CH.20 REVIEW
The "normal" underlying level of unemployment in the economy is
- the full-employment rate of unemployment. - the sum of structural unemployment and frictional unemployment. - the natural rate of unemployment.
When the economy was expanding in early 2007, fewer than _______ percent of the unemployed had been jobless for more than 6 months.
20
If income rises more slowly than the rate of inflation, purchasing power will rise.
False
Most economists agree that the above-market wage paid in unionized industries significantly increases the unemployment rate in the United States.
False
To avoid the cost of the purchasing power of paper money decreasing with inflation, workers and firms will try to hold as much paper money as possible.
False
Relative to the household survey, which of the following is a strength of the establishment survey?
The establishment survey is determined by actual payrolls, rather than by the unverified answers of the household survey.
How would it affect the unemployment rate if the Bureau of Labor Statistics counted as unemployed both (1) discouraged workers and (2) people who work part-time but would prefer to work full-time?
The unemployment rate would increase
If inflation is unexpectedly high, borrowers will benefit and lenders will be harmed.
True
The producer price index (PPI) tracks the prices firms receive for goods and services at all stages of production
True
Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there aren't any jobs available. You would be counted as
a discouraged worker.
When a firm pays a wage that is higher than the market wage in order to increase worker productivity, the wage is called
an efficiency wage
Workers who lose their jobs because of a recession are experiencing
cyclical unemployment.
When the economy is at full employment, which types of unemployment remain?
frictional and structural
The short-term unemployment that arises from the process of matching workers with jobs is called
frictional unemployment.
In April 2017, which of the following demographic groups had a higher rate of unemployment than the unemployment rate for the total population?
high school dropouts
Increases in the minimum wage will
increase unemployment among teenagers.
Two important trends in the labor force participation rates of adults aged 20 and over in the United States since 1948 are the _________ labor force participation rate of adult women and the __________ labor force participation rate of adult men.
rising; falling
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called
structural unemployment.
The real interest rate equals
the nominal interest rate minus the inflation rate.
The BLS collects price statistics from traditional full-price retail stores, which do not reflect the prices some consumers pay by shopping at discount stores or on the Internet.
the outlet bias
Computation of the CPI assumes that households buy the same market basket of products each month. For this reason, which one of the following factors is not relevant in calculating the CPI?
the quantities of the products households purchase in the current year
Changes in the CPI overstate the true inflation rate due to four "biases." If apple prices rise rapidly during the month while orange prices fall, consumers will reduce their apple purchases and increase their orange purchases. Which of the four biases is concerned with this consumer behavior?
the substitution bias
In 2017, the Bureau of Labor Statistics (BLS) analyzed and revised its employment data for the period December 2007dash-December 2010. According to that revision, the recession of 2007dash-2009
was more severe than economists and policymakers realized at the time.
The extent of job creation and job destruction is
what we would expect in a vibrant market system.
If the CPI was 207 in 2009 and 225 in 2013, what wage would someone who earned a $50,000 income in 2009 have to earn in 2013 in order to keep her purchasing power constant?
$54,348
If the inflation rate is 6 percent and the nominal interest rate is 4 percent, then the real interest rate is
-2 percent, which is the nominal interest rate minus the inflation rate.
Of the eight categories in the CPI market basket, which three categories make up more than 75 percent of the basket?
housing, transportation, and food
The unemployment rate in the United States is usually ________ than the unemployment rates in most other high-income countries, partly because the United States has _________ requirements for the unemployed to receive government payments.
lower; more stringent