plus the inflation rate equals the real interest rate.

Accepted Answer

A) True 
 B)False

Question 19

The deflation of the 1930s impacted the U.S.economy because it led some consumers to ________ and because it ________.

Accepted Answer

A) postpone purchases while they waited for prices to fall even lower;increased the burden on borrowers 
B) demand higher wages in anticipation of prices eventually rising again;increased manufacturing since firms could afford to hire more labor 
C) borrow more money since money was now cheap;reduced the amount of money consumers would have to pay back on their outstanding loans 
D) increase purchases to take advantage of the falling prices;increased the burden on lenders 
A) postpone purchases while they waited for prices to fall even lower;increased the burden on borrowers 
B) demand higher wages in anticipation of prices eventually rising again;increased manufacturing since firms could afford to hire more labor 
C) borrow more money since money was now cheap;reduced the amount of money consumers would have to pay back on their outstanding loans 
D) increase purchases to take advantage of the falling prices;increased the burden on lenders

Question 20

Table 9-7
  
-Refer to Table 9-7.Suppose that the data in the table above reflect price levels in the economy.What is the inflation rate between 2015 and 2016?

Accepted Answer

A) 2.9% 
B) 3.5% 
C) 4.6% 
D) 5% 
E) 7.5% 
A) 2.9% 
B) 3.5% 
C) 4.6% 
D) 5% 
E) 7.5%

The problem with inflation is that as prices rise,consumers can no longer afford to buy as many goods and services.

Table 9-16 -Refer to Table 9-16.Looking at the table above,real wages from 2014 to 2015,and real wages from 2015 to 2016.

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?

To understand why someone cannot get a job,it helps to know the three types of unemployment.List the three types of unemployment and explain what causes each type.What advice for finding a job would be appropriate for someone in each type of unemployment?

Upon your graduation from college,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

The unemployment rate is

The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill.

Efficiency wage is another name for the minimum wage.

The most widely used measure of inflation is based on which of the following price indices?

During the 1990s,Japan experienced periods of deflation and very low nominal interest rates,approaching zero percent.Why would lenders of money agree to a nominal interest rate of almost zero?

Which of the following is true about the consumer price index?

If the number of unemployed workers is 19 million,the number in the working-age population is 500 million,and the unemployment rate is 4%,how many workers are in the labor force?

The average price of goods and services in the economy is also known as

Table 9-11 -Refer to Table 9-11.Suppose an economy has only three goods and the typical family purchases the amounts given in the table above.If 2011 is the base year,then what is the CPI for 2016?

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

If inflation is completely anticipated,

The real interest rate equals the nominal interest rate ________ the inflation rate.

The nominal interest rate plus the inflation rate equals the real interest rate.

The deflation of the 1930s impacted the U.S.economy because it led some consumers to and because it .

Table 9-7 -Refer to Table 9-7.Suppose that the data in the table above reflect price levels in the economy.What is the inflation rate between 2015 and 2016?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

Exam 9: Unemployment and Inflation

The problem with inflation is that as prices rise,consumers can no longer afford to buy as many goods and services.

Table 9-16 -Refer to Table 9-16.Looking at the table above,real wages ________ from 2014 to 2015,and real wages ________ from 2015 to 2016.

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?

To understand why someone cannot get a job,it helps to know the three types of unemployment.List the three types of unemployment and explain what causes each type.What advice for finding a job would be appropriate for someone in each type of unemployment?

Upon your graduation from college,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

The unemployment rate is

The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill.

Efficiency wage is another name for the minimum wage.

The most widely used measure of inflation is based on which of the following price indices?

During the 1990s,Japan experienced periods of deflation and very low nominal interest rates,approaching zero percent.Why would lenders of money agree to a nominal interest rate of almost zero?

Which of the following is true about the consumer price index?

If the number of unemployed workers is 19 million,the number in the working-age population is 500 million,and the unemployment rate is 4%,how many workers are in the labor force?

The average price of goods and services in the economy is also known as

Table 9-11 -Refer to Table 9-11.Suppose an economy has only three goods and the typical family purchases the amounts given in the table above.If 2011 is the base year,then what is the CPI for 2016?

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

If inflation is completely anticipated,

The real interest rate equals the nominal interest rate ________ the inflation rate.

The nominal interest rate plus the inflation rate equals the real interest rate.

The deflation of the 1930s impacted the U.S.economy because it led some consumers to ________ and because it ________.

Table 9-7 -Refer to Table 9-7.Suppose that the data in the table above reflect price levels in the economy.What is the inflation rate between 2015 and 2016?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

Table 9-16 -Refer to Table 9-16.Looking at the table above,real wages from 2014 to 2015,and real wages from 2015 to 2016.

The deflation of the 1930s impacted the U.S.economy because it led some consumers to and because it .