Chapter 5
10) The consumer price index (CPI) A) compares the cost of the typical basket of goods consumed in period 1 to the cost of a basket of goods typically consumed in period 2. B) compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period. C) measures the increase in the prices of the goods included in GDP. D) is the ratio of the average price of a typical basket of goods to the cost of producing those goods.
B
10) The_____ equals the number of _______ . A) labor force; persons over 16 years old B) labor force; unemployed and employed persons C) working age population; employed persons D) unemployment rate; people unemployed
B
103) 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? A) 3 percent. B) 4 percent. C) 5 percent. D) 7 percent.
B
104) Suppose that the natural unemployment rate is 4.5 percent and the actual unemployment rate is 3.5 percent. Then cyclical unemployment is A) 1 percent. B) -1 percent. C) 8 percent. D) 0 percent
B
104) Using the information in the above table, the unemployment rate is A) 4.5 percent. B) 4.3 percent. C) 2.8 percent. D) 6.0 percent.
B
1) The working-age population is defined as the number of A) people over the age of 16 who are not in jail, hospital, or other institution. B) people who have a job. C) people working full-time jobs who are over the age of 16. D) people looking for work.
A
102) The relationship between the unemployment rate and the natural unemployment rate is that the unemployment rate A) fluctuates about the natural rate. B) equals the natural rate. C) is always below the natural rate. D) is always above the natural rate.
A
102) Using the information in the table above, calculate the unemployment rate. A) 53.3 percent B) 30.8 percent C) 13.3 percent D) 7.7 percent
A
105) The labor force participation rate is A) 67.1 percent. B) 64.0 percent. C) 95.7 percent. D) 56 percent.
A
107) When real GDP is___potential GDP, the unemployment rate is the natural unemployment rate. A) greater than; less than B) less than; equal to C) equal to; greater than D) greater than; greater than
A
109) When the unemployment rate is less than the natural unemployment rate, A) the output gap is positive. B) the output gap equals zero. C) the output gap is negative. D) None of the above is possible because it is impossible for the unemployment rate to be less than the natural rate.
A
11) The labor force is defined as people A) who have a job or are looking for a job. B) in the working-age population who have a job. C) in the working-age population who have a full time job. D) who are 16 years of age or older.
A
11) The type of unemployment created by the normal rate of reentry and entry into the labor force is A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.
A
112) Including marginally attached workers in the calculation of the unemployment rate would A) increase the reported rate. B) lower the reported rate. C) not change the reported rate. D) change the reported rate, but in an unpredictable manner.
A
16) The labor force is defined as the A) number of employed people plus the number of unemployed people. B) number of people who are working. C) number of people who are working in labor -type jobs. D) number of union members who are working.
A
17) A person quits her job in order to spend time looking for a better -paying job. This type of unemployment is an example of A) frictional unemployment. B) cyclical unemployment. C) seasonal unemployment. D) structural unemployment.
A
17) The information in the table above gives the 2008 reference base period CPI basket and prices used to construct the CPI for a small nation. It also has the 2009 prices. What is the value of the CPI for 2009? A) 140 B) 133 C) 100 D) 75
A
18) The labor force is defined as the number of people who A) are employed plus the number of people who are unemployed. B) are available and looking for work but are unable to find employment. C) would like to have a job but have stopped seeking work. D) would like to have a full-time job but are working part-time.
A
19) Full-time students and prisoners are . A) not in the labor force B) in the labor force C) counted as discouraged workers D) counted as unemployed
A
19) If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the CPI in the later year equals A) 225. B) 250. C) 300. D) 450.
A
23) The official U-3 unemployment rate A) includes persons without a job who have made efforts in the last week to find a job. B) includes persons without a job, whether they are actively searching for work or not. C) counts discouraged workers as unemployed. D) counts people with part-time jobs who want full-time jobs as unemployed.
A
24) If the CPI was 122.3 at the end of last year and 124.5 at the end of this year, the inflation rate over these two years was A) 1.8 percent. B) 2.5 percent. C) 22.5 percent. D) 18.0 percent.
A
25) Which of the following people would be counted as is employed in the Current Population Survey? A) Rich, who is working 20 hours a week but wants a full -time job B) Misty, who just quit her job to return full-time to school C) April, who just graduated from college and is looking for work D) Jason, who was laid off from work less than 6 months ago but who has stopped looking for work
A
26) Catherine quit her job in order to look for a new one; therefore, she is best considered as A) frictionally unemployed. B) structurally unemployed. C) cyclically unemployed. D) seasonally unemployed.
A
27) 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 A) frictionally unemployed. B) cyclically unemployed. C) structurally unemployed. D) naturally unemployed.
A
28) Bill loses his job as a loan officer when the bank he works for is bought up by a larger financial institution. Bill has the skills necessary to find a new job, so as Bill searches for work he is best considered an example of A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) a discouraged worker.
A
28) If this year the price level is 135 and last year it was 125, the inflation rate is A) 8 percent. B) 10 percent. C) 12 percent. D) none of the above
A
29) Suppose the price level this year is 150 and the price level last year was 125. The inflation rate between last year and this year was A) 20 percent. B) 2 percent. C) 16.6 percent. D) 1.6 percent.
