Question 1

If an economy experiences deflation,the real interest rate

Accepted Answer

A) will be less than the nominal interest rate. 
B) will be negative when the nominal interest rate is positive. 
C) will be greater than the nominal interest rate. 
D) will be equal to the deflation rate,so long as the nominal interest rate is positive. 
A) will be less than the nominal interest rate. 
B) will be negative when the nominal interest rate is positive. 
C) will be greater than the nominal interest rate. 
D) will be equal to the deflation rate,so long as the nominal interest rate is positive.

Question 2

An unemployment insurance program has which of the following effects?

Accepted Answer

A) It decreases the amount of personal income of the unemployed. 
B) It contributes to the severity of a recession or economic downturn. 
C) It increases the amount of time spent searching for a job. 
D) It lowers the overall unemployment rate. 
A) It decreases the amount of personal income of the unemployed. 
B) It contributes to the severity of a recession or economic downturn. 
C) It increases the amount of time spent searching for a job. 
D) It lowers the overall unemployment rate.

Question 3

Why might firms pay wages that are above the equilibrium wage in a market?

Accepted Answer

A) to increase the productivity of their workers 
B) to reduce the unemployment rate 
C) to encourage workers to form labor unions 
D) to reduce profit 
A) to increase the productivity of their workers 
B) to reduce the unemployment rate 
C) to encourage workers to form labor unions 
D) to reduce profit

Question 4

Which of the following has a tendency to raise the unemployment rate?

Accepted Answer

A) implementing a minimum wage in an economy 
B) reducing unemployment insurance in an economy 
C) offering wages at the market-clearing rate 
D) reducing labor union membership in an economy 
A) implementing a minimum wage in an economy 
B) reducing unemployment insurance in an economy 
C) offering wages at the market-clearing rate 
D) reducing labor union membership in an economy

Question 5

Table 9-14
   The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 9-14.The real average hourly earnings for 1965 in 1982-1984 dollars equal

Accepted Answer

A) $1.28. 
B) $6.49. 
C) $8.28. 
D) $15.45. 
A) $1.28. 
B) $6.49. 
C) $8.28. 
D) $15.45.

Question 6

Suppose 180,000 people are employed,20,000 people are unemployed,the working-age population is 250,000,and 50,000 people are out of the labor force.Calculate the unemployment rate.

Accepted Answer

The unemployment rate is calculated as:

Question 7

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.The CPI over that year rises from 180 to 190.What is the real rate of interest you will earn?

Accepted Answer

A) 0% 
B) 4.4% 
C) 5.5% 
D) 5.8% 
A) 0% 
B) 4.4% 
C) 5.5% 
D) 5.8%

Question 8

Describe how a lender can lose during inflation if the inflation is unanticipated and the loan is a fixed-interest-rate loan.How would a variable-interest-rate loan (one that adjusts over the contract period)eliminate these loses?

Accepted Answer

Lenders require compensation for inflati

Question 9

If the nominal rate of interest is 6.5% and the inflation rate is 3.0%,what is the real rate of interest?

Accepted Answer

A) -9.5% 
B) -3.5% 
C) 1.5% 
D) 3.5% 
E) 9.5% 
A) -9.5% 
B) -3.5% 
C) 1.5% 
D) 3.5% 
E) 9.5%

Question 10

An efficiency wage

Accepted Answer

A) is higher than the market wage and tends to increase productivity. 
B) is lower than the market wage and tends to increase productivity. 
C) is higher than the market wage and tends to decrease productivity. 
D) is lower than the market wage and tends to decrease productivity. 
A) is higher than the market wage and tends to increase productivity. 
B) is lower than the market wage and tends to increase productivity. 
C) is higher than the market wage and tends to decrease productivity. 
D) is lower than the market wage and tends to decrease productivity.

Question 11

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.Inflation during that year is 5%.As a result,you will receive ________ at the end of the year,but that money has a purchasing power of ________.

Accepted Answer

A) $5,050;$5,025 
B) $5,100;$5,050 
C) $5,500;$5,250 
D) $6,000;$5,500 
A) $5,050;$5,025 
B) $5,100;$5,050 
C) $5,500;$5,250 
D) $6,000;$5,500

Question 12

Currently,the base year for the CPI is the average of prices in the years 1982 to 1984.

Accepted Answer

A) True 
 B)False

Question 13

The increased generosity of unemployment insurance programs in Canada as compared to the United States should

Accepted Answer

A) decrease the duration of unemployment in Canada as compared to the United States. 
B) increase the duration of unemployment in Canada as compared to the United States. 
C) have no impact on the duration of unemployment in Canada. 
D) raise the duration of unemployment in the United States. 
A) decrease the duration of unemployment in Canada as compared to the United States. 
B) increase the duration of unemployment in Canada as compared to the United States. 
C) have no impact on the duration of unemployment in Canada. 
D) raise the duration of unemployment in the United States.

Question 14

When prices are rising,which of the following will be true?

Accepted Answer

A) The real interest rate will be lower than the nominal interest rate. 
B) The real interest rate will be negative. 
C) The real interest rate will be higher than the nominal interest rate. 
D) The nominal interest rate will be negative. 
A) The real interest rate will be lower than the nominal interest rate. 
B) The real interest rate will be negative. 
C) The real interest rate will be higher than the nominal interest rate. 
D) The nominal interest rate will be negative.

