Economics Chapter 6

Suppose there are five goods in the economy, A-E. The current-year quality of each is 10A, 20B, 30C, 40D and 50E. Current-year prices are $1 for each unit A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals

$150

If the government enacts legislation which allows lenders to lower lending standards, the government indirectly___________ the demand for which leads to _________ house prices.

increased; higher

If the cyclical unemployment rate is negative, then the

natural unemployment rate is greater than the actual unemployment rate in the economy.

A __________ is a person who was employed in the civilian labor force and was either fired or laid off.

none of the above

Persons who are retired or engaged in own-home housework are considered to be in which of the following categories?

not in the labor force

One measure of the inflation rate is the

percentage change in the CPI of adjacent years.

A(n) _____ is a person who was previously employed, hasn't worked for some time, and is currently reentering the labor force

reentrant

Assume that Dakota's salary is $49,500, up from $45,000 last year, while the CPI is 198 this year, up from 180 last year. This means that Dakota's real income has ____________ since last year.

stayed the same

The unemployment due to changes in the types if skills employers require is called _______ unemployment.

structural

In automobile manufacturing, many parts of the production process that were once completed by people are now completed using robotics. Workers who lost their jobs as a result of the use of robotics became __________ unemployed.

structurally

The base year is the year

that serves as a reference point or benchmark

"Full employment" is said to exist when the unemployment rate equals

the natural unemployment rate

"Full employment" is said to exist when the unemployment rate equals

the natural unemployment rate.

If Carlos is waiting to be called back to his job from which he has been temporarily laid off, the Bureau of Labor Statistics will classify him as unemployed

true

Jamaal lost his job when a mechanical device replaced people with his skills. If Jamaal's skill are non-transferable, he would be considered to be structurally unemployed.

true

Natural unemployment is cause by frictional and structural factors in the economy.

true

When the unemployment rate is equal to the natural unemployment rate, full employment exists.

true

If Jorge is temporarily absent from his regular job because of an industrial dispute, the Bureau of Labor Statistics will classify him as unemployed.

False

If the unemployment rate drops, then it necessarily follows that some of the people who were once unemployed are now employed

False

The cyclical unemployment rate can never be negative.

False

The sum of the unemployment rate and the labor force participation rate always equals 100 percent.

False

Which of the following statements is true?

If the actual unemployment rate is currently 5% and the natural unemployment rate is 5%, then the economy is operating at full-employment.

Which of the following statements is true?

If the actual unemployment rate is currently 5% and the natural unemployment rate us 5%, then the economy is operating at full-employment.

The number of employed persons plus the number of unemployed persons equals the number of persons

in the civilian labor force.

When flat screen televisions were first introduced in 1997 they were priced at $15,000. If the CPI in 1997 was 160 and the CPI in 2019 is 265, then this price is equivalent to approximately ______________________in 2019 dollars. If the average flat screen TV sells for $550 in 2019, the percentage change between the inflation-adjusted price of a flat screen TV in 1997 and the actual price in 2019 price is ___________.

$24,844; -97.7 percent

In year 1 the CPI is 174, and in year 2 the CPI 185. If Sarah's salary was $49,600 in year 1, what is the minimum salary he must earn in year 2 to "keep up with inflation"?

$52,736

The movie "Return of the Jedi" earned $64 million in 1983 when it was released. The CPI in 1983 was 97.8 and the CPI in 2012 was 226.665. Approximately how much did the movie earn in 2012 dollars?

$612 million

Suppose that the price index in 1999 was 170 and your salary was $44,000. Suppose in 2016 the consumer price index will be 290. What salary will you have to earn in 2016 in order to equal your 1999 real income.

$73,059

Suppose that the price index in 1999 was 170 and your salary was $44,000. Suppose in 2016 the consumer price index will be 290. What salary will you have to earn in 2016 in order to equal your 1999 real income?

$75,059

In year 1 the CPI is 175, and in year 2 the CPI is 189. If Dennis's salary was $82,000 in year 1, what is the minimum salary he must earn in year 2 to "keep up with inflation"?

$8,560

Smith's income was $50,000 in year 1 and $55,000 in year 2. The CPI was 114 in year 1 and 124 in year 2. What was the approximate percentage change in Smith's real income between the two years?

+2.2 percent

Smith's income was $50,000 in year 1 and $55,600 in year 2. The CPI was 114 in year 1 and 124 in year 2. What was the approximate percentage change in Smith's real income between the two years?

