Question 1

The Personal Consumption Expenditure Index (PCE)  is a

Accepted Answer

A)   statistical measure of a weighted average of prices of a specific set of goods and services purchased by wage earners in urban areas.
B)   statistical measure of a weighted average of prices of commodities that firms produce and sell.
C)   price index measuring the changes in prices of all new goods and services produced in the economy.
D)   statistical measure of average prices using annually updated weights based on surveys of consumer spending.

Question 2

An automatic increase in a wage rate found in some contracts is known as a

Accepted Answer

A)   change of labor agreement.
B)   cost of labor arrangement.
C)   cost of living adjustment.
D)   charge for living amendment.

Question 3

The Consumer Price Index (CPI)  is a

Accepted Answer

A)   statistical measure of a weighted average of prices of a specific set of goods and services purchased by consumers in urban areas.
B)   statistical measure of a weighted average of prices of commodities that firms produce and sell.
C)   price index measuring the changes in prices of all new goods and services produced in the economy.
D)   statistical measure of average prices using annually updated weights based on surveys of consumer spending.

Question 4

The largest major change in the U.S. labor force participation rate during the last few decades has been

Accepted Answer

A)   the number of prisoners dropping out of the labor force.
B)   the increase in the number of working women.
C)   the decrease in the number of working women.
D)   the increase in the number of illegal immigrants in the United States.

Question 5

If the rate of inflation is 6 percent and the real interest rate is 2 percent, the nominal interest rate should be

Accepted Answer

A)   2 percent.
B)   4 percent.
C)   8 percent.
D)   -2 percent.

Question 6

Suppose the rate of inflation unexpectedly decreases from 7% to 4%. Which one of the following would most likely benefit from this unexpected reduction in the rate of inflation?

Accepted Answer

A)   creditors.
B)   a borrower whose loan has a fixed nominal interest rate.
C)   debtors.
D)   workers who are covered by a COLA agreement.

Question 7

Reductions in employment in the U.S. auto industry caused by the increased adoption of new technologies to produce cars more efficiently is an example of

Accepted Answer

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

Question 8

Costs of unemployment include

Accepted Answer

A)   structural unemployment.
B)   the output lost due to the fact that the economy is not running at full employment.
C)   reduction in the labor force.
D)   higher wages.

Question 9

Structural unemployment is

Accepted Answer

A)   due to the fact that workers must search for appropriate job offers.
B)   a result of a poor match of worker's abilities and skills with current requirements of employers.
C)   a result of business recessions that occur when aggregate demand is insufficient to create full employment.
D)   a result of the seasonal pattern of work in specific industries.

Question 10

In 2018, the price for a market basket of consumer goods is $1,300. In the base year, the cost of the identical market basket was $1,000. The price index in this case is

Accepted Answer

A)   13.0.
B)   130.0.
C)   200.0.
D)   160.0.

Question 11

Which of the following would be considered a member of the labor force?

Accepted Answer

A)   an engineer who has been laid off a year ago and since then has not looked for work
B)   an inmate in a state prison making license plates
C)   a person in a mental institution
D)   a computer programmer looking for work

Question 12

Full employment is defined by the Council of Economic Advisers as

Accepted Answer

A)   a zero percent unemployment rate.
B)   every adult who wants to work has a job.
C)   the unemployment rate associated with zero inflation.
D)   the unemployment rate associated with the normal frictions in the labor market.

Question 13

How is inflation related to interest rates?

Accepted Answer

People base their decisions on borrowing...

Question 14

The population of individuals at least 16 years of age can be broken into 3 groups. They are

Accepted Answer

A)   the unemployed, discouraged workers, and retirees.
B)   those employed full-time, those employed only part-time, and the unemployed.
C)   those working in the for-profit sector, those working in the nonprofit sector, and individuals who are unemployed.
D)   none of the above.

Question 15

Suppose that Lee quits a job with the AAA Corporation in order to look for more rewarding employment. Lee would be

Accepted Answer

A)   counted as still being employed.
B)   included in the economy's "hidden employment."
C)   counted as frictionally unemployed.
D)   counted as cyclically unemployed.

Question 16

In the United States, the labor-force participation rate since 1960 has been

Accepted Answer

A)   increasing for females.
B)   declining for females.
C)   declining for both males and females.
D)   unchanged for both males and females.

Question 17

The greater the inflation rate, the

Accepted Answer

A)   faster the decrease in the purchasing power of money.
B)   slower the decrease in the purchasing power of money.
C)   better it is to hold money as cash.
D)   better it is to put money into savings accounts.

Question 18

Deflation is defined as a situation in which

Accepted Answer

A)   the rate of inflation is below 2 percent.
B)   the average of all prices of goods and services in an economy is falling.
C)   the value of the dollar is rising relative to other currencies.
D)   the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter.

Question 19

Which one of the following statements is TRUE?

Accepted Answer

A)   The existence of unemployment places the economy at a point inside its production possibilities curve.
B)   The unemployment rate is the percentage of the population not working.
C)   To be counted as part of the labor force, an individual must be working more than 40 hours a week.
D)   The sum of wages lost by all unemployed workers gives an accurate, comprehensive estimate of the total cost of unemployment.

Question 20

-Refer to the above figure. At Point B, the actual unemployment rate

Accepted Answer

A)   will decrease over time.
B)   is negative.
C)   tends to be higher than the natural unemployment rate.
D)   tends to be lower than the natural unemployment rate.

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

In the United States, the labor-force participation rate since 1960 has been

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Structural unemployment is

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Deflation is defined as a situation in which

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The Consumer Price Index (CPI) is a

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Which of the following would be considered a member of the labor force?

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Costs of unemployment include

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In 2018, the price for a market basket of consumer goods is $1,300. In the base year, the cost of the identical market basket was $1,000. The price index in this case is

Correct AnswerverifiedShow Answer

An automatic increase in a wage rate found in some contracts is known as a

Correct AnswerverifiedShow Answer

Suppose the rate of inflation unexpectedly decreases from 7% to 4%. Which one of the following would most likely benefit from this unexpected reduction in the rate of inflation?

Correct AnswerverifiedShow Answer

Full employment is defined by the Council of Economic Advisers as

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The population of individuals at least 16 years of age can be broken into 3 groups. They are

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How is inflation related to interest rates?

Correct AnswerverifiedPeople base their decisions on borrowing...View AnswerShow Answer

Reductions in employment in the U.S. auto industry caused by the increased adoption of new technologies to produce cars more efficiently is an example of

Correct AnswerverifiedShow Answer

The Personal Consumption Expenditure Index (PCE) is a

Correct AnswerverifiedShow Answer

The largest major change in the U.S. labor force participation rate during the last few decades has been

Correct AnswerverifiedShow Answer

-Refer to the above figure. At Point B, the actual unemployment rate

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The greater the inflation rate, the

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Which one of the following statements is TRUE?

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Suppose that Lee quits a job with the AAA Corporation in order to look for more rewarding employment. Lee would be

Correct AnswerverifiedShow Answer

If the rate of inflation is 6 percent and the real interest rate is 2 percent, the nominal interest rate should be

Correct AnswerverifiedShow Answer

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People base their decisions on borrowing...
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