Question 1

The advice to "keep searching,there are plenty of jobs around here for which you are qualified",would be most appropriate for which of the following types of unemployment?

Accepted Answer

A)  frictional unemployment 
B)  structural unemployment 
C)  cyclical unemployment 
D)  seasonal unemployment

Question 2

Suppose that the labor movement has a revival in the United States and the majority of workers join labor unions.As a result we would expect

Accepted Answer

A)  the labor force participation rate to fall. 
B)  the unemployment rate to fall. 
C)  the unemployment rate to rise. 
D)  no change in the unemployment rate or labor force participation rate.

Question 3

The increase in quality bias in the consumer price index refers to the idea that price increases in the CPI reflect pure inflation,but ________ quality increases.This causes the CPI to ________ the cost of the market basket.

Accepted Answer

A)  also; understate 
B)  also; overstate 
C)  not; understate 
D)  not; overstate

Question 4

Which of the following policies would reduce frictional unemployment?

Accepted Answer

A)  a decrease in the minimum wage 
B)  a job retraining program 
C)  implementing an unemployment insurance policy 
D)  building an on-line job database that helps workers find jobs

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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.

Question 7

The recession of 2007-2009 and its aftermath had different effects on various sectors of the economy.Which of the following sectors of the U.S.economy had the highest unemployment rate in August 2011,topping 12 percent?

Accepted Answer

A)  education and health services 
B)  manufacturing 
C)  construction 
D)  financial activities

Question 8

Which of the following is true about the consumer price index?

Accepted Answer

A)  It accounts for people switching to goods whose prices have fallen. 
B)  It assumes that consumers purchase the same amount of each product in the market basket each month. 
C)  It frequently updates the price changes of new products added to the market basket, as these have a tendency to fall. 
D)  It filters out the part of price increases that occurs because of quality improvements in products.

Exam 9: Unemployment and Inflation