Question 15

In the modern U.S.economy,the typical unemployed person stays unemployed for

Accepted Answer

A) a relatively long time,over a year. 
B) a relatively short time,less than six months. 
C) a long time during expansions and a short time during recessions. 
D) an amount of time that is hard to quantify. 
A) a relatively long time,over a year. 
B) a relatively short time,less than six months. 
C) a long time during expansions and a short time during recessions. 
D) an amount of time that is hard to quantify.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Inflation redistributes income to a greater extent when the inflation is unanticipated compared to when the inflation is anticipated.

Accepted Answer

A) True 
 B)False

Question 18

The CPI in 1990 was 131,and the CPI in 2010 was 218.If you earned a salary of $40,000 in 1990,what would be a salary with equivalent purchasing power in 2010?

Accepted Answer

A) $45,977 
B) $66,565 
C) $87,200 
D) $143,486 
A) $45,977 
B) $66,565 
C) $87,200 
D) $143,486

Question 19

What is the difference between the nominal interest rate and the real interest rate?

Accepted Answer

The nominal interest rate is t

Question 20

Table 9-1
   Consider the data above for a simple economy.
-Refer to Table 9-1.The labor force participation rate for this simple economy equals

Accepted Answer

A) (1,000/1,100)× 100. 
B) (1,000/15,000)× 100. 
C) (1,100/15,000)× 100. 
D) (1,100/20,000)× 100. 
A) (1,000/1,100)× 100. 
B) (1,000/15,000)× 100. 
C) (1,100/15,000)× 100. 
D) (1,100/20,000)× 100.

If an economy experiences deflation,the real interest rate

An unemployment insurance program has which of the following effects?

Why might firms pay wages that are above the equilibrium wage in a market?

Which of the following has a tendency to raise the unemployment rate?

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-14.The real average hourly earnings for 1965 in 1982-1984 dollars equal

Suppose 180,000 people are employed,20,000 people are unemployed,the working-age population is 250,000,and 50,000 people are out of the labor force.Calculate the unemployment rate.

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.The CPI over that year rises from 180 to 190.What is the real rate of interest you will earn?

Describe how a lender can lose during inflation if the inflation is unanticipated and the loan is a fixed-interest-rate loan.How would a variable-interest-rate loan (one that adjusts over the contract period)eliminate these loses?

If the nominal rate of interest is 6.5% and the inflation rate is 3.0%,what is the real rate of interest?

An efficiency wage

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.Inflation during that year is 5%.As a result,you will receive at the end of the year,but that money has a purchasing power of .

Currently,the base year for the CPI is the average of prices in the years 1982 to 1984.

The increased generosity of unemployment insurance programs in Canada as compared to the United States should

When prices are rising,which of the following will be true?

In the modern U.S.economy,the typical unemployed person stays unemployed for

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

Inflation redistributes income to a greater extent when the inflation is unanticipated compared to when the inflation is anticipated.

The CPI in 1990 was 131,and the CPI in 2010 was 218.If you earned a salary of $40,000 in 1990,what would be a salary with equivalent purchasing power in 2010?

What is the difference between the nominal interest rate and the real interest rate?

Table 9-1 Consider the data above for a simple economy. -Refer to Table 9-1.The labor force participation rate for this simple economy equals

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

If an economy experiences deflation,the real interest rate

An unemployment insurance program has which of the following effects?

Why might firms pay wages that are above the equilibrium wage in a market?

Which of the following has a tendency to raise the unemployment rate?

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-14.The real average hourly earnings for 1965 in 1982-1984 dollars equal

Suppose 180,000 people are employed,20,000 people are unemployed,the working-age population is 250,000,and 50,000 people are out of the labor force.Calculate the unemployment rate.

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.The CPI over that year rises from 180 to 190.What is the real rate of interest you will earn?

Describe how a lender can lose during inflation if the inflation is unanticipated and the loan is a fixed-interest-rate loan.How would a variable-interest-rate loan (one that adjusts over the contract period)eliminate these loses?

If the nominal rate of interest is 6.5% and the inflation rate is 3.0%,what is the real rate of interest?

An efficiency wage

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.Inflation during that year is 5%.As a result,you will receive ________ at the end of the year,but that money has a purchasing power of ________.

Currently,the base year for the CPI is the average of prices in the years 1982 to 1984.

The increased generosity of unemployment insurance programs in Canada as compared to the United States should

When prices are rising,which of the following will be true?

In the modern U.S.economy,the typical unemployed person stays unemployed for

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

Inflation redistributes income to a greater extent when the inflation is unanticipated compared to when the inflation is anticipated.

The CPI in 1990 was 131,and the CPI in 2010 was 218.If you earned a salary of $40,000 in 1990,what would be a salary with equivalent purchasing power in 2010?

What is the difference between the nominal interest rate and the real interest rate?

Table 9-1 Consider the data above for a simple economy. -Refer to Table 9-1.The labor force participation rate for this simple economy equals

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

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.Inflation during that year is 5%.As a result,you will receive at the end of the year,but that money has a purchasing power of .