A
31) Structural unemployment is the result of A) technological change or foreign competition. B) normal labor market turnover. C) a slowdown in the rate of economic expansion. D) irresponsible workers with poor work habits.
A
32) If the Consumer Price Index last year was 110 and 115 this year, the inflation rate is approximately A) 4.5 percent. B) 5.0 percent. C) 10.0 percent. D) 15.0 percent.
A
33) In the above table, the inflation rate between 2008 and 2009 is approximately A) 0.9 percent. B) 1 percent. C) 10 percent. D) 100 percent.
A
35) The unemployment rate equals A) (the number of unemployed workers)/(the number of employed + unemployed workers) ×100. B) (the number of unemployed workers)/(the civilian population) × 100. C) (the number of unemployed workers)/(the U.S. population older than 16 years of age) ×100. D) (the number of unemployed + employed workers)/(U.S. population older than 16 years of age) × 100.
A
36) Unemployment caused by changes in technology is called unemployment. A) structural B) frictional C) techno D) cyclical
A
38) The is calculated as the number of people divided by the labor force multiplied by 100. A) unemployment rate; unemployed B) employment-to-population ratio; unemployed C) employment rate; employed D) employment-to-population ratio; in the working age population
A
39) In the above table, the inflation rate between 2010 and 2011 is approximately A) 10 percent. B) 11 percent. C) 121 percent. D) None of the above answers is correct.
A
40) In the table above, what inflation rate belongs in space A? A) 17.0 percent B) 6.8 percent C) 8.3 percent D) -4.0 percent
A
43) Which labor market statistic tends rise during recessions and fall during expansions? A) the unemployment rate B) the labor-force participation rate C) the employment-to-population ratio D) aggregate hours
A
49) Which of the following decreases the official U-3 unemployment rate? A) Workers leave the labor force. B) More women enter the labor force and seek jobs. C) Young people graduate from college and start to look for their first full -time job. D) None of the above because they all increase or do not change the unemployment rate.
A
5) The cost of inflation to society includes A) unpredictable changes in the value of money. B) higher interest rates paid by borrowers. C) higher interest rates paid by the government on its debt. D) the lost spending when people do not have enough money.
A
50) If this yearʹs price level exceeds last yearʹs, A) the inflation rate between these years has been positive. B) the inflation rate is accelerating. C) deflation is occurring. D) no relative price changes are occurring.
A
53) If the inflation rate is negative, the price level in an economy is A) falling. B) rising slowly. C) constant. D) rising rapidly.
A
53) Suppose the working-age population is 220 million, the labor force is 150 million, and the unemployment rate is 10 percent. The number of unemployed people is A) 15 million. B) 22 million. C) 37 million. D) 7 million.
A
53) Which type of unemployment increases during a recession? A) cyclical unemployment B) frictional unemployment C) structural unemployment D) the natural unemployment rate
A
59) The bias in the CPI typically A) overstates inflation. B) understates inflation. C) about half the time overstates and about half the time understates the inflation rate. D) cannot be measured or estimated.
A
6) Frictional unemployment includes A) unemployment caused by normal labor turnover associated with people leaving and entering the labor force. B) unemployment caused by industries moving overseas to better meet foreign competition. C) unemployment caused by a lack of education so that workers do not possess necessary job skills. D) unemployment caused by automation of the work place that displaces unskilled workers.
A
61) The above table shows answers given by people interviewed in a government survey of households. Which individuals are considered unemployed using the official U-3 unemployment rate? A) A, B, and C B) B, C, and D C) A, C, and D D) C and D
A
62) A recession causes a decrease in the demand for housing, resulting in substantial layoffs in the construction industry. The people laid off are considered A) cyclically unemployment. B) frictionally unemployment. C) seasonally unemployment. D) structurally unemployment.
A
62) The above table shows answers given by people interviewed in a government survey of households. Which individual or individuals are considered marginally attached? A) A B) B, C, and D C) A and D D) A and D
A
67) Cyclical unemployment _______ A) decreases during an expansion B) grows at the same rate as potential GDP C) is zero at a business-cycle trough D) decreases during a recession
A
67) Price indexes can overstate inflation because they A) omit some quality improvements. B) do not contain the prices of any used goods. C) do not contain the prices of foreign goods. D) do not contain the prices of services.
A
72) If last yearʹs price level was 100 and this yearʹs price level is 114, over the year the inflation rate has been A) 14 percent. B) 114 percent. C) 12 percent D) 100 percent.
A
74) The best example of a cyclically unemployed individual is A) Charles who lost his job as a real estate salesperson when the housing market went soft because of a recession. B) Alice who quit her job to enter college. C) Mary who lost her job in the textile industry following a decrease in the tariff on textiles. D) Bob who has just graduated from college and is entering the labor market.
A
77) From 1980 to 2000 the trend in the employment-to-population ratio was and from 2000 to 2010 the trend was . A) upward; downward B) downward; downward C) upward; upward D) downward; upward
A
77) Full employment occurs when A) there is no cyclical unemployment. B) there is no unemployment. C) there is no frictional unemployment. D) the unemployment rate is less than 5 percent.
