econ 2143 sample test 4 uark rahman

30) Refer to Table 24-3. If 2012 is the base year, then the inflation rate in 2013 was A) 24.7 percent. B) 54.0 percent. C) 32.8 percent. D) 38.0 percent.

C) 32.8 percent.

18) Refer to Figure 28-4. If the government imposes a minimum wage of $6, how many workers will be unemployed? A) 0 B) 2,000 C) 4,000 D) 6,000C) 4,000

C) 4,000

33) Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid? A) 16 percent B) 12 percent C) 8 percent D) 6 percent

C) 8 percent

6) Using the data in the above table, the unemployment rate is A) 9.3 percent. B) 8.6 percent. C) 8.0 percent. D) 4.8 percent. E) 4.6 percent.

C) 8.0 percent.

34) Which one IS true about the comparison between CPI and GDP deflator? A) GDP deflator is more volatile than CPI. B) GDP deflator considers price of only the goods purchased by the consumers while CPI considers price of all the goods in the economy. C) CPI and GDP deflator always move together. D) None of the above.

C) CPI and GDP deflator always move together.

12) Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal A) (20/60) × 100. B) (20/80) × 100. C) (30/80) × 100. D) (20/100) × 100.

D) (20/100) × 100.

28) If the bank returns $1,060 on the $1,000 deposited for a year during which inflation was 4 percent, the real interest rate is A) 6 percent. B) 10 percent. C) -2 percent. D) 2 percent. E) 16 percent.

D) 2 percent.

4) If 160 million people are employed, 15 million people are unemployed, and the population is 280 million people, the unemployment rate is A) 57 percent. B) 62.5 percent. C) 9.4 percent. D) 8.6 percent. E) not possible to calculate without data on the labor force.

D) 8.6 percent.

29) Suppose Mack's wage was $7.00 an hour in 2001 and was $12.00 per hour in 2012. The CPI was 94 in 2001 and 201 in 2012. The 2001 wage in terms of 2012 dollars is A) $14.97. B) $14.07. C) $3.48. D) $13.16. E) $7.00.

A) $14.97.

23) Based on the table above, between 2013 and 2014, the inflation rate in this country was A) -1.5 percent. B) 105.1 percent. C) 2.5 percent. D) 98.5 percent. E) -2.5 percent.

A) -1.5 percent.

5) If the working-age population is 20 million and labor force is 13 million, the labor force participation rate is A) 65 percent. B) 35 percent. C) 153 percent. D) 60 percent. E) impossible to calculate because data on the number of employed workers is needed.

A) 65 percent.

21) If the cost of the CPI market basket at current period prices is $275 and the cost of the CPI market basket at base period prices is $350, the CPI is A) 79. B) 100. C) 127. D) 350. E) 275.

A) 79.

22) Based on the table above, the CPI for 2014 is A) 98.5. B) 105.1. C) 102.5. D) 5.0 percent. E) 100.

A) 98.5.

9) An economic recession produces A) an increase in cyclical unemployment. B) an increase in structural unemployment. C) an increase in natural unemployment. D) a decrease in cyclical unemployment. E) a decrease in natural unemployment.

A) an increase in cyclical unemployment.

16) Amy is working part-time. Tavaris is on temporary layoff. Who probably is included in the Bureau of Labor Statistics' "employed" category? A) only Amy B) only Tavaris C) both Amy and Tavaris D) neither Amy nor Tavaris

A) only Amy

32) Assume that consumers consider rice and potatoes to be substitutes, so that when the price of rice rises, consumers purchase less rice and more potatoes. When the CPI is computed following the increase in the price of rice, it takes into account A) the increase in the price of rice. B) the decrease in the quantity of rice purchased and the increase in the quantity of potatoes purchased. C) Both (a) and (b) are correct. D) None of the above is correct.

A) the increase in the price of rice.

19) Refer to Table 28-2. The unemployment rate of Aridia in 2010 was A) 10%. B) 12.5%. C) 14.3%. D) 80%.

B) 12.5%.

11) Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness? A) inflation B) discouraged workers C) people employed in the underground economy D) unemployed persons falsely report themselves to be actively looking for a job

B) discouraged workers

20) Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness? A) inflation B) discouraged workers C) people employed in the underground economy D) unemployed persons falsely report themselves to be actively looking for a job

B) discouraged workers

17) If Samantha quits her job voluntarily and actively searches for other work, then she is considered A) structurally unemployed. B) frictionally unemployed. C) cyclically unemployed. D) not to be unemployed.

B) frictionally unemployed.

