Question 1

The broadest measure of the price level that includes all final goods and services is

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 2

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2016.You know that average prices have risen steadily since 1961.You earn

Accepted Answer

A) 5 times as much as your grandfather in terms of real income. 
B) more than 5 times as much as your grandfather in terms of real income. 
C) less than 5 times as much as your grandfather in terms of real income. 
D) less than 5 times as much as your grandfather in terms of nominal income. 
A) 5 times as much as your grandfather in terms of real income. 
B) more than 5 times as much as your grandfather in terms of real income. 
C) less than 5 times as much as your grandfather in terms of real income. 
D) less than 5 times as much as your grandfather in terms of nominal income.

Question 3

A full-time student who is not working is categorized as

Accepted Answer

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

Question 4

Describe how inflation can be costly even if it is anticipated.

Accepted Answer

First,there will be redistribution as so

Question 5

Between 2015 and 2016,the CPI of a small nation rose from 182 to 185.If household incomes rose by 3% during that period of time,which of the following is true?

Accepted Answer

A) The purchasing power of household income rose between 2015 and 2016. 
B) The purchasing power of household income fell between 2015 and 2016. 
C) The purchasing power of household income remained constant between 2015 and 2016. 
D) The CPI cannot be used to determine how the purchasing power of household income changes over time. 
A) The purchasing power of household income rose between 2015 and 2016. 
B) The purchasing power of household income fell between 2015 and 2016. 
C) The purchasing power of household income remained constant between 2015 and 2016. 
D) The CPI cannot be used to determine how the purchasing power of household income changes over time.

Question 6

The natural rate of unemployment consists of frictional unemployment plus structural unemployment.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

Accepted Answer

A) A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year,and the actual rate of inflation ends up being 7 percent per year. 
B) A worker receives a raise in salary that is less than the rate of inflation,because management under-predicted inflation. 
C) Firms have to hire an extra worker to change prices in its store because of inflation. 
D) A bank collects a lower amount of interest from a loan because inflation was under-predicted. 
A) A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year,and the actual rate of inflation ends up being 7 percent per year. 
B) A worker receives a raise in salary that is less than the rate of inflation,because management under-predicted inflation. 
C) Firms have to hire an extra worker to change prices in its store because of inflation. 
D) A bank collects a lower amount of interest from a loan because inflation was under-predicted.

Question 8

If inflation is unanticipated,no redistribution of income can occur.

Accepted Answer

A) True 
 B)False

Question 9

You earned $30,000 in 2007,and your salary rose to $80,000 in 2016.If the CPI rose from 82 to 202 between 2007 and 2016,which of the following is true?

Accepted Answer

A) There was deflation between 2007 and 2016. 
B) The purchasing power of your salary fell between 2007 and 2016. 
C) The purchasing power of your salary remained constant between 2007 and 2016. 
D) The purchasing power of your salary increased between 2007 and 2016. 
A) There was deflation between 2007 and 2016. 
B) The purchasing power of your salary fell between 2007 and 2016. 
C) The purchasing power of your salary remained constant between 2007 and 2016. 
D) The purchasing power of your salary increased between 2007 and 2016.

Question 10

The labor force is the sum of

Accepted Answer

A) employed workers and discouraged workers. 
B) employed workers and unemployed workers. 
C) employed workers and individuals not looking for work. 
D) unemployed workers and the working-age population. 
A) employed workers and discouraged workers. 
B) employed workers and unemployed workers. 
C) employed workers and individuals not looking for work. 
D) unemployed workers and the working-age population.

Question 11

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers;60 have full-time employment;20 have part-time employment;20 do not have employment,but are actively looking for employment;and 10 would like employment but do not have employment and are not actively looking for employment.The official unemployment rate as calculated by the U.S.Bureau of Labor would equal

Accepted Answer

A) (20/60)× 100. 
B) (20/80)× 100. 
C) (30/80)× 100. 
D) (20/100)× 100. 
A) (20/60)× 100. 
B) (20/80)× 100. 
C) (30/80)× 100. 
D) (20/100)× 100.

Question 12

The "new product bias" in the consumer price index refers to the idea that

Accepted Answer

A) consumers switch to new goods when the prices of old goods increase,and the CPI overestimates the cost to consumers. 
B) consumers switch to old goods when the prices of new goods increase,and the CPI underestimates the cost to consumers. 
C) consumers prefer new goods,even if they are worse in quality than old goods,and this causes the CPI to underestimate the cost to consumers. 
D) new products' prices often decrease after their initial introduction,and the CPI is adjusted infrequently and overestimates the cost to consumers. 
A) consumers switch to new goods when the prices of old goods increase,and the CPI overestimates the cost to consumers. 
B) consumers switch to old goods when the prices of new goods increase,and the CPI underestimates the cost to consumers. 
C) consumers prefer new goods,even if they are worse in quality than old goods,and this causes the CPI to underestimate the cost to consumers. 
D) new products' prices often decrease after their initial introduction,and the CPI is adjusted infrequently and overestimates the cost to consumers.

Question 13

What are the three main kinds of unemployment?