A
78) The labor force participation rate is the ratio of A) (the labor force divided by the working-age population) multiplied by 100. B) (the number of unemployed divided by the working-age population) multiplied by 100. C) (the labor force divided by the total population) multiplied by 100. D) (the number of unemployed divided by the labor force) multiplied by 100.
A
8) The Consumer Price Index is a measure of the average of the prices paid by _____for a fixed basket of consumer goods and services. A) urban consumers B) all consumers C) urban wage earners and clerical workers D) consumers living in cities with a population greater than 100,000
A
80) Full employment occurs when the A) unemployment rate equals the natural unemployment rate. B) structural unemployment rate equals the frictional unemployment rate. C) natural unemployment rate equals the frictional unemployment rate. D) cyclical unemployment rate equals the natural unemployment rate.
A
82) From 1980 to 2000 the trend in the labor force participation rate was and from 2000 to 2010 the trend was . A) upward; downward B) downward; downward C) upward; upward D) downward; upward
A
86) If the labor force participation rate is rising and the working-age population is not changing, then the A) size of the labor force is rising. B) number of unemployed people is rising and the size of the labor force is falling. C) size of the labor force is falling. D) number of unemployed people is falling and the size of the labor force is rising.
A
87) Suppose the labor force in Tiny Town is 100 people. If the__ in Tiny Town is 150 people, the labor force participation rate equals______ multiplied by 100. A) working age population; 100/150 B) working age population; 100/250 C) number of employed persons; 100/250 D) number of employed persons; 100/150
A
89) If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the labor force participation rate is A) 78.6 percent. B) 71.4 percent. C) 64.3 percent. D) 66.6 percent.
A
9) The first step in measuring the CPI is to A) select the market basket. B) conduct a monthly survey. C) collect prices for the basket of goods and services. D) interview businesses.
A
91) 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 labor force participation rate is A) 69.6 percent. B) 23.3 percent. C) 6.67 percent. D) 50 percent.
A
95) If unemployment is at the natural rate, then there A) is no cyclical unemployment. B) is no frictional unemployment. C) will be cyclical and frictional unemployment but not structural unemployment. D) will be only cyclical unemployment.
A
99) Using the data in the above table, the labor force is ____ million. A) 215 B) 120 C) 125 D) 165
A
99) When the economy moves into and out of recessions and expansions, the unemployment rate fluctuates around the A) natural unemployment rate. B) structural unemployment rate. C) cyclical unemployment. D) frictional unemployment rate.
A
105) The natural unemployment rate A) estimated to be close to 9 percent in recent years in the United States. B) has been estimated to range between 4 percent and 6 percent in the United States in recent years. C) is attained whenever the unemployment rate is less than 5 percent because 95 percent employment is considered full employment. D) occurs when 100 percent of the labor force is employed.
B
11) 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 A) 200. B) 225. C) 325. D) 450.
B
110) Discouraged workers counted as officially unemployed because they . A) are; are not working B) are; are still in the labor force C) are not; are not qualified to work D) are not; are not actively seeking work
B
110) When more labor is unemployed than the amount at the natural unemployment rate, then real GDP potential GDP. A) is equal to B) is less than C) is greater than D) cannot be compared to
B
116) In a country with a working-age population of 150 million, 120 million workers are employed and 10 million workers are unemployed. What is the size of the labor force? A) 150 million B) 130 million C) 120 million D) 10 million
B
117) In a country with a working-age population of 300 million, 230 million workers are employed and 40 million workers are unemployed. What is the labor force participation rate? A) 100 percent B) 90 percent C) 65 percent D) 5 percent
B
12) Which population category equals the sum of employed and unemployed people? A) working-age population B) labor force C) young and institutionalized D) not in the labor force
B
13) Suppose the country of Tiny Town experienced frictional unemployment. This frictional unemployment would A) definitely signal that the country is in a recession. B) be considered a natural occurrence in a growing economy. C) signal that there are more job leavers than job losers. D) signal that the number of discouraged workers is growing.
B
14) When an individual is frictionally unemployed, the unemployment arises in part from A) a short-term elimination of jobs because of a slowdown in business activity. B) individuals searching for appropriate employment. C) the permanent elimination of jobs because of a change in the structure of the economy. D) a reduction in the overall demand for workersʹ skills.
B
15) Frictional unemployment increases when A) real GDP decreases and the unemployment rate rises. B) the number of workers who quit one job to find another increases. C) discouraged workers drop out of the work force. D) workers are replaced by machines and the unemployed workers do not have the skills to perform new jobs.
B
15) If 2003 is the reference base period, what is the price index for the CPI basket of goods for 2011 in the above table? A) 97.3 B) 102.8 C) 128.0 D) zero because the price of CDs fell and the price of water increased
B
22) If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the labor force is A) 1000. B) 1100. C) 1400. D) 1500.
B
23) If the CPI was 121.5 at the end of last year and 138.3 at the end of this year, the inflation rate over these two years was A) 10.2 percent. B) 13.8 percent. C) 12.2 percent. D) 16.8 percent.
