Question 1

Table 9-8
 
-Refer to Table 9-8.Suppose that the data in the table above reflect the price levels in the economy.What is the inflation rate in between 2015 and 2016?

Accepted Answer

A) 2% 
B) 5% 
C) 10% 
D) 12% 
E) 20%

Question 2

Which of the following do not suffer the costs of inflation?

Accepted Answer

A) persons on fixed incomes 
B) persons whose incomes rise more rapidly than inflation 
C) firms that have to devote more time and labor to raising prices 
D) an investor that has to pay higher taxes because of the inflation

Question 3

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price,and the CPI does not reflect this and ________ the cost of the market basket.

Accepted Answer

A) change;overestimates 
B) change;underestimates 
C) do not change;overestimates 
D) do not change;underestimates

Question 4

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

Accepted Answer

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

Question 5

Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest.If the inflation rate was 4%,what was the real interest rate you paid?

Accepted Answer

A) 16 percent 
B) 12 percent 
C) 8 percent 
D) 6 percent

Question 6

You borrow $10,000 from a bank for one year at a nominal interest rate of 5%.The CPI over that year rises from 180 to 200.What is the real interest rate you are paying?

Accepted Answer

A) 15% 
B) 5% 
C) -1.1% 
D) -6.1%

Question 7

In 2015,JP Morgan Chase announced that it was laying off 5,000 employees.The laid-off employees who were not able to find jobs at another bank due to a permanent decline in demand in the banking industry would be considered

Accepted Answer

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

Question 8

Deflation occurs when

Accepted Answer

A) there is a sustained increase in the price level. 
B) there is a one-time increase in the price level. 
C) there is a decline in the price level. 
D) there is a decrease in the expected rate of inflation.

Question 9

If the BLS counted persons that are on active military service in the totals for employment,the labor force,or the working-age population,this would

Accepted Answer

A) decrease the measured unemployment rate. 
B) decrease the measured labor force participation rate. 
C) decrease the number of persons in the labor force. 
D) decrease the number of persons in the working-age population.

Question 10

Suppose the labor force stays constant,and the working-age population stays constant,but a greater number of persons who were unemployed become employed.The labor force participation rate will

Accepted Answer

A) increase. 
B) decrease. 
C) remain constant. 
D) not change in a way that can be predicted.

Question 11

The Bureau of Labor Statistics does not count discouraged workers as unemployed.Suppose discouraged workers were counted as unemployed.Explain how the unemployment rate and the labor force participation rate would change.

Accepted Answer

The answer of The Bureau of Labor Statistics does not...

Question 12

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 13

During the month of May,10 million workers moved from being classified as "unemployed" to being classified as "employed." As a result,

Accepted Answer

A) the unemployment rate rose. 
B) the labor force participation rate fell. 
C) the unemployment rate fell. 
D) the labor force participation rate rose.

Question 14

If firms pay what are called "efficiency wages," they pay wages that

Accepted Answer

A) motivate workers to increase their productivity. 
B) are lower than average to ensure maximum profit. 
C) will eventually lower the unemployment rate. 
D) are mandated by the government.

Question 15

The nominal interest rate will be less than the real interest rate when

Accepted Answer

A) the rate of inflation is positive but decreasing. 
B) the rate of inflation is positive and increasing. 
C) the rate of inflation is negative. 
D) the real interest rate is negative.

Question 16

If the CPI changes from 125 to 120 between 2015 and 2016,how did prices change between 2015 and 2016?

Accepted Answer

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

Question 17

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

Accepted Answer

A) True 
 B)False

Question 18

The nominal interest rate equals the real interest rate ________ the inflation rate.

Accepted Answer

A) times 
B) divided by 
C) plus 
D) minus

Question 19

Paying efficiency wages are a way for a company to cut costs and become more efficient,and are therefore lower than market wages.

Accepted Answer

A) True 
 B)False

Question 20

The unemployment rate in the United States is typically lower than in Western Europe because the United States has tougher requirements for the unemployed to receive government payments.

Accepted Answer

A) True 
 B)False

Exam 9: Unemployment and Inflation

Table 9-8 -Refer to Table 9-8.Suppose that the data in the table above reflect the price levels in the economy.What is the inflation rate in between 2015 and 2016?

Which of the following do not suffer the costs of inflation?

The substitution bias in the consumer price index refers to the idea that consumers the quantity of products they buy in response to price,and the CPI does not reflect this and the cost of the market basket.

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest.If the inflation rate was 4%,what was the real interest rate you paid?

You borrow $10,000 from a bank for one year at a nominal interest rate of 5%.The CPI over that year rises from 180 to 200.What is the real interest rate you are paying?

In 2015,JP Morgan Chase announced that it was laying off 5,000 employees.The laid-off employees who were not able to find jobs at another bank due to a permanent decline in demand in the banking industry would be considered

Deflation occurs when

If the BLS counted persons that are on active military service in the totals for employment,the labor force,or the working-age population,this would

Suppose the labor force stays constant,and the working-age population stays constant,but a greater number of persons who were unemployed become employed.The labor force participation rate will

The Bureau of Labor Statistics does not count discouraged workers as unemployed.Suppose discouraged workers were counted as unemployed.Explain how the unemployment rate and the labor force participation rate would change.

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.

During the month of May,10 million workers moved from being classified as "unemployed" to being classified as "employed." As a result,

If firms pay what are called "efficiency wages," they pay wages that

The nominal interest rate will be less than the real interest rate when

If the CPI changes from 125 to 120 between 2015 and 2016,how did prices change between 2015 and 2016?

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

The nominal interest rate equals the real interest rate ________ the inflation rate.

Paying efficiency wages are a way for a company to cut costs and become more efficient,and are therefore lower than market wages.

The unemployment rate in the United States is typically lower than in Western Europe because the United States has tougher requirements for the unemployed to receive government payments.