Accepted Answer

A) frictional,seasonal,and cyclical 
B) temporary,permanent,and volunteer 
C) cyclical,structural,and temporary 
D) structural,frictional,and cyclical 
A) frictional,seasonal,and cyclical 
B) temporary,permanent,and volunteer 
C) cyclical,structural,and temporary 
D) structural,frictional,and cyclical

Question 14

The percent increase in the CPI from one year to the next is a measure of the

Accepted Answer

A) GDP deflator. 
B) unemployment rate. 
C) real interest rate. 
D) inflation rate. 
A) GDP deflator. 
B) unemployment rate. 
C) real interest rate. 
D) inflation rate.

Question 15

You agree to lend $1,000 for one year at a nominal interest rate of 10%.You anticipate that inflation will be 4% over that year.If inflation is instead 3% over that year,which of the following is true?

Accepted Answer

A) The real interest rate you earn on your money is lower than you expected. 
B) The purchasing power of the money that will be repaid to you will be lower than you expected. 
C) The person who borrowed the $1,000 will be worse off as a result of the unanticipated decrease in inflation. 
D) The real interest rate you earn on your money will be negative. 
A) The real interest rate you earn on your money is lower than you expected. 
B) The purchasing power of the money that will be repaid to you will be lower than you expected. 
C) The person who borrowed the $1,000 will be worse off as a result of the unanticipated decrease in inflation. 
D) The real interest rate you earn on your money will be negative.

Question 16

In 2015,JPMorgan Chase announced it was laying off employees.The employees who were laid off due to the business cycle would be considered

Accepted Answer

A) structurally unemployed. 
B) frictionally unemployed. 
C) seasonally unemployed. 
D) cyclically unemployed. 
A) structurally unemployed. 
B) frictionally unemployed. 
C) seasonally unemployed. 
D) cyclically unemployed.

Question 17

Why would a firm pay efficiency wages?

Accepted Answer

An efficiency wage is a wage that is hig

Question 18

The labor force participation rates of men have gradually increased since 1948.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is an example of a worker experiencing frictional unemployment?

Accepted Answer

A) A worker quits his job at the Post Office to find more interesting work. 
B) A computer programmer loses her job because it is outsourced to India. 
C) An employee is laid off because the economy is suffering a recession. 
D) A United Airlines pilot loses her job because of lack of demand for air travel. 
A) A worker quits his job at the Post Office to find more interesting work. 
B) A computer programmer loses her job because it is outsourced to India. 
C) An employee is laid off because the economy is suffering a recession. 
D) A United Airlines pilot loses her job because of lack of demand for air travel.

Question 20

If the nominal interest rate is 6% and the inflation rate is 2% then the real interest rate is

Accepted Answer

A) 8%. 
B) 4%. 
C) 3%. 
D) 2%. 
E) 1%. 
A) 8%. 
B) 4%. 
C) 3%. 
D) 2%. 
E) 1%.

The broadest measure of the price level that includes all final goods and services is

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2016.You know that average prices have risen steadily since 1961.You earn

A full-time student who is not working is categorized as

Describe how inflation can be costly even if it is anticipated.

Between 2015 and 2016,the CPI of a small nation rose from 182 to 185.If household incomes rose by 3% during that period of time,which of the following is true?

The natural rate of unemployment consists of frictional unemployment plus structural unemployment.

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

If inflation is unanticipated,no redistribution of income can occur.

You earned $30,000 in 2007,and your salary rose to $80,000 in 2016.If the CPI rose from 82 to 202 between 2007 and 2016,which of the following is true?

The labor force is the sum of

The "new product bias" in the consumer price index refers to the idea that

What are the three main kinds of unemployment?

The percent increase in the CPI from one year to the next is a measure of the

You agree to lend $1,000 for one year at a nominal interest rate of 10%.You anticipate that inflation will be 4% over that year.If inflation is instead 3% over that year,which of the following is true?

In 2015,JPMorgan Chase announced it was laying off employees.The employees who were laid off due to the business cycle would be considered

Why would a firm pay efficiency wages?

The labor force participation rates of men have gradually increased since 1948.

Which of the following is an example of a worker experiencing frictional unemployment?

If the nominal interest rate is 6% and the inflation rate is 2% then the real interest rate is

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

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Exam 9: Unemployment and Inflation

The broadest measure of the price level that includes all final goods and services is

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2016.You know that average prices have risen steadily since 1961.You earn

A full-time student who is not working is categorized as

Describe how inflation can be costly even if it is anticipated.

Between 2015 and 2016,the CPI of a small nation rose from 182 to 185.If household incomes rose by 3% during that period of time,which of the following is true?

The natural rate of unemployment consists of frictional unemployment plus structural unemployment.

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

If inflation is unanticipated,no redistribution of income can occur.

You earned $30,000 in 2007,and your salary rose to $80,000 in 2016.If the CPI rose from 82 to 202 between 2007 and 2016,which of the following is true?

The labor force is the sum of

The "new product bias" in the consumer price index refers to the idea that

What are the three main kinds of unemployment?

The percent increase in the CPI from one year to the next is a measure of the

You agree to lend $1,000 for one year at a nominal interest rate of 10%.You anticipate that inflation will be 4% over that year.If inflation is instead 3% over that year,which of the following is true?

In 2015,JPMorgan Chase announced it was laying off employees.The employees who were laid off due to the business cycle would be considered

Why would a firm pay efficiency wages?

The labor force participation rates of men have gradually increased since 1948.

Which of the following is an example of a worker experiencing frictional unemployment?

If the nominal interest rate is 6% and the inflation rate is 2% then the real interest rate is

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