Chapter 5 Econ 102

If the CPI this year is 220 and was 200 in last year, the annual inflation rate between the two years

10%

The information in the table above gives the 2012 reference base period CPI basket and prices use to construct the CPI for a small nation. It also has the 2013 prices. What is the value of the CPI for 2013?

140

Using the notation Pt to designate this periods price level and Pt-1 to designate last periods price level, the formula for measuring the inflation rate from last period to this period is

[(Pt-Pt-1)/Pt-1] x 100

The unemployment caused by the normal labor turnover is called... unemployment

frictional

The natural unemployment rate

has been estimated to range between 4% and 6% in the United States in recent years

The biases in the CPI are

important since they effect nearly 1/3 of federal government spending

If unemployment equals the natural unemployment rate, then there

is only frictional or structural unemployment

In a period of rapid, unexpected inflation, resources can be lost

when firms use resources to forecast inflation

Inflation is a problem when

all of the above problems are correct

The labor force is defined as the number of people who

are employed plus the number of people who are unemployed

Full employment occurs when?

cyclical unemployment is zero

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

225

In the table above, the number of marginally attached workers is ...?

4 million

Using the information in the above table, the unemployment rate is

4.3%

In the above table, the employment to population ratio is

44%

Using the information in the above table, the labor force participation rate

67.1%

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

8%

The above table shows answers given by people interviewed in a government survey of households. Which individuals are considered to be a part of the labor force.

A, B, C

Which of the following CORRECTLY describes "frictional unemployment"

Frictional unemployment is a normal occurrence in a growing economy

Suppose that matt quits a job with the XYZ corp. in order to look for more rewarding employment. Matt is best be considered as

Frictionally unemployed

Which of the following best fits the definition of unemployed?

Not working but looking for a job

The biases in the CPI include the

new goods, quality change, and substitution biases

Fictional unemployment is the result of

normal labor market turnover

The labor force is defined as the

number of employed people plus the number of unemployed-people

If the economy is at full employment

real GDP equals potential GDP