Question 1

Using the notation Pt to designate this period's price level and Pt₋₁ to designate last period's price level,the formula for measuring the inflation rate from last period to this period is

Accepted Answer

A)  [(Pt - Pt ₋ ₁) / Pt] × 100. 
B)  [(Pt ₋₁ - Pt) / Pt ₋ ₁] × 100. 
C)  [(Pt - Pt ₋ ₁) / Pt ₋ ₁] × 100. 
D)  [(Pt ₋₁ - Pt) / Pt] × 100.

Question 2

An example of the new goods bias in the CPI is the

Accepted Answer

A)  introduction of higher quality brakes as standard equipment on new cars. 
B)  introduction of hybrid automobiles, vehicles that were not made until recently. 
C)  decreasing popularity of SUVs as the price of gasoline has risen. 
D)  switch from traditional car dealerships to low-cost Internet car buying services.

Question 3

Mike has just been laid off from his construction job because consumers are not purchasing new homes because of the recession.Mike would be considered to be part of

Accepted Answer

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

Question 4

The unemployment rate measures the percentage of the working-age population who can't find a job.

Accepted Answer

A) True 
 B)False

Question 5

The percentage of the people of working age who have jobs is called the ________.

Accepted Answer

A)  labor force 
B)  inverse of the unemployment rate 
C)  employment-to-population ratio 
D)  employment-to-working-age-population ratio

Question 6

Why is unemployment a problem?

Accepted Answer

The answer of Why is unemployment a problem?...

Question 7

Cyclical unemployment exists when

Accepted Answer

A)  frictional and structural unemployment is zero. 
B)  real national income exceeds potential income. 
C)  real GDP exceeds potential GDP. 
D)  real GDP is less than potential GDP.

Question 8

$$\begin{array} { | l | c | } 
\hline { \text { Category } } & \begin{array} { c } 
\text { Number } \
\text { (millions) }
\end{array} \
\hline \text { Discouraged workers } & 15 \
\hline \text { Unemployed workers } & 40 \
\hline \text { Employed workers } & 100 \
\hline \begin{array} { l } 
\text { Population (16years and } \
\text { over) }
\end{array} & 225 \
\hline
\end{array}$$
-In the above table,the size of the labor force is

Accepted Answer

A)  210 million. 
B)  155 million. 
C)  140 million. 
D)  100 million.

Question 9

The working-age population is defined as the number of

Accepted Answer

A)  people over the age of 16 who are not in jail, hospital, or other institution. 
B)  people who have a job. 
C)  people working full-time jobs who are over the age of 16. 
D)  people looking for work.

Question 10

The labor force is defined as the number of

Accepted Answer

A)  people 16 and over. 
B)  unemployed people. 
C)  people with jobs, both part-time and full-time. 
D)  people who are employed and unemployed.

Question 11

If the inflation rate is negative,the price level in an economy is

Accepted Answer

A)  falling. 
B)  rising slowly. 
C)  constant. 
D)  rising rapidly.

Question 12

Consider the following scenario.Initially the economy has 90 million people working,10 million people unemployed,and 20 million people not in the labor force.Then prospects for the economy improve.Five million people who previously were not in the labor force now join the 10 million previously unemployed in looking for work.For now,the economy remains with 90 million workers.What happens to the unemployment rate?

Accepted Answer

The answer of Consider the following scenario.Initially the economy has...

Question 13

$$\begin{array} { | l | c | c | c | } 
\hline { \text { Item } } & \begin{array} { c } 
\text { Quantity } \
( 2012 )
\end{array} & \begin{array} { c } 
\text { Price } \
( 2012 )
\end{array} & \begin{array} { c } 
\text { Price } \
( 2013 )
\end{array} \
\hline \text { Oranges } & 50 & \$ 0.90 & \$ 0.75 \
\hline \text { Bananas } & 100 & \$ 0.50 & \$ 0.95 \
\hline \text { Chicken } & 200 & \$ 2.00 & \$ 2.50 \
\hline \text { Beef } & 100 & \$ 5.00 & \$ 4.80 \
\hline \text { Bread } & 300 & \$ 1.75 & \$ 2.00 \
\hline
\end{array}$$
-The table above gives the CPI basket for 2012.Suppose that 2012 is the reference base period.
a) What is the cost of the CPI basket in 2012?
b) What is the cost of the CPI basket in 2013?
c) What is the CPI for 2012?
d) What is the CPI for 2013?

Accepted Answer

The answer of \[\begin{array} { | l | c |...

Question 14

How does the unemployment rate change in a recession and in an expansion?

Accepted Answer

The answer of How does the unemployment rate change in...

Question 15

Based on the following data for the country of Tiny Town,the employment-to-population ratio equals ________ multiplied by 100. Population = 200
Working age population = 100
Labor Force = 90
Number of employed persons = 75

Accepted Answer

A)  90/100. 
B)  75/200 
C)  90/200. 
D)  75/100.

Question 16

Unemployment caused by the normal labor turnover is called ________ unemployment.

Accepted Answer

A)  part-time 
B)  frictional 
C)  involuntary 
D)  cyclical

Question 17

If the CPI was 132.5 at the end of last year and 140.2 at the end of this year,the inflation rate over these two years was

Accepted Answer

A)  7.7 percent. 
B)  5.4 percent. 
C)  4.4 percent. 
D)  5.8 percent.

Question 18

In the United States in 1996,the population was 265.5 million and the working age population was 200.6 million.There were 133.9 million people in the labor force and 126.7 of them were employed.The unemployment rate equaled ________.

Accepted Answer

A)  7.2 percent 
B)  5.4 percent 
C)  3.6 percent 
D)  33 percent

Question 19

Give an example of a frictionally unemployed person.

Accepted Answer

The answer of Give an example of a frictionally unemployed...

Question 20

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 unemployment rate is

Accepted Answer

A)  23.3 percent. 
B)  6.7 percent. 
C)  6.25 percent. 
D)  26.7 percent.

Exam 5: Monitoring Jobs and Inflation