Chapter 14

B

Q: Look at the table Price Levels. What is the rate of inflation from 2013 to 2014? a. 2.9% b. 1.1% c. 2.0% d. 2.6%

A

Q: Look at the table Unemployment and Employment Data. If marginally attached workers are included, the labor force in this economy is: a. 103 million. b. 98 million. c. 170 million. d. 100 million.

C

Q: If the actual unemployment rate is 7% and the natural rate is 5%, then the cyclical rate is: a .5%. b. 7%. c. 2%. d. 9%.

B

Q: A survey reveals that on a small island 1,000 people have jobs, 250 people are unemployed and looking for jobs, and 450 people are neither working nor looking for work. The unemployment rate on the island is: a. 25%. b. 20%. c. 45%. d. 15.6%.

A

Q: All of the following are examples of job search EXCEPT: a. attending class at a community college to learn database management. b. calling a former college roommate to see if there are any job openings in her company. c. reading the employment section of the local newspaper while sitting at a coffee shop. d. visiting a former college professor to learn about work as a research assistant.

D

Q: Frictional unemployment exists because of all of the following reasons EXCEPT: a .that new jobs are continually being created. b. that new workers are always entering the labor market. c. that some old jobs are always being destroyed. d. for the minimum wage.

A

Q: If Jim's income is $80,000 and the price level is 4, then Jim's real income is: a. $20,000. b. $80,000. c. $84,000. d. $320,000.

A

Q: If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people unemployed and seeking employment, then its labor force is: A. 140 million. B. 145 million. C. 150 million. D. 135 million.

D

Q: If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is: a. 4%. b. 67.5%. c. 7.5%. d. 10%.

A

Q: If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 5 old dollars, then a loan of $10,000 would become a debt of _____ new dollars. a. 2,000 b. 10,000 c. 50,000 d. 9,995

C

Q: It is generally accepted that a binding minimum wage does all of the following EXCEPT: a. decrease the quantity of labor demanded. b. increase the amount of labor supplied. c. decrease the amount of labor supplied. d. increase unemployment.

C

Q: Look at the figure The Minimum Wage. What is the quantity of labor demanded at a binding minimum wage of P3? A. Q3 B. Q4 C. Q1 D. Q2

C

Q: Structural unemployment consists of people who are unemployed because of: a. the time it takes for employers and workers to find each other. b. temporary changes in jobs. c. more job hunters than jobs. d. more labor demanded than labor supplied.

A

Q: Suppose that the nominal rate of interest is 7% and the inflation rate is 3%. The real rate of interest is: a. 4%. b. 10%. c. 7%. d. 3%.

D

Q: Unanticipated inflation: a. increases the value of future obligations. b .helps lenders. c. increases certainty about the future. d. reduces the value of money.

A

Q: When hyperinflation forces Pedro to change the price stickers on the books in his bookstore very frequently to keep up with the aggregate price level, economists say that Pedro has a: a. menu cost. b. unit-of-account cost. c. shoe-leather cost. d. debt deflation.

D

Q: When the economy is at full employment, _____ is zero. a .unemployment b. frictional unemployment c. the natural rate of unemployment d. cyclical unemployment

A

Q: Which of the following situations is likely to lead to an increase in discouraged workers? a. The availability of jobs falls. b. The economy is undergoing menu costs. c. The economy is expanding. d. The economy is undergoing inflation.

D

Q: Which of the following statements is FALSE? a. Unemployment always rises during recessions. b. In general, there is a trade-off between inflation and unemployment in the short run. c. There is a strong negative relation between growth in real GDP and changes in unemployment. d. Unemployment always falls during expansions.

D

Q: Which pair of policies is likely to reduce the natural rate of unemployment? a. high minimum wages and generous unemployment benefits b. job training and higher minimum wages c. employment subsidies and policies designed to strengthen labor unions d. job training and employment subsidies