Question 1

A person quits her job in order to spend time looking for a better paying job. This is an example of

Accepted Answer

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

Question 2

Which of the following statements is TRUE if your money income stays the same but the price of one good that you are buying goes up?

Accepted Answer

A)   Your effective purchasing power falls.
B)   Your nominal income has been decreased.
C)   You will have to reduce the quantities you purchase of all goods.
D)   Your real income has increased.

Question 3

A COLA is

Accepted Answer

A)   unanticipated positive inflation.
B)   unanticipated negative inflation.
C)   the cost associated with recalculating prices and printing new price lists when there is inflation.
D)   an automatic increase in wages that takes into account increases in the price level.

Question 4

The labor-force participation rate shows the percentage of

Accepted Answer

A)   people not working, but who want to work.
B)   people who are not actively participating in meaningful economic activity.
C)   new entrants into the labor force.
D)   non-institutionalized working-age people who are actually working or seeking employment.

Question 5

"Discouraged workers"

Accepted Answer

A)   would be considered as unemployed.
B)   would not be considered as unemployed.
C)   would be considered as part of the labor force.
D)   would only be considered as underemployed.

Question 6

Which of the following statements about full employment is correct? I. Full employment means that the unemployment rate is less than 1/2 of 1 percent.
II)  Full employment means that the transaction costs associated with getting a job are zero.

Accepted Answer

A)   I only
B)   II only
C)   Both I and II
D)   Neither I nor II

Question 7

The period between the trough and the peak of a business fluctuation is called

Accepted Answer

A)   the growth phase.
B)   the spreading out.
C)   the development.
D)   the expansion.

Question 8

The labor force participation rate is the

Accepted Answer

A)   proportion of the noninstitutionalized adult population in the labor force.
B)   proportion of the labor force that is employed.
C)   proportion of the labor force that is unemployed.
D)   proportion of the noninstitutionalized adult population that is employed.

Question 9

The definition of the adult population is those who are 16 years and older and who are

Accepted Answer

A)   employed or unemployed.
B)   in the labor force.
C)   in the labor force or not in the labor force.
D)   not in the labor force.

Question 10

In computing a price index,

Accepted Answer

A)   the most recent year is always set equal to 100.
B)   both the quantities in the market basket and the prices change from year to year.
C)   the quantities in the market basket stay the same while the prices differ.
D)   the base year must be one for which the inflation rate was zero.

Question 11

If your income rises at 4 percent and inflation has risen at 3 percent, then the purchasing power of your income has

Accepted Answer

A)   eroded.
B)   stayed the same.
C)   fallen, but will increase due to indexing.
D)   increased.

Question 12

The real rate of interest equals 2%, and the expected rate of inflation equals 2%. The nominal rate of interest is

Accepted Answer

A)   -2%.
B)   2%.
C)   4%.
D)   0%.

Question 13

The cost of inflation to society includes I. The opportunity costs of resources used by people to protect themselves against inflation
II)  The costs associated with recalculating prices

Accepted Answer

A)   I only
B)   II only
C)   Both I and II
D)   Neither I nor II

Question 14

-In the table shown above, the total cost of the market basket in 2010 was

Accepted Answer

A)   $6.00.
B)   $8.50.
C)   $60.00.
D)   $85.00.

Question 15

The real rate of interest is

Accepted Answer

A)   the nominal rate of interest divided by the anticipated rate of inflation.
B)   negative if the anticipated rate of inflation is zero.
C)   the market rate of interest expressed in today's dollars.
D)   the nominal rate of interest minus the anticipated rate of inflation.

Question 16

For most people, the problems of inflation are caused by the fact that

Accepted Answer

A)   the inflation is unanticipated.
B)   the inflation is anticipated.
C)   the inflation rate causes the purchasing power of money to increase.
D)   all prices change so there is no way to protect themselves against the decline in their wealth.

Question 17

In a small country, the adult population is 10,000. In that country, 7,000 people are in the labor force and 6,300 people are employed. The unemployment rate equals

Accepted Answer

A)   0.63 percent.
B)   7 percent.
C)   10 percent.
D)   an undetermined amount given the lack of information.

Question 18

According to the text, during which time period did the United States have the highest unemployment rates?

Accepted Answer

A)   1930s
B)   1950s
C)   1980s
D)   2000s

Question 19

Economists agree that the structure of the Consumer Price Index has some problems that limit its usefulness as a reliable measure of inflation. What is one of these drawbacks?

Accepted Answer

A)   It is based on the faulty assumption that each consumer buys only one unit of each item.
B)   It is based on the faulty assumption that consumption choices are not influenced by income levels.
C)   It ignores changes in consumption patterns brought about by changes in the relative prices of consumer goods.
D)   It is based on a market basket of mail-order items and does not include the goods that consumers typically purchase.

Question 20

The definition of a job leaver is an individual

Accepted Answer

A)   who terminates his job voluntarily in order to work for a family business.
B)   whose employment was terminated involuntarily.
C)   who competed for a promotion at his company and did not get it.
D)   who is underemployed.

Exam 7: The Macroeconomy: Unemployment, Inflation, and Deflation

In a small country, the adult population is 10,000. In that country, 7,000 people are in the labor force and 6,300 people are employed. The unemployment rate equals

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Economists agree that the structure of the Consumer Price Index has some problems that limit its usefulness as a reliable measure of inflation. What is one of these drawbacks?

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If your income rises at 4 percent and inflation has risen at 3 percent, then the purchasing power of your income has

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The cost of inflation to society includes I. The opportunity costs of resources used by people to protect themselves against inflation II) The costs associated with recalculating prices

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A COLA is

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The labor force participation rate is the

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The labor-force participation rate shows the percentage of

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For most people, the problems of inflation are caused by the fact that

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The real rate of interest is

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The period between the trough and the peak of a business fluctuation is called

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In computing a price index,

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A person quits her job in order to spend time looking for a better paying job. This is an example of

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Which of the following statements about full employment is correct? I. Full employment means that the unemployment rate is less than 1/2 of 1 percent. II) Full employment means that the transaction costs associated with getting a job are zero.

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Which of the following statements is TRUE if your money income stays the same but the price of one good that you are buying goes up?

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"Discouraged workers"

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According to the text, during which time period did the United States have the highest unemployment rates?

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-In the table shown above, the total cost of the market basket in 2010 was

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The definition of a job leaver is an individual

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The real rate of interest equals 2%, and the expected rate of inflation equals 2%. The nominal rate of interest is

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The definition of the adult population is those who are 16 years and older and who are

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