Econ chapter 5 practice test

If the CPI at the end of last year was 100 and the CPI at the end of this year was 115, the inflation rate was

A) 15 percent.

In the above table, the unemployment rate is

A) 29 percent.

In the above table, the labor force participation rate is

A) 62 percent.

The above table shows answers given by people interviewed in a government survey of households. Which individual or individuals are considered marginally attached?

A) D

From September 2013 to September 2014, the employment-to-population ratio increased from 58.6 percent to 59.0 percent. This change could have been the result of

A) a decrease in the working-age population.

Structural unemployment is

A) associated with the general decline of specific industries.

Cyclical unemployment ________.

A) decreases during an expansion

The percentage of people employed aged 16 years and older divided by the working-age population is known as the

A) employment-to-population ratio.

If the inflation rate is negative, the price level in an economy is

A) falling.

When a person reenters the labor force and looks for a job after spending time at home raising a child

A) frictional unemployment increases.

Frictional unemployment

A) is unemployment associated with normal labor turnover.

The biases in the CPI include the

A) new goods, quality change, and substitution biases.

The natural unemployment rate

A) rises with an increase in structural unemployment.

In the 1990s, video recordings were made primarily on tapes. However, in the 2000s DVDs became increasingly popular, leading to a sharp decline in video tapes. As a result, many people who manufactured tapes lost their jobs and didn't have the skills necessary to work making DVDs. This occurrence is best consider an example of

A) structural unemployment.

Cyclical unemployment is the result of

A) the business cycle.

When cyclical unemployment increases and other things remain the same, ________.

A) the natural unemployment rate does not change

Assume the inflation rate falls from 4 percent to 2 percent. This means that

A) the price level is increasing more slowly.

At the end of last year, the CPI equaled 120. At the end of this year, the CPI equals 132. What is the inflation rate over this year?

B) 10 percent

The CPI basket contains 400 oranges and 800 pens. In the base year, the price of an orange is $1.00 and the price of a pen is $0.75. This year, urban consumers each buy 300 oranges at $2.00 each and 850 pens at $1.00 each. The CPI this year is ________.

B) 160

If the population is 300 million, with 70 million under the age of 16 and institutionalized, another 70 million not in the labor force, 10 million unemployed and 150 million employed, the employment-to-population ratio is

B) 50 percent.

In an economy, 23 million people are employed and 2 million are unemployed, but 5 million part-time workers would prefer full- time work. What is the unemployment rate?

B) 8 percent

Which of the following people would be considered unemployed by the Bureau of Labor Statistics? I. Mrs. X retires from her job at the age of 55 and does not look for another job. II. Mr. Y was laid off from his job as a welder, but expects to be rehired in 8 months.

B) II only

Which of the following decreases the official U-3 unemployment rate?

B) Workers leave the labor force.

The type of unemployment created by the normal rate of reentry and entry into the labor force is

B) frictional unemployment.

Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as

B) frictionally unemployed.

In September 2014, 32 percent of unemployed workers had been unemployed for 6 months or more. This long-term unemployment is of particular concern because

B) long-term unemployment is the most costly type of unemployment.

In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012 and 2013 are listed in the table above. The reference base period for Dexter's CPI is 2012. What is the cost of the CPI basket in 2013?

C) $540

Suppose the economy is experiencing frictional unemployment of 1 percent, structural unemployment of 3 percent and cyclical unemployment of 4 percent. What is the natural unemployment rate?

C) 4 percent

Suppose that last year the Consumer Price Index was 124; this year it is 130.7. What was the inflation rate between these years?

C) 5.4 percent

Using the data in the above table, the labor force participation rate is

C) 75.7 percent.

If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the unemployment rate is

C) 9.1 percent.

The above table shows answers given by people interviewed in the Current Population Survey. Which people are structurally unemployed?

C) B and C.

Discouraged workers ________ counted as officially unemployed because they ________.

C) are not; are not actively seeking work

The cost of inflation to society includes

C) both I and II

The unemployment rate is at the natural unemployment rate when

C) cyclical unemployment.

When a worker quits a job to look for a better job

C) frictional unemployment increases.

Suppose that the price level was 100 in 2011, 110 in 2012, and 130 in 2013. Over these three years

C) the inflation rate was positive and accelerating.

The Consumer Price Index is a measure of the average of the prices paid by ________ for a fixed basket of consumer goods and services.

C) urban consumers

In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012 and 2013 are listed in the table above. The reference base period for Dexter's CPI is 2012. What is the CPI in 2012?

D) 100

In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012 and 2013 are listed in the table above. The reference base period for Dexter's CPI is 2012. What is the CPI in 2013?

D) 169

If the basket of goods and services used to calculate the CPI cost $200 in the reference base period and $450 in a later year, the CPI for the latter year equals

D) 225.

In the table above, the size of the labor force is

D) 42 million.

In the table above, what inflation rate belongs in space B?

D) 6.8 percent

Using the information in the table above, calculate the employment-to-population ratio.

D) 65 percent

Between September 2013 and September 2014 the number of discouraged workers decreased from 852,000 to 698,000. Assuming the change resulted from discouraged workers starting to make specific efforts to find a job again, this change creates

D) an increase to the U-3 unemployment rate.

When the economy is operating at full employment, the natural unemployment rate consists of only

D) frictional and structural unemployment.

Which of the following is NOT included in the working-age population?

D) people in prison

An example of the new goods bias in the CPI is the

D) switch from traditional car dealerships to low-cost Internet car buying services.

Structural unemployment is the result of

D) technological change or foreign competition.

An individual is structurally unemployed if

D) the individual lacks marketable job skills because technology has changed.