Question 1

Define the unemployment rate and labor-force participation rate. Discuss the differences between these two rates.

Accepted Answer

The answer of Define the unemployment rate and labor-force participation...

Question 2

Substitution bias in the CPI refers to the fact that the CPI

Accepted Answer

A)  takes into account the substitution of goods by consumers when relative prices change. 
B)  takes no account of the substitution of goods by consumers when relative prices change. 
C)  substitutes quality changes whenever they occur without taking account of the cost of the quality changes. 
D)  substitutes relative prices for absolute prices of goods.

Question 3

If a worker is temporarily laid off because the economy is in a recession, frictional unemployment increases.

Accepted Answer

A) True 
 B)False

Question 4

Full employment exists when

Accepted Answer

A)  there is only frictional and structural unemployment. 
B)  the economy is at the natural unemployment rate. 
C)  there is no cyclical unemployment. 
D)  All of the above answers are correct.

Question 5

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

Question 6

What is potential GDP and what is the relationship between actual and potential real GDP?

Accepted Answer

The answer of What is potential GDP and what is...

Question 7

-In 2016, consumers in Dexter consumed only books and pens. The prices and quantities for 2016 and 2017 are listed in the table above. The reference base period for Dexter's CPI is 2016. What is the cost of the CPI basket in 2016?

Accepted Answer

A)  $430 
B)  $335 
C)  $320 
D)  $540

Question 8

Bill is a high-school dropout who lost his job in a fast food restaurant when the economy plunged into a recession. After 8 months, Bill is still looking for work. He is an example of

Accepted Answer

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

Question 9

If the price level for the last three months has been 112, 125, and 126, we would say

Accepted Answer

A)  inflation has been constant over the three months. 
B)  inflation was more rapid between the first and second month than between the second and third month. 
C)  inflation was less rapid between the first and second month than between the second and third month. 
D)  inflation has steadily increased over the three months.

Question 10

Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as

Accepted Answer

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

Question 11

Frictional unemployment comes about because of

Accepted Answer

A)  friction between labor and management. 
B)  a mismatch between skills and available jobs. 
C)  normal labor market turnover. 
D)  a general economic slowdown.

Question 12

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)  the percentage of people in the labor force who are unemployed. 
C)  an indicator to determine long-term economic growth. 
D)  an indicator for potential inflation.

Question 13

The unemployment rate is the ________ who are unemployed.

Accepted Answer

A)  number of people in the labor force 
B)  percentage of people in the labor force 
C)  percentage of people in the country 
D)  percentage of the working-age population

Question 14

If the CPI is 120, this means that

Accepted Answer

A)  prices are 120 percent higher than in the reference base period. 
B)  prices are 0.12 times higher than in the reference base period. 
C)  prices are 20 percent higher than in the reference base period. 
D)  the inflation rate must be positive.

Question 15

In a country with a working-age population of 130 million, 90 million workers are employed and 10 million workers are unemployed. What is the unemployment rate?

Accepted Answer

A)  5.0 percent 
B)  7.1 percent 
C)  7.7 percent 
D)  10.0 percent

Question 16

If the number of people unemployed is 100, the number of people employed is 1,000, and the working-age population is 1,400, then the employment-to-population ratio is

Accepted Answer

A)  78.6 percent. 
B)  75 percent. 
C)  71.4 percent. 
D)  66.6 percent.

Question 17

Between September 2013 and September 2014 the number of economic part-time workers decreased from 7.9 million to 7.1 million. Assuming the change resulted from economic part-time workers transitioning to full-time jobs, this change created

Accepted Answer

A)  no change to the U-3 unemployment rate. 
B)  a decrease to the U-3 unemployment rate. 
C)  an increase to the U-3 unemployment rate. 
D)  an increase in the employment-to-population ratio.

Question 18

Frictional unemployment includes

Accepted Answer

A)  unemployment caused by normal labor turnover associated with people leaving and entering the labor force. 
B)  unemployment caused by industries moving overseas to better meet foreign competition. 
C)  unemployment caused by a lack of education so that workers do not possess necessary job skills. 
D)  unemployment caused by automation of the work place that displaces unskilled workers.

Question 19

"The bias in the CPI distorts private contracts because a future payment that is linked to the CPI will be raised above the true increase in the price level." Is the previous sentence true or false?

Accepted Answer

The answer of "The bias in the CPI distorts private...

Question 20

Suppose the price level this year is 150 and the price level last year was 125. The inflation rate between last year and this year was

Accepted Answer

A)  20 percent. 
B)  2 percent. 
C)  16.6 percent. 
D)  1.6 percent.

Exam 5: Monitoring Jobs and Inflation