B
24) The official U-3 unemployment rate includes the total number of people who A) have jobs or are currently looking for jobs. B) are available and looking for work but unable to find employment. C) would like to have a job but have stopped seeking work. D) would like to have a full-time job but are working part-time.
B
24) Which of the following most likely would decrease frictional unemployment? A) an increase in the number of high school and college graduates B) effective Internet-based employment services and job registries C) an expansion of unemployment compensation benefits D) All of the above would decrease frictional unemployment.
B
25) If the CPI was 132.5 at the end of last year and 137.5 at the end of this year, the inflation rate over these two years was A) 3.6 percent. B) 3.8 percent. C) 5.0 percent. D) None of the above answers is correct.
B
26) At the end of last year the Consumer Price Index was equal to 163.8 and at the end of this year it was equal to 157.5. What is the inflation rate over this time period? A) 6.3 percent B) 4.0 percent C) 3.85 percent D) 10.1 percent
B
27) If the price level last year was 220 and this year is 250, what is the inflation rate between the two years? A) 30 percent B) 13.6 percent C) 12.2 percent D) 20 percent
B
28) 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. A) I only B) II only C) both I and II D) neither I nor II
B
29) The best example of a frictionally unemployed individual is A) Charles who has lost his job as an autoworker because of increased imports and canʹt find a good job that utilizes his skills. B) Mary who quit her job to find work closer to her home. C) Sam who lost his job as a real estate salesperson when the housing market went soft because of a recession. D) Sandy who has few skills and is no longer looking for work.
B
3) The total number of people aged 16 years and over who are not institutionalized . A) equals the number of employed plus unemployed B) is the working-age population C) does not include students D) is the labor force
B
31) If the CPI this year is 220 and was 200 in last year, the annual inflation rate between the two years is A) 5 percent. B) 10 percent. C) 20 percent. D) 2 percent.
B
31) The unemployment rate is the____who are unemployed. A) number of people in the labor force B) percentage of people in the labor force C) percentage of people in the country D) percentage of the working-age population
B
50) The above table shows answers given by people interviewed in the Current Population Survey. Which people are structurally unemployed? A) A, B, C, and D B) A, B, and C C) B and C. D) A, B, and D
C
33) Suppose that over a period of years the country of Quasiland switched from being an agriculturally-based economy to a technologically-based economy. As a result, many people lost jobs because they lacked the correct skills. As they search for new jobs, these people are part of A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) discouraged workers.
B
33) The unemployment rate equals A) (number of people employed/working age population) × 100. B) (number of people unemployed/labor force) × 100. C) (labor force/working age population) × 100. D) (number of people employed/number of people age 16 and over) × 100.
B
38) In the above table, the inflation rate between 2009 and 2010 is approximately A) 9 percent. B) 10 percent. C) 100 percent. D) 110 percent.
B
38) Suppose that the number of jobs in the fishing industry decreases but the number of jobs in the travel industry increases. Initially, _________________ . A) the economy remains at full employment B) structural unemployment increases C) there is a shortage of workers in both sectors D) cyclical unemployment increases
B
39) When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing A) frictional unemployment. B) structural unemployment. C) frictional and cyclical unemployment. D) cyclical unemployment.
B
4) Frictional unemployment is A) unemployment associated with business cycle recessions. B) unemployment associated with the changing of jobs in a changing economy. C) long-term unemployment. D) unemployment associated with declining industries.
B
4) Which of the following statements is incorrect? A) The labor force is equal to the number of people employed plus the number of people unemployed. B) The working age population includes everyone over the age of 16. C) The unemployment rate is the number of persons who are unemployed divided by the labor force then times 100. D) The labor-force participation rate is the labor force divided by the working-age population then times 100.
B
40) The unemployment rate is measured as A) the number of people that want to work but cannot find jobs out of the entire population. B) the percentage of people in the labor force who are unemployed. C) an indicator to determine long-term economic growth. D) an indicator for potential inflation.
B
41) In the table above, what inflation rate belongs in space B? A) 17.0 percent B) 6.8 percent C) 8.3 percent D) -4.0 percent
B
42) When the economy switches production toward services and away from manufacturing and workers in the manufacturing industry are permanently laid off, A) frictional unemployment decreases. B) structural unemployment increases. C) cyclical unemployment increases. D) frictional and cyclical unemployment increase.
B
43) In the table above, what price level belongs in space D? A) 125 B) 130 C) 140 D) 145
B
43) Suppose the country of Tiny Town decided to open its borders to free trade. As a result, a number of its workers lost their jobs to international competition and canʹt find new jobs because their skills donʹt match what is required for job openings. The workers who lost their jobs and searched for new ones are best be considered part of A) frictional unemployment. B) structural unemployment C) cyclical unemployment. D) discouraged workers.
B
44) 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 didnʹt have the skills necessary to work making DVDs. This occurrence is best consider an example of A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) underemployment.
B
46) Based on the following data for the country of Tiny Town, the unemployment rate equals: Population = 100 Labor force = 80 Number of employed persons = 70 Number of discouraged workers = 5 A) 10/100 × 100. B) 10/80 × 100. C) 15/80 × 100. D) 5/70 × 100.