+2.2 percent

If the existing unemployment rate is 3.1 percent and the natural unemployment rate is 4.5 percent, the cyclical unemployment rate is ________ percent

-1.4

Refer to Exhibit 6-3. Price changed by _____ percent between year 1 and year 2.

-1.6

Refer to Exhibit 6-1. Prices rose by ______ percent from year 1 to year 2.

1.38

If the existing unemployment rate is 6.2 percent and the natural unemployment rate is 4.5 percent, the cyclical unemployment rate is ________ percent.

1.7

Refer to Exhibit 6-2. The unemployment rate in year 4 is

10 percent.

Refer to Exhibit 6-2. How many persons are not participating in the labor force in year 2?

100 million

Refer to Exhibit 6-2. How many persons are unemployed in year 2?

100 million

Suppose there are 65 million employed persons, 5 million unemployed persons, and 35 million persons not in the labor force. What does the civilian noninstitutional population equal?

105 million

Suppose the civilian non-institutional population equals 250,000; there are 132,500 employed persons and 10,000 unemployed persons. How many persons are not in the labor force?

107,500

A market basket is made up if three goods, 10X, 12Y, and 18Z. The price in the base year are $1.20, $2.10, and $3.25, respectively. The prices in the current year are $1.44. $2.23, and $3.88. What is the approximate consumer price index in the current year?

116

Refer to Exhibit 6-2. The unemployment rate in year 1 is

12 1/2 percent.

In an economy with a population of 100 million persons, 42 million hold civilian jobs and 6 million are not working but are looking for a job. The unemployment rate is

12.5%

If the CPI was 196.5 in 2005 and 172.2 in 2000, by what percentage did prices rise during the period 2000-2005?

14.1 percent

Suppose the market basket consists of 100X, 200Y, and 300Z. Current-year prices are $5 for each unit of X, $2 for each unit of Y, and $3 for each unit of Z. Base-year prices are $2 for each unit of X, Y, and Z. What is the approximate CPI in the current year?

150

Look at the following data: Employed persons = 110 million; civilian labor force = 135 million persons; civilian noninstitutional population = 190 million. The unemployment rate is __________ percent and the employment rate is __________ percent.

18.5; 57.9

Refer to Exhibit 6-2. How many persons are not participating in the labor force in year 4?

200 million

Suppose the market basket consists of 400X, 150Y, and 220Z. Current-year prices are $1.50 for each unit of X, $0.50 for each unit of Y, and $4.60 for each unit of Z. Base-year prices are $1.00 for each unit of X, Y, and Z. Approximately what is the value of the CPI in the current year?

219

Refer to Exhibit 6-2. How many unemployed persons are there in year 1?

25 million

Refer to Exhibit 6-3. Prices changed by ______ percent between the year 3 and year 4.

3.0

Look at the following data: The frictional unemployment rate is 3 percent, the natural unemployment rate is 6.5 percent, and the cyclical unemployment rate is 2.4 percent. The structural unemployment rate is __________ percent and the actual unemployment rate (in this economy) is __________ percent.

3.5; 8.9

Refer to Exhibit 6-1. Prices rose by __________ percent from Year 4 to Year 5.

3.90

Suppose there are 200 million persons in the population, 120 million persons in the civilian labor force, and 90 million persons are employed. The number of persons unemployed is ______ million are the unemployment rate is ____ percent.

30; 25

Suppose there are 200 million persons in the population, 120 million persons in the civilian labor force, and 90 million persons are employed. The number of persons unemployed is _______ million and the unemployment rate is ___________ percent.

30; 25

Look at the following data: The frictional unemployment rate is 1.5 percent, the natural unemployment rate is 4.5 percent, and the cyclical unemployment rate is -1 percent. The structural unemployment rate is ______ percent and the actual unemployment rate (in this economy) is _____ percent.

3; 3.5

If there are 10 job losers, 12 job leavers, 13 reentrants, and 12 new entrants, then there are ______ unemployed persons.

47

Bentley's income was $48,000 in year 1 and $52,600 in year 2. The CPI was 120.3 in year 1 and 125.4 in year 2. What was the approximate percentage change in Bentley's real income between the two years?

5.1 percent

In an economy with a population of 300 million persons, 130 million hold civilian jobs and 8 million are not working but are looking for jobs. The unemployment rate is

5.8 percent

Refer to Exhibit 6-2. How many unemployed persons are there in year 3?

50 million

Refer to Exhibit 6-2. The employment rate in year 2 is

50 percent

If the CPI is 100 in the base year and 106 in the current year, how much did prices rise between the base year and the current year?

