Chapter 8 hw- Austin

(Table: The Consumer Price Index (CPI)) Look at the table The Consumer Price Index (CPI). The inflation rate between 2011 and 2012 was:

1.4%

Suppose banks are issuing personal loans at 9%. If expected inflation is 3%, then the nominal interest rate is _____ and the real interest rate is _____.

9%; 6%

Unemployment rates are usually highest for:

female workers aged 25 to 54. (WRONG)

Since 1960 in the United States, the rate of inflation has:

fluctuated.

Anna recently moved to Boston, as her husband, Joe, has a new job as an economics professor at Harvard. Anna is an experienced surgeon who is interviewing with several hospitals in Boston. Anna is:

frictionally unemployed

Last week Stephanie quit her job as a copywriter at an advertising agency. She has spent the past few days browsing the help wanted ads but hasn't found anything that matches her skills. Stephanie is best classified as:

frictionally unemployed.

During Brazil's hyperinflation of the 1990s the economy lost real resources when the _____ sector grew very large to cope with the consequences of the high rate of inflation.

government (WRONG)

Unanticipated inflation:

helps borrowers and hurts lenders.

A binding minimum wage in a labor market is set _____ the equilibrium wage and causes a _____ of labor.

above; surplus

(Table: Unemployment and Employment Data) Look at the table Unemployment and Employment Data. The labor force in this economy is:

(Table: Unemployment and Employment Data) Look at the table Unemployment and Employment Data. The labor force in this economy is:

Which of the following most accurately describes how to calculate the unemployment rate?

(Unemployed / labor force) × 100

If 99 million people are working and 1 million are unemployed but actively seeking work, then the unemployment rate is:

100% (WRONG)

The consumer price index in 1979 was 72.6. In 1980 it was 82.4. What was the rate of inflation from 1979 to 1980?

11.89% (WRONG)

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 8 old dollars, then a mortgage of $100,000 would become a debt of _____ new dollars.

12,500

If the actual unemployment rate is 7% and the natural rate is 5%, then the cyclical rate is:

2%

(Table: Price Levels) Look at the table Price Levels. What is the rate of inflation from 2012 to 2013?

2.0%

(Table: Employment Data) Look at the table Employment Data. The labor force is:

22 million. (WRONG)

Which of the following is an example of cyclical unemployment?

An autoworker is laid off because a recession has caused a decline in sales.

Suppose that roughly 8 million people in the United States were actively seeking jobs but had not found them this month, the same number as last month. Suppose that 2 million of the people who were unemployed last month gave up their search this month and stopped looking for work. What will happen to the official unemployment rate this month, all other things unchanged?

It will fall, because 2 million people are not in the labor force this month and are not counted as unemployed.

(Figure: The Minimum Wage) Look at the figure The Minimum Wage. What is the quantity of labor demanded at a binding minimum wage of P3?

Q1

Which of the following situations is likely to lead to an increase in discouraged workers?

The availability of jobs falls.

In the absence of minimum wages, efficiency wages, or labor unions, a decline in the demand for labor will likely result in _____ if wages are flexible.

a lower level of employment and a higher unemployment rate (WRONG)

One factor that raises the natural rate of unemployment is:

a population boom that increases the number of young workers joining the labor force.

Unit-of-account costs of inflation are the:

costs associated with money not being a reliable unit of measurement.

The National Bureau of Economic Research announced that the U.S. economic recession that began in December of 2007 hit a trough in June of 2009. During that period, which type of unemployment increased for sure?

cylical

(Figure: The Effect of a Minimum Wage) Look at the figure The Effect of a Minimum Wage. Suppose that after some time with a minimum wage of WF, the government abolishes the minimum wage. Employment will:

decrease to QE. (WRONG)

As the average age of the labor force increased from the end of the 1970s to the end of the 1990s, the natural rate of unemployment:

decreased

The official unemployment rate reported by the government may tend to understate the amount of unemployment because it:

excludes discouraged workers.

When the unemployment rate is high, there is political demand to increase the benefit period for unemployment compensation. In a standard analysis, this will lead to:

increases in the unemployment rate.

The natural rate of unemployment:

is composed of structural and frictional unemployment.

A bank makes a loan for one year. The nominal annual interest rate is 7.5%. The real rate is 4%. Over the course of the year, overall prices increase by 4%. This rate of inflation hurt the _____ because the actual rate of inflation was _____ than the anticipated rate.

lender; lower (WRONG)

The sum of the frictional and structural rates of unemployment is the:

natural rate of unemployment.

The rate of unemployment is found by dividing the:

number of people not working but looking for work by the number of people not working but looking for work plus the number of people employed.

The labor force is the total:

number of people who are employed or unemployed.

If money income remains the same while the average price level doubles:

real income will fall.

Unanticipated inflation:

reduces the real value of debt.

A survey reveals that on a small island initially 1,000 people have jobs, 200 people are unemployed but are looking for jobs, and 200 people are neither working nor looking for work. Suppose that 100 of the 200 people who weren't looking for work now begin looking for work and that half of the new entrants find a job. The unemployment rate:

rises to 19.2%.

A survey reveals that on a small island initially 1,000 people have jobs, 250 people are not working but are looking for jobs, and 450 people are neither working nor looking for work. Suppose that 150 of the 450 people who weren't looking for work now begin looking for work. There are now 400 people looking for work and 1,000 people working. The unemployment rate:

rises to 28.6%.

A survey reveals that on a small island initially 100 people have jobs, 25 people don't have jobs but are looking for jobs, and 45 people are neither working nor looking for work. Suppose that 15 of the 45 people who weren't looking for work now begin looking for work. There are now 40 people looking for work and 100 people working. The unemployment rate:

rises to 28.6%.

A survey reveals that on a small island initially 40 people have jobs, 10 people are not working but looking for jobs, and 30 people are neither working nor looking for work. Suppose that 10 of the 30 people who weren't working or looking for work now begin looking for work. There are now 20 people without jobs but looking for work and 40 people working. The unemployment rate:

rises to 33.3%.

Efficiency wages are:

set above equilibrium wages to act as an incentive for better performance.

When the unemployment rate is very low, most of it tends to be:

structural (WRONG)

Sam, who is 55 years old and has been a steelworker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is _____ unemployed.

structurally

Which of the following situations is likely to increase the natural rate of unemployment?

the elimination of the minimum wage (WRONG)

Suppose that Allison has an accounting degree, but she lost her job two months ago when her company merged with another firm. Allison hasn't been able to find another accounting job, so she has taken a part-time job as a sales clerk at a clothing store. The Bureau of Labor Statistics classifies Allison as:

underemployed.

The unemployment rate is the ratio of all of the people:

unemployed to those in the labor force.

Unemployment rates are usually higher in Europe than in the United States because:

unemployment benefits are more generous in Europe than in the United States.

Annie's credit union charges a fee for transferring funds from her money market account to her checking account. The rate of inflation has been 12% lately, so Annie has transferred funds from her money market account to her checking account more often than usual. This cost is an example of the _____ cost of high inflation.

unit-of-account (WRONG)

The introduction of ATMs reduced the:

unit-of-account costs of inflation. (WRONG)

If deflation occurs and your income is fixed, your real income:

will go up.