B
49) Nicholas does not possess marketable job skills; therefore, he is A) frictionally unemployed. B) structurally unemployed. C) cyclically unemployed. D) seasonally unemployed.
B
5) This type of unemployment reflects the normal amount of unemployed workers who possess skills that will enable them to find another job. A) cyclical unemployment B) frictional unemployment C) structural unemployment D) None of the above answers is correct.
B
50) During a recession, people drop out of the labor force because they are unable to find a job. All else the same, this A) increases the official U-3 unemployment rate. B) decreases the official U-3 unemployment rate. C) does not change the official U-3 unemployment rate. D) increases the official U-3 unemployment rate and the labor force participation rate.
B
51) If the price level for the last three months has been 112, 125, and 126, we would say A) inflation has been constant over the three months. B) inflation was more rapid between the first and second month than between the second and third month. C) inflation was less rapid between the first and second month than between the second and third month. D) inflation has steadily increased over the three months.
B
51) In the United States in 1996, the population was 265.5 million and the working age population was 200.6 million. There were 133.9 million people in the labor force and 126.7 of them were employed. The unemployment rate equaled _______ . A) 7.2 percent B) 5.4 percent C) 3.6 percent D) 33 percent
B
52) Assume the inflation rate falls from 4 percent to 2 percent. This means that A) the price level has fallen. B) the price level is increasing more slowly. C) the economy is experiencing deflation. D) real GDP is decreasing.
B
56) Suppose the population is 220 million people, the labor force is 150 million people, the number of people employed is 130 million and the working-age population is 175 million people. What is the unemployment rate? A) 9.0 percent B) 13.3 percent C) 11.4 percent D) 15.4
B
57) Suppose there are currently 100 people unemployed, 1500 people employed, 1600 people in the labor force, and 2000 people in the working age population. The unemployment rate equals 100 times A) 100/1500. B) 100/1600. C) 100/2000. D) 1500/2000.
B
58) The biases in the CPI include the A) old goods, unemployment, and inflation biases. B) new goods, quality change, and substitution biases. C) old goods, new goods, and quality change biases. D) substitution, new goods, and old goods biases.
B
58) Unemployment that is the result of recessions is called A) frictional unemployment. B) cyclical unemployment. C) downtime unemployment. D) structural unemployment.
B
6) All people in the working-age population can be divided into A) labor force participants. B) employed, unemployed, or not in the labor force. C) either over-employed or under-employed. D) potential employees.
B
6) In a period of rapid, unexpected inflation, resources can be lost A) when firms invest in research and development instead of forecasting inflation. B) when firms use resources to forecast inflation. C) because rapid inflation almost always turns into a hyperinflation. D) Both answers B and C are correct.
B
60) The primary factor leading to cyclical unemployment is when A) businesses often discriminate in their hiring practices on the basis of age, sex, and race. B) the level of overall economic activity fluctuates. C) workers quit their jobs in order to look for higher paying employment. D) some workers do not have marketable job skills.
B
62) The currently used method for calculating the CPI A) accounts for people increasing consumption of a good that falls in relative price. B) probably overstates inflation by about 1 percentage point. C) has no effect on government expenditures. D) None of the above answers are correct.
B
63) Because of the biases in calculating the CPI, actual inflation is A) accurately measured. B) less than the measured inflation rate by about 1 percent per year. C) more than the measured inflation rate by about 1 percent per year. D) more than the measured inflation rate by about 1 percent per month.
B
64) Cyclical unemployment A) is the major part of the natural unemployment rate. B) decreases during economic expansions. C) rises as a result of increased international competition. D) falls when unemployment compensation payments are increased.
B
64) The currently used method for calculating the CPI A) accounts for people increasing consumption of a good that falls in relative price. B) probably overstates inflation by about 1 percentage point. C) has no effect on government expenditures. D) None of the above answers are correct.
B
65) An example of the new goods bias in the CPI is the A) introduction of higher quality brakes as standard equipment on new cars. B) introduction of hybrid automobiles, vehicles that were not made until recently. C) decreasing popularity of SUVs as the price of gasoline has risen. D) switch from traditional car dealerships to low-cost Internet car buying services.
B
65) During an economic expansion, real GDP___ and unemployment ________ A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
B
66) An observer of the economy notices that over the past 12 months the unemployment rate has fallen from 7.0 percent to 6.5 percent. During the same time, the rate of growth in real GDP has been positive. From this information we might conclude that A) inflation is not occurring. B) an expansion is occurring in the economy. C) a recession is in progress. D) a trough in the business cycle will soon be reached.
B
66) If a new and better good replaced an older and less expensive good, then the price level measured by the CPI . A) is lower than the actual price level B) is higher than the actual price level C) might be either higher or lower than the actual price D) is the same as the actual price level because it measures the prices of the actual goods.
B
68) As currently calculated, the CPI tends to overstate the true inflation rate because A) we cannot know what the true inflation rate is. B) it fails to correctly measure quality changes for some products. C) the market basket selected is inappropriate. D) the market basket fails to weigh housing costs sufficiently.
