Question 1

How does the Current Population Survey determine if a person should be counted in the labor force?

Accepted Answer

The answer of How does the Current Population Survey determine...

Question 2

If unemployment equals the natural unemployment rate, then there

Accepted Answer

A)  is less than full employment. 
B)  are no job openings existing at the time. 
C)  is zero unemployment. 
D)  is only frictional or structural unemployment.

Question 3

In 2000, you could buy a Cadillac DTS for $45,000. In 2011, the Cadillac DTS sold for $55,000. While both models include anti-lock brakes and air bags along with other similar features), the 2011 model also includes satellite radio and new technology that provides improved gas mileage and safer driving. If the Cadillac DTS was included in the CPI basket, it would create

Accepted Answer

A)  an upward bias in the CPI as a result of commodity substitution bias. 
B)  a downward bias in the CPI as a result of new goods bias. 
C)  an upward bias in the CPI as a result of quality change bias. 
D)  a downward bias in the inflation rate.

Question 4

When real GDP is __________potential GDP, the unemployment rate is __________the natural unemployment rate.

Accepted Answer

A)  greater than; greater than 
B)  greater than; less than 
C)  equal to; greater than 
D)  less than; equal to

Question 5

$$\begin{array} { | l | l | c | } 
\hline  { \text { Year } } & \text { Price index } & \begin{array} { l } 
\text { Inflation rate } \
\text { (percent) }
\end{array} \
\hline 1 & 100 & \
\hline 2 & 117 & \text { A } \
\hline 3 & 125 & \text { B } \
\hline 4 & 120 & \text { C } \
\hline 5 & \mathrm { D } & 8.3 \
\hline 6 & 150 & \text { E } \
\hline
\end{array}$$
-In the table above, what inflation rate belongs in space C?

Accepted Answer

A)  8.3 percent 
B)  6.8 percent 
C)  17.0 percent 
D)  -4.0 percent

Question 6

If the population is 300 million, with 70 million under the age of 16 and institutionalized, another 70 million not in the labor force, 10 million unemployed and 150 million employed, the labor force participation rate is

Accepted Answer

A)  6.67 percent. 
B)  23.3 percent. 
C)  50 percent. 
D)  69.6 percent.

Question 7

The primary factor leading to cyclical unemployment is when

Accepted Answer

A)  some workers do not have marketable job skills. 
B)  the level of overall economic activity fluctuates. 
C)  businesses often discriminate in their hiring practices on the basis of age, sex, and race. 
D)  workers quit their jobs in order to look for higher paying employment.

Question 8

Which type of unemployment increases during a recession?

Accepted Answer

A)  frictional unemployment 
B)  the natural unemployment rate 
C)  cyclical unemployment 
D)  structural unemployment

Question 9

Last year the CPI was 177.1 and this year the CPI is 180.9. What was the inflation rate between these two years?

Accepted Answer

The answer of Last year the CPI was 177.1 and...

Question 10

Which of the following people would be considered unemployed by the Bureau of Labor Statistics?
I. Mrs. X retires from her job at the age of 55 and does not look for another job.
II. Mr. Y was laid off from his job as a welder, but expects to be rehired in 8 months.

Accepted Answer

A)  II only 
B)  I only 
C)  both I and II 
D)  neither I nor II

Question 11

If this yearʹs price level is 126 and last yearʹs price level was 120, the inflation rate is .

Accepted Answer

A)  5 percent a year 
B)  0.95 percent a year 
C)  6 percent a year 
D)  1.05 percent a year

Question 12

Which of the following situations best describes an individual who is cyclically unemployed?

Accepted Answer

A)  Catherine is a ski instructor who is not working because it is summer. 
B)  Nicholas was laid-off when orders for General Motors cars fell during a recession. 
C)  Matthew was an artillery man, but he has been unable to find work since he left the army. 
D)  Susan quit her job as a preschool teacher to try to find a better paying job.

Question 13

The table below shows data regarding Germany?s labor market. $$\begin{array} { | l | l | c | l | l | } 
\hline \text { Year } &\begin{array}{c}
\text { Labor Force } \
\text { (millions) }
\end{array} & \begin{array}{c}
\text { Number of } \
\text { Employed } \
\text { (millions) }
\end{array} & \begin{array}{c}
\text { Population } \
\text { (millions) }
\end{array} & \begin{array}{l}
\text { Working-age } \
\text { Population } \
\text { (millions) }
\end{array} \\hline 2006 & 43.7 & 39.01 & 82.3 & 54.9 \
\hline 2007 & 43.7 & 39.06 & 82.2 & 54.7 \
\hline 2008 & 43.6 & 39.8 & 82.1 & 54.6 \
\hline
\end{array}$$ The data show that Germany?s employment-to-population ratio is in 2007.

Accepted Answer

A)  92 percent 
B)  80 percent 
C)  47.5 percent 
D)  67 percent

Question 14

Suppose the population of Tiny Town is 100 people and the working age population is 70. If 10 of these people are unemployed, the unemployment rate in Tiny Town is

Accepted Answer

A)  10/80 × 100. 
B)  10 percent. 
C)  10/70 × 100. 
D)  There is not enough information provided to calculate the unemployment rate.

Question 15

An individual who has stopped looking for a job but has looked in the past and still wants a job is referred to as

Accepted Answer

A)  a productive worker. 
B)  a contingent worker. 
C)  a marginally attached worker. 
D)  an unemployed worker.

Question 16

When the economy is at full employment the unemployment rate equals the natural unemployment rate.

Accepted Answer

A) True 
 B)False

Question 17

Auto and steel workers commonly experience this type of unemployment in a recession.

Accepted Answer

A)  structural unemployment 
B)  frictional unemployment 
C)  natural unemployment rate 
D)  cyclical unemployment

Question 18

Suppose the number of people employed is 25 million and the number of people in the labor force is 75 million. What is the employment-to-population ratio?

Accepted Answer

A)  25 percent 
B)  75 percent 
C)  33 percent 
D)  There is not enough information given to answer the question.

Question 19

Explain how the labor force participation rate and the unemployment rate change in a recession.

Accepted Answer

The answer of Explain how the labor force participation rate...

Question 20

The unemployment rate is measured as

Accepted Answer

A)  the number of people that want to work but cannot find jobs out of the entire population. 
B)  an indicator for potential inflation. 
C)  an indicator to determine long-term economic growth. 
D)  the percentage of people in the labor force who are unemployed.

Exam 5: Monitoring Jobs and Inflation