Question 1

During a deflationary period

Accepted Answer

A) the nominal interest rate is less than the real interest rate. 
B) the real interest rate is less than the nominal interest rate. 
C) the price level rises. 
D) the nominal interest rate does not change.

Question 2

Counting part-time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy.

Accepted Answer

A) True 
 B)False

Question 3

Full employment is not considered to be zero unemployment,because

Accepted Answer

A) some cyclical unemployment always exists. 
B) some people do not want a job. 
C) there are not enough jobs for everyone who wants one. 
D) people do not find jobs instantaneously.

Question 4

An advantage of the household survey over the establishment survey of the labor market is that the household survey

Accepted Answer

A) is based on actual payrolls, rather than on unverified answers. 
B) includes the number of self-employed persons. 
C) includes the number of discouraged workers. 
D) omits persons employed at newly opened firms.

Question 5

If the CPI changes from 125 to 120 between 2012 and 2013,how did prices change between 2012 and 2013?

Accepted Answer

A) Prices increased by 5%. 
B) Prices decreased by 5% 
C) Prices increased by 25%. 
D) Prices decreased by 4%.

Question 6

Table 13-6
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \text { CPI } \
\hline 1996 & 157 \
\hline 1997 & 161 \
\hline 1998 & 163 \
\hline
\end{array}$$
-Refer to Table 13-6.Consider the following values of the consumer price index for 1996,1997,and 1998: The inflation rate for 1997 was equal to

Accepted Answer

A) 1.2 percent. 
B) 2.0 percent. 
C) 2.5 percent. 
D) 4.0 percent.

Question 7

Table 13-23
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal } \
\text { Minimum } \
\text { Wage }
\end{array} & \begin{array} { c } 
\text { CPI } \
( \mathbf { 1 9 8 2 - 1 9 8 4 } = \mathbf { 1 0 0 } )
\end{array} \
\hline 1974 & \$ 2.00 & 49.3 \
\hline 2012 & 7.25 & 224.9 \
\hline
\end{array}$$
-Refer to Table 13-23.The table above lists the actual minimum wage and CPI in 1974 and in 2012.Using the above table,calculate the real minimum wage for 1974 and 2012.Calculate the rate of growth of the real minimum wage from 1974 to 2012.Are workers better off in terms of the purchasing power of a dollar in 1974 or 2012? Explain why.

Accepted Answer

The answer of Table 13-23
 \[\begin{array} { | c |...

Question 8

Table 13-9
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { CPI } \
( \mathbf { 1 9 8 2 } - \mathbf { 1 9 8 4 } = \mathbf { 1 0 0 } )
\end{array} \
\hline 2012 & 100 \
\hline 2013 & 113 \
\hline
\end{array}$$
-Refer to Table 13-9.Suppose that the data in the table above reflect the price levels in the economy.Given that data,we can say that the cost of living rose by ________ between 2012 and 2013?

Accepted Answer

A) 2% 
B) 5% 
C) 8% 
D) 11% 
E) 13%

Question 9

Which of the following would decrease the unemployment rate?

Accepted Answer

A) an increase in the minimum wage 
B) an increase in the efficiency wage 
C) an increase in labor union membership 
D) government aid to retrain unemployed workers

Question 10

Explain why you would rather be a borrower during a period of unexpected rising inflation,and a lender during a period of unexpected declining inflation.

Accepted Answer

The answer of Explain why you would rather be a...

Question 11

You borrow $10,000 from a bank for one year at a nominal interest rate of 5%.If inflation over the year is 2%,what is the real interest rate you are paying?

Accepted Answer

A) 2% 
B) 2.5% 
C) 3% 
D) 5%

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Assume the average annual CPI values for 2012 and 2013 were 207.3 and 215.3,respectively.What was the percent increase in the CPI between these two years?

Accepted Answer

A) 0.96 
B) 1.04 
C) 3.86 
D) 8.0

Question 14

Table 13-20
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \text { Median Salary: } & \text { CPI } ( \mathbf { 1 9 8 2 - 1 9 8 4 = } \
&\text { New York Yankees } & \mathbf { 1 0 0 } ) \
\hline 1989 & \$ 500,000 & 124 \
\hline 2009 & 5,200,000 & 216 \
\hline
\end{array}$$ 
Salaries in major league baseball have soared over the last 30 to 40 years. Some of the salary increase is due to inflation. The table above reports the consumer price index and the median nominal salary of the New York Yankees for 1989 and 2009.
Source: USA Today Salaries Database, asp.usatoday.com/sports/baseball/salaries/default.aspx
-Refer to Table 13-20.Calculate the real median salary of the New York Yankees in both 1982-1984 dollars and 2009 dollars.Calculate the percentage increase in the median salary of the Yankees from 1989 to 2009 in both nominal terms and in real terms.

Accepted Answer

The answer of Table 13-20
 \[\begin{array} { | c |...

Question 15

Most of the unemployment that occurred during the Great Depression was

Accepted Answer

A) frictional unemployment. 
B) structural unemployment. 
C) cyclical unemployment. 
D) core unemployment.

Question 16

Explain how the CPI is constructed.

Accepted Answer

The answer of Explain how the CPI is constructed....

Question 17

Table 13-1
 $$\begin{array} { | l | r| } 
\hline \text { Total population } & 20,000 \
\hline \text { Working-age population } & 15,000 \
\hline \text { Employment } & 1,000 \
\hline \text { Unemployment } & 100 \
\hline
\end{array}$$ 
Consider the data above for a simple economy.
-Refer to Table 13-1.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.

Question 18

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

Question 19

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 losses?

Accepted Answer

The answer of Describe how a lender can lose during...

Question 20

Frictional unemployment is the result of

Accepted Answer

A) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. 
B) the search process of matching workers with jobs. 
C) the ups and downs in inflation. 
D) a slowdown in the economy.

Exam 13: Unemployment and Inflation

During a deflationary period

Counting part-time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy.

Full employment is not considered to be zero unemployment,because

An advantage of the household survey over the establishment survey of the labor market is that the household survey

If the CPI changes from 125 to 120 between 2012 and 2013,how did prices change between 2012 and 2013?

Which of the following would decrease the unemployment rate?

Explain why you would rather be a borrower during a period of unexpected rising inflation,and a lender during a period of unexpected declining inflation.

You borrow $10,000 from a bank for one year at a nominal interest rate of 5%.If inflation over the year is 2%,what is the real interest rate you are paying?

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

Assume the average annual CPI values for 2012 and 2013 were 207.3 and 215.3,respectively.What was the percent increase in the CPI between these two years?

Most of the unemployment that occurred during the Great Depression was

Explain how the CPI is constructed.

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

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 losses?

Frictional unemployment is the result of