B
69) Auto and steel workers commonly experience this type of unemployment in a recession. A) frictional unemployment B) cyclical unemployment C) structural unemployment D) natural unemployment rate
B
69) The employment-to-population ratio is equal to the number of A) unemployed people divided by the total population then multiplied by 100. B) employed people divided by the working-age population then multiplied by 100. C) employed people divided by the total population then multiplied by 100. D) unemployed people divided by the working age population then multiplied by 100.
B
7) Unemployment caused by the normal labor turnover is called unemployment. A) part-time B) frictional C) involuntary D) cyclical
B
70) Substitution bias in the CPI refers to the fact that the CPI A) takes into account the substitution of goods by consumers when relative prices change. B) takes no account of the substitution of goods by consumers when relative prices change. C) substitutes quality changes whenever they occur without taking account of the cost of the quality changes. D) substitutes relative prices for absolute prices of goods.
B
70) The percentage of people employed aged 16 years and older divided by the working -age population is known as the A) employment rate. B) employment-to-population ratio. C) labor force participation rate. D) working-age population ratio.
B
71) 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? A) 6 percent B) 10 percent C) 12 percent D) None of the above answers are correct because more information is needed to calculate the inflation rate.
B
72) In an economy, 43 million people are employed, 3 million are unemployed, and 4 million are not in the labor force. What is the employment-to-population ratio? A) 86 percent B) 92 percent C) 93 percent D) 6.5 percent
B
72) Mike has just been laid off from his construction job because consumers are not purchasing new homes because of the recession. Mike would be considered to be part of A) structural unemployment. B) cyclical unemployment. C) seasonal unemployment. D) frictional unemployment.
B
75) 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 rate is A) 53.3 percent. B) 65.2 percent. C) 46.7 percent. D) 87.5 percent.
B
76) Full employment occurs when A) structural unemployment is zero. B) cyclical unemployment is zero. C) frictional unemployment is zero. D) cyclical and frictional unemployment are zero
B
78) Full employment means that A) no one is unemployed. B) there is no cyclical unemployment. C) there is no cyclical or frictional unemployment. D) there is no structural or frictional unemployment.
B
79) The economy is at full employment when A) there are no unemployed workers. B) all unemployment is frictional or structural. C) there are fewer unemployed workers than available jobs. D) all unemployment is cyclical.
B
8) Frictional unemployment is the result of A) technological change or foreign competition. B) normal labor market turnover. C) a slowdown in the rate of economic expansion. D) irresponsible workers with poor work habits.
B
80) The labor force participation rate is percentage of the_____ who are in the labor force. A) people under age 65 B) working-age population C) people over age 16 D) population
B
81) Full employment occurs A) only if the unemployment rate is zero. B) only if the unemployment rate is equal to the natural unemployment rate. C) only if unemployment is equal to structural unemployment plus cyclical unemployment. D) None of the above answers are correct.
B
82) When the economy is at full employment the A) natural unemployment rate is equal to 0 percent. B) natural unemployment rate equals the unemployment rate. C) natural unemployment rate is equal to 10 percent. D) unemployment rate is equal to 0 percent.
B
85) In an economy, 40 million people are employed, 2 million are unemployed, and 8 million are not in the labor force. What is the labor force participation rate? A) 83 percent B) 84 percent C) 80 percent D) 87.5 percent
B
87) When the economy is operating at full employment, the natural unemployment rate consists of only A) cyclical unemployment. B) frictional and structural unemployment. C) frictional and cyclical unemployment. D) structural and cyclical unemployment.
B
9) The labor force is defined as A) people with full time jobs. B) workers with jobs and unemployed workers. C) all people capable of work. D) All of the above answers are correct.
B
90) Suppose the population is 220 million people, the labor force is 150 million people, the number of people employed is 130 million and the working-age population is 175 million people. What is the labor force participation rate? A) 0.68 percent B) 68 percent C) 85.7 percent D) 86.7 percent
B
90) The natural unemployment rate A) falls with an increase in cyclical unemployment. B) rises with an increase in structural unemployment. C) rises with an increase in cyclical unemployment. D) rises with a decrease in frictional unemployment.
B
96) If unemployment equals the natural unemployment rate, then there A) is zero unemployment. B) is only frictional or structural unemployment. C) are no job openings existing at the time. D) is less than full employment.
B
96) In the above table, the employment-to-population ratio is A) 51 percent. B) 42 percent. C) 62 percent. D) 44 percent.
B
88) An unemployment rate of zero percent cannot be expected because A) there are some people who do not want to work. B) there will always be discouraged workers. C) some portion of the labor force will always be between jobs. D) cyclical unemployment will always exist.
C
1) An increase in the price level is defined as A) a recession. B) a growth boom. C) inflation. D) an expansion.
C
10) Frictional unemployment comes about because of A) friction between labor and management. B) a mismatch between skills and available jobs. C) normal labor market turnover. D) a general economic slowdown.
