Question 1

We say that the economy is at full employment if the unemployment rate is equal to

Accepted Answer

A)   zero.
B)   the natural rate of unemployment.
C)   the amount of cyclical unemployment.
D)   the sum of frictional and cyclical unemployment.
E)   the sum of structural and cyclical unemployment.F) A) and D)
G) B) and D)

Question 2

Table 20-3
 
-Refer to Table 20-3.Suppose that the data in the table above reflect the price levels in the economy.Given that data,we can say that the cost of living rose by ________ between 2010 and 2011?

Accepted Answer

A)   2%
B)   5%
C)   8%
D)   11%
E)   13%F) A) and E)
G) A) and D)

Question 3

Explain why you would rather be a borrower during a period of unexpected rising inflation,and a lender during a period of unexpected declining inflation.

Accepted Answer

The nominal interest rate includes a cha...

Question 4

List three different price indices and explain how they differ in terms of the market basket on which they are based.

Accepted Answer

Three examples of price indices are the ...

Question 5

The problem with inflation is that as prices rise,consumers can no longer afford to buy as many goods and services.

Accepted Answer

A) True 
 B)False

Question 6

The deflation of the 1930s impacted the U.S.economy because it led some consumers to ________ and because it ________.

Accepted Answer

A)   postpone purchases while they waited for prices to fall even lower; increased the burden on borrowers.
B)   demand higher wages in anticipation of prices eventually rising again; increased manufacturing since firms could afford to hire more labor.
C)   borrow more money since money was now cheap; reduced the amount of money consumers would have to pay back on their outstanding loans.
D)   increase purchases to take advantage of the falling prices; increased the burden on lenders.E) B) and D)
F) B) and C)

Question 7

What does the PPI measure?

Accepted Answer

A)   the average change in the prices paid for all goods produced in the economy over a given year
B)   the average of the prices received by producers of goods and services at all stages of the production process
C)   the level of production of goods and services generated in the economy in a given year
D)   the difference between the prices consumers pay for goods and services and the prices producers pay for goods and servicesE) A) and D)
F) All of the above

Question 8

Following the end of the recession of 2007-2009,the employment-population ratio

Accepted Answer

A)   remained virtually unchanged for the next 36 months.
B)   continued to decline for the next two years.
C)   began to slowly increase back to its pre-recession level.
D)   began to quickly increase back to its pre-recession level.E) None of the above
F) B) and C)

Question 9

The producer price index tracks the prices firms receive for goods and services at all stages of production.

Accepted Answer

A) True 
 B)False

Question 10

Upon your graduation from college,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

Accepted Answer

A)   the cost of additional education is always higher during recession.
B)   high unemployment rates do not usually last for very long.
C)   looking for work is your only option.
D)   the wages of college graduates do not fall during recession.E) C) and D)
F) B) and C)

Question 11

If the CPI rises from 206.7 to 212.7 between two consecutive years,by how much has the cost of living changed between these two years?

Accepted Answer

A)   The cost of living has increased by 6%.
B)   The cost of living has increased by 2.9%.
C)   The cost of living has increased by 12.7%.
D)   The cost of living has decreased by 6%.E) None of the above
F) B) and C)

Question 12

The formula for calculating the CPI is

Accepted Answer

A)   (Expenditures in the current year/Expenditures in the base year)  × 100.
B)   (Expenditures in the current year × Expenditures in the base year) /100.
C)   (Expenditures in the base year/Expenditures in the current year) .
D)   (Expenditures in the base year × 100) /(Expenditures in the current year) .E) All of the above
F) None of the above

Question 13

Why would a firm pay efficiency wages?

Accepted Answer

An efficiency wage is a wage that is hig...

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

Accepted Answer

A) True 
 B)False

Question 16

The labor force is the sum of

Accepted Answer

A)   employed workers and discouraged workers.
B)   employed workers and unemployed workers.
C)   employed workers and individuals not looking for work.
D)   employed workers and the working age population.
E)   unemployed workers and the working age population.F) A) and B)
G) A) and C)

Question 17

If the nominal interest rate is 6% and the inflation rate is 9%,then the real interest rate is

Accepted Answer

A)   -3%.
B)   3%.
C)   6.67%.
D)   15%.E) A) and B)
F) A) and C)

Question 18

An increase in cyclical unemployment will result in

Accepted Answer

A)   an increase in the natural rate of unemployment.
B)   an increase in the unemployment rate.
C)   an increase in structural unemployment.
D)   a decrease in frictional unemployment.E) A) and B)
F) B) and C)

Question 19

Discouraged workers are classified by the BLS as

Accepted Answer

A)   part of the labor force.
B)   out of the labor force.
C)   unemployed.
D)   employed.
E)   part-time employees.F) A) and B)
G) C) and D)

Question 20

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.F) A) and D)
G) A) and B)

Exam 9: Unemployment and Inflation

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

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We say that the economy is at full employment if the unemployment rate is equal to

Correct AnswerverifiedShow Answer

Discouraged workers are classified by the BLS as

Correct AnswerverifiedShow Answer

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

Correct AnswerverifiedShow Answer

The formula for calculating the CPI is

Correct AnswerverifiedShow Answer

If the nominal interest rate is 6% and the inflation rate is 9%,then the real interest rate is

Correct AnswerverifiedShow Answer

The problem with inflation is that as prices rise,consumers can no longer afford to buy as many goods and services.

Correct AnswerverifiedShow Answer

Upon your graduation from college,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

Correct AnswerverifiedShow Answer

List three different price indices and explain how they differ in terms of the market basket on which they are based.

Correct AnswerverifiedThree examples of price indices are the ...View AnswerShow Answer

If the CPI rises from 206.7 to 212.7 between two consecutive years,by how much has the cost of living changed between these two years?

Correct AnswerverifiedShow Answer

The producer price index tracks the prices firms receive for goods and services at all stages of production.

Correct AnswerverifiedShow Answer

What does the PPI measure?

Correct AnswerverifiedShow Answer

An increase in cyclical unemployment will result in

Correct AnswerverifiedShow Answer

Following the end of the recession of 2007-2009,the employment-population ratio

Correct AnswerverifiedShow Answer

The labor force is the sum of

Correct AnswerverifiedShow Answer

The deflation of the 1930s impacted the U.S.economy because it led some consumers to ________ and because it ________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Why would a firm pay efficiency wages?

Correct AnswerverifiedAn efficiency wage is a wage that is hig...View AnswerShow Answer

Explain why you would rather be a borrower during a period of unexpected rising inflation,and a lender during a period of unexpected declining inflation.

Correct AnswerverifiedThe nominal interest rate includes a cha...View AnswerShow Answer

Table 20-3 -Refer to Table 20-3.Suppose that the data in the table above reflect the price levels in the economy.Given that data,we can say that the cost of living rose by ________ between 2010 and 2011?

Correct AnswerverifiedShow Answer

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Three examples of price indices are the ...
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Correct Answer
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The deflation of the 1930s impacted the U.S.economy because it led some consumers to and because it .

Correct Answer
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Correct Answer
verified

Correct Answer
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An efficiency wage is a wage that is hig...
View Answer

Correct Answer
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The nominal interest rate includes a cha...
View Answer

Correct Answer
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