6 percent

In an economy with 200 million people, 140 million hold civilian jobs and 9 million are not working but are looking for jobs. The unemployment rate is

6.0%

The CPI was 154 in one year and 165 the following year. How much did prices rise between these two years?

7.14 percent

Refer to Exhibit 6-2. The employment rate in year 3 is

70 percent.

If the CPI is 230 in year 1 and 249 in year 2, what is the approximate percentage change in prices between the two years?

8.3 percent

Refer to Exhibit 6-2. The labor force participation rate in year 1 is

80 percent.

A plumber who quits his job in Indianapolis and moves to Orlando where additional plumbers are needed is said to be ________ unemployed.

frictionally

A plumber who quits his job in Indianapolis and moves to Orlando where additional plumbers are needed is said to be ___________________ unemployed

frictionally

At the time of Elise's 20 year high school she was earning $50,000 and the CPI was 80. Now that it is time for her to attend her 25 year high school reunion. Elise's income has risen to $80,000 and CPI is 150. At her 25 year reunion, can Elise rightfully brag that her income has rise since the last she saw her former classmates five years ago?

No, Elise's real income fell during that 5 year period.

Because discouraged workers are not considered unemployed, the unemployment rate may be biased downward.

True

If the Bureau of Labor Statistics considers Jessica to be a discouraged worker, then she is not counted as unemployed for purposes of computing the official unemployment rate.

True

The CPI is based on a representative group of goods called the market basket.

True

Valerie works 23 unpaid hours per week at her parent's restaurant, therefore the Bureau of Labor Statistics would count her as employed.

True

Vehicle works 23 unpaid hours per week at her parent's restaurant, therefore the Bureau of Labor Statistics would count her as employed.

True

When the unemployment rate is equal to the natural unemployment rate, full employment exists.

True

Suppose that 1983 is the base year for the Consumer Price Index (CPI) and in 2019 the CPI is 254. What does this "254" mean?

What cost $100 in 1983 on average cost $154 more in 2019.

Suppose that 1983 is the base year for the Consumer Price Index (CPI) and in 2019 the CPI is 260. What does this "260" mean?

What cost $100 in 1983 on average cost 2.60 times as much in 2019

Suppose that 1983 is the base year for the Consumer Price Index (CPI) and in 2019 the CPI is 254. What does this "254" mean?

What costs $100 in 1983 on average costs $154 more in 2019

The answer is "a person employed in the civilian labor force who quits his or her job." The question is:

Who is a job leave?

At the time of Kelsey's 20 year high school reunion she was earning $50,000 and the CPI was 120. Now that it is time for her to attend her 30 year high school reunion, Kelsey's income has risen to $97,000 and the CPI was 230. At her 30 year reunion, can Kelsey rightfully brag that her real income has risen since the last time she saw her former classmates ten years ago?

Yes, Kelsey's real income rose during that 10 year period

Is it possible for the economy to be full employment and still have some people who are unemployed?

Yes, since full employment exists if the economy is operating at the natural unemployment rate and there is always some natural unemployment

Is it possible for the economy to be at full employment and still have some people who are unemployed?

Yes, since full employment exists if the economy is operating at the natural unemployment rate and there is always some natural unemployment.

Marta, who was previously employed, hasn't worked for some time because she was raising her children. When Marta reenters the labor force, the Bureau of Labor Statistics would categorize her as

a reentrant.

If a person is waiting to be called back to a job from which she has been laid off, how is she classified by the Bureau of Labor Statistics?

as an unemployed person

The civilian non-institutional population consists of everyone in the population who is

b, c, and d

The difference between the existing unemployment rate and the natural unemployment rate is defined is the _____ unemployment rate.

cyclical

The difference between the existing unemployment rate and the natural unemployment rate is defined is the __________ unemployment rate.

cyclical

Which of the following statements is false?

in recent years, the demand for workers in the manufacturing sector has grown dramatically compared to the demand for workers in the service sector

The cyclical unemployment rate is defined as the _______ unemployment rates.

difference between the existing (actual) and the natural

The employment rate equals the number of

employed persons divided by the civilian non-institutional population

The base year is always the year in which prices were the lowest.

false

The cyclical unemployment rate can never be negative

false

Jones lost his job in industry A, but he has skills that can be transferred to industry B (which is currently hiring). Smith lost a job in industry C, but his skills cannot be transferred to industry B or to any other industry. Jones is _____ unemployed and Smith is ____ unemployed.

fractionally; structurally

Unemployment that arises as a result of the time it takes for unemployed people to locate a job utilizing their transferable skills is called _____ unemployment.

frictional