C
100) The natural unemployment rate . A) is the same from year to year B) is greater than the actual rate of unemployment C) is the unemployment rate when there is no cyclical unemployment D) equals zero
C
100) Using the data in the above table, the labor force participation rate is A) 66 percent. B) 58.1 percent. C) 75.7 percent. D) 96.0 percent.
C
107) An individual who has stopped looking for a job but has looked in the past and still wants a job is referred to as A) a contingent worker. B) a productive worker. C) a marginally attached worker. D) an unemployed worker.
C
108) An individual who has stopped looking for a job because he is convinced that he cannot find a job is referred to as A) a contingent worker. B) a productive worker. C) a discouraged worker. D) an unemployed worker.
C
108) Suppose that the unemployment rate equals 4.5 percent and that the natural unemployment rate is 5.5 percent. We can conclude that A) the output gap is negative. B) the output gap equals zero. C) the output gap is positive. D) we have mismeasured the natural unemployment rate.
C
112) At the natural unemployment rate, there is no A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) unemployment.
C
118) In a country with a working-age population of 100 million, 70 million workers are employed and 5 million workers are unemployed. What is the labor force participation rate? A) 70 percent B) 5 percent C) 75 percent D) 7 percent
C
12) Unemployment caused by people voluntarily leaving their jobs is classified as A) part-time unemployment. B) cyclical unemployment. C) frictional unemployment. D) seasonal unemployment.
C
13) The____ is the total number of people aged 16 years and older (and not in jail, hospital or institutional care) while the____is the number of people employed and the unemployed. A) labor force; working-age population B) labor force participation rate; labor force C) working-age population; labor force D) working-age population; labor force participation rate
C
14) If the CPI is 120, this means that A) prices are 120 percent higher than in the reference base period. B) prices are 0.12 times higher than in the reference base period. C) prices are 20 percent higher than in the reference base period. D) the inflation rate must be positive.
C
15) The labor force is defined as the A) number of people over 16 years of age. B) number of people who are working. C) sum of employed and unemployed people. D) number of people in blue-collar jobs.
C
16) The information in the table above gives the 2008 reference base period CPI basket and prices used to construct the CPI for a small nation. It also has the 2009 prices. What is the value of the CPI for the reference base period, 2008? A) 140 B) 133 C) 100 D) 75
C
16) To prevent frictional unemployment, we would have to A) eliminate recessions. B) eliminate the business cycle. C) prevent people from leaving their jobs. D) make sure everyone goes to college.
C
18) 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 _____________ . A) 1.60 B) 62.5 C) 160 D) 140
C
20) Using the notation Pt to designate this periodʹs price level and Pt-1 to designate last periodʹs price level, the formula for measuring the inflation rate from last period to this period is A) [(Pt - Pt-1) / Pt] × 100. B) [(Pt-1 - Pt) / Pt-1] × 100. C) [(Pt - Pt-1) / Pt-1] × 100. D) [(Pt-1 - Pt) / Pt] × 100.
C
21) In an economy, 42 million people are in the labor force, 38 million are employed, and 47 million are of working age. How many people are not in the labor force? A) 19 percent B) 9 million C) 5 million D) 4 million
C
21) Suppose the CPI last year is 121 and the CPI this year is 137. The correct method to calculate the inflation rate is A) (137 - 121)/100 = 0.16. B) 137 × 121 = 258. C) [(137 - 121)/121] × 100 = 13.2. D) (137/121) × 100 = 113.2.
C
22) Students who leave school in the spring and look for work are one source of . A) structural unemployment B) cyclical unemployment C) frictional unemployment D) business-cycle fluctuations
C
23) When a student finishes college and begins looking for work, A) cyclical unemployment increases. B) structural unemployment increases. C) frictional unemployment increases. D) frictional and cyclical unemployment increase.
C
25) Suppose that Matt quits a job with the XYZ Corporation in order to look for more rewarding employment. Matt would be best be considered as A) still being employed. B) included in the economyʹs ʺhidden employment.ʺ C) frictionally unemployed. D) cyclically unemployed.
C
26) Which of the following best fits the definition of unemployed? A) retired and not working B) working less than a full work week C) not working but looking for a job D) not working and not looking for work
C
29) Using the official measure of unemployment, which of the following people is considered unemployed? A) a part-time worker who wishes to work full time B) a person who gave up looking for jobs because he or she was discouraged about his or her job prospects C) a person who has been searching for work, but turns down a job paying a lower wage rate than desired D) a person who is working but expects to be laid off at the end of the month
C
3) Frictional unemployment A) includes discouraged workers. B) is voluntary part-time unemployment. C) is unemployment associated normal labor turnover. D) is unemployment associated with declining industries.
C
3) Unpredictable changes in the value of money, which brings about gains and losses, are a consequence of unpredictable changes in A) real GDP. B) unemployment rate. C) inflation. D) productivity.
C
30) Structural unemployment is A) associated with the normal changing of jobs in a dynamic economy. B) associated with the general downturns in the economy. C) associated with the general decline of specific industries. D) almost always short-term in nature.