13) An increase in unemployment insurance payments would, in effect, ________ the amount of time spent searching for a job, which would increase ________ unemployment. A) increase; cyclical B) increase; frictional C) decrease; cyclical D) decrease; frictional

B) increase; frictional

25) The fact the consumers substitute one good for another when prices change is A) taken into account by the fixed market basket used in calculating the CPI. B) not taken into account by the fixed market basket used in calculating the CPI. C) not important to economists. D) a reason why the CPI is used to calculate inflation rates. E) a reason why the CPI understates the actual change in the cost of living.

B) not taken into account by the fixed market basket used in calculating the CPI.

27) If prices have decreased since the base period, then A) real GDP is smaller than nominal GDP. B) real GDP is larger than nominal GDP. C) real GDP is equal to nominal GDP. D) there is no way to adjust nominal GDP so that it equals real GDP. E) real GDP can no longer be compared to nominal GDP.

B) real GDP is larger than nominal GDP.

35) What is outlet bias? A) the tendency for households to spend more money over time B) the tendency for households to spend their money at discount stores as prices rise C) the tendency for the quality of products to improve over time even though the CPI does not measure changes in quality D) the tendency for consumers to purchase newer, more technologically advanced products even though they have higher prices

B) the tendency for households to spend their money at discount stores as prices rise

10) Full employment means that A) the unemployment rate is below 6 percent. B) there is no cyclical unemployment. C) the unemployment rate is zero. D) the frictional unemployment rate is equal to the structural unemployment rate. E) there is no frictional unemployment.

B) there is no cyclical unemployment.

31) Babe Ruth's 1931 salary was $80,000. Government statistics show a consumer price index of 15.2 for 1931 and 229.6 for 2012. Ruth's 1931 salary was equivalent to a 2012 salary of about A) $5,296. B) $1,128,421 C) $1,208,421 D) $17,152,000

C) $1,208,421

37) What is the good or service is given the most weight in the CPI? A) apparel B) food and beverages C) housing D) transportation E) recreation

C) housing

8) Structural unemployment is the result of A) voluntary job quitting by workers. B) changing labor needs by firms during the year. C) technology changes or foreign competition. D) changes in the family structure. E) downturns in the business cycle.

C) technology changes or foreign competition.

24) The presence of new goods that are of higher quality than the old goods leads the BLS to A) update the market basket every time a new good is available. B) do nothing because at least some people still buy the old goods. C) try to separate price differences from improvements in quality. D) actually understate the cost of living when calculating the CPI. E) immediately update the reference base period used in calculating the CPI.

C) try to separate price differences from improvements in quality.

36) You earned $30,000 in 2000, and your salary rose to $80,000 in 2013. If the CPI rose from 82 to 202 between 2000 and 2013, which of the following is true? A) There was deflation between 2000 and 2013. B) The purchasing power of your salary fell between 2000 and 2013. C) The purchasing power of your salary remained constant between 2000 and 2013. D) The purchasing power of your salary increased between 2000 and 2013.

D) The purchasing power of your salary increased between 2000 and 2013.

15) The natural rate of unemployment is the A) unemployment rate that would prevail with zero inflation. B) rate associated with the highest possible level of GDP. C) difference between the long-run and short-run unemployment rates. D) amount of unemployment that the economy normally experiences.

D) amount of unemployment that the economy normally experiences.

26) If higher prices cause buyers to shop at discount stores, the CPI has A) a new goods bias. B) a quality change bias. C) a commodity substitution bias. D) an outlet substitution bias. E) a discounted bias.

D) an outlet substitution bias.

7) The amount of frictional unemployment depends on A) the phase of the business cycle. B) the time of the year. C) international competition. D) demographic factors and unemployment benefits. E) Both answers A and B are correct.

D) demographic factors and unemployment benefits.

2) In the Current Population Survey, a person is considered unemployed if the person A) is without a job. B) is working anything less than 40 hours per week. C) is working without pay. D) does not have a job and is actively looking for a job. E) is working less than 20 hours per week.

D) does not have a job and is actively looking for a job.

14) Which of the following would decrease the unemployment rate? A) an increase in the minimum wage B) an increase in the efficiency wage C) an increase in labor union membership D) government aid to retrain unemployed workers

D) government aid to retrain unemployed workers

3) If Jose is 22-years old, is available to work but does not have a job and made no specific efforts to find a job for the previous month, Jose is classified in the Current Population Survey as A) unemployed. B) employed. C) not in the working-age population. D) not in the labor force. E) in the labor force but not in the working-age population.

D) not in the labor force.

1) If Keke, age 32, worked 12 hours as a paid employee the week before the Current Population Survey, KeKe is classified in the Current Population Survey as ______ as when calculating the unemployment rate. a) unemployed b) employed c) a discouraged worker d) not in the labor force e) underemployed

b) employed