C
30) Suppose that last year the Consumer Price Index was 124; this year it is 130.7. What was the inflation rate between these years? A) 30.7 percent B) 6.7 percent C) 5.4 percent D) 5.1 percent
C
30) Using the official measure of unemployment, which of the following would NOT be counted as unemployed? A) a person who is not working but who has tried to find a job in the past week B) a person who is waiting to be called back to a job after having been laid off C) a person who performs traditional housework and does not work outside the home for pay D) a person who is waiting to start a new job in the next 30 days
C
32) Structural unemployment is A) associated with the changing of jobs in a dynamic economy. B) associated with general downturns in the economy. C) associated with changes in technology that change required job skills. D) very short-term unemployment.
C
32) The unemployment rate is calculated as A) [(labor force) ÷ (population)] × 100. B) [(unemployment) ÷ (population)] × 100. C) [(unemployment) ÷ (labor force)] × 100. D) [(labor force) ÷ (unemployment)] × 100.
C
35) Which statement correctly describes ʺstructural unemployment?ʺ A) Structural unemployment occurs mainly during recessions. B) Structural unemployment is also called ʺfrictional unemployment.ʺ C) Structural unemployment occurs even when the economy is at the natural unemployment rate. D) The amount of structural unemployment depends on normal labor turnover.
C
37) In the above table, the inflation rate between 2008 and 2009 is approximately A) 0.9 percent. B) 1 percent. C) 10 percent. D) 100 percent.
C
37) Structural unemployment A) falls during the expansion phase of the business cycle. B) falls as the pace of technological progress increases. C) generally lasts longer than frictional unemployment. D) falls when the government provides more generous unemployment compensation benefits.
C
37) The unemployment rate is found by dividing the number of unemployed people by the A) number of working individuals, and multiplying by 100. B) number of the working-age population, and multiplying by 100. C) sum of working individuals plus unemployed workers, and multiplying by 100. D) number in the labor force, and dividing by 100.
C
39) The unemployment rate is defined as the A) number of people not working. B) percentage of the population not working. C) percentage of the labor force not working. D) percentage of the working-age population not working.
C
4) The cost of inflation to society includes I. the opportunity costs of resources used by people to protect themselves against inflation. II. the diversion of productive resources to forecasting inflation. A) I only B) II only C) both I and II D) neither I nor II
C
41) To calculate the unemployment rate, which of the following are necessary pieces of information? I. the number of unemployed persons II. the population III. the number of people in the labor force IV. the working age population A) I, II III and IV B) I and II C) I and III D) I and IV
C
42) The unemployment rate measures the percentage of A) people who want full-time jobs, but canʹt find them. B) the working-age population who canʹt find a job. C) people in the labor force who canʹt find a job. D) the working age population that canʹt find a full -time job.
C
45) In 2010, consumers in Dexter consumed only books and pens. The prices and quantities for 2010 and 2011 are listed in the table above. The reference base period for Dexterʹs CPI is 2010. What is the cost of the CPI basket in 2010? A) $430 B) $335 C) $320 D) $540
C
45) The population of Tiny Town is 100 people and the labor force is made up of 75 people. If 5 of these people are unemployed, the unemployment rate is A) 5/100 × 100. B) 5/80 × 100. C) 5/75 × 100. D) There is not enough information provided to calculate the unemployment rate.
C
46) Which of the following individuals is the best example of a structurally unemployed worker? A) a recent college graduate who has entered the labor force B) an individual who has been laid off from his job because of a business cycle recession C) an automobile worker who has lost her job because of an increase in automobile imports and does not have the skills currently needed by businesses D) an individual who quits one job in the hope of finding a better job
C
47) 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? A) 23.2 percent B) 6.7 percent C) 8 percent D) 25 percent
C
47) Ms. Krupsky has shorthand and typing skills and still finds herself unemployed. In todayʹs economy, Ms. Krupsky is an example of what type of unemployment? A) cyclical unemployment B) frictional unemployment C) structural unemployment D) None of the above answers is correct.
C
48) Assume that the total labor force is 100 individuals with 10 unemployed. The unemployment rate is ______. Now assume that 10 people drop out of the labor force and that 10 remain unemployed. The new unemployment rate is ________ . A) 9 percent, 10 percent B) 10 percent, 9 percent C) 10 percent, 11 percent D) 11 percent, 10 percent
C
52) Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed persons is _____and the new unemployment rate is ______ . A) 100.1 million; 5.8 percent B) 100 million; 6.1 percent C) 94.1 million; 5.9 percent D) 93.9 million; 6.1 percent
C
54) Suppose initially that the working-age population is 220 million, the labor force is 150 million, and the official U-3 unemployment rate is 10 percent. 5 million new jobs are created and filled by 5 million people who had previously been discouraged workers. What is the new U -3 unemployment rate? A) 6.25 percent B) 6.7 percent C) 9.7 percent D) 8.7 percent
C
55) Cyclical unemployment is the result of A) technological change or foreign competition. B) normal labor market turnover. C) the business cycle. D) irresponsible workers with poor work habits
C
55) 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 A) 6.6 percent. B) 10 percent. C) 9.1 percent. D) 7.1 percent.
C
58) 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 unemployment rate is A) 23.3 percent. B) 6.7 percent. C) 6.25 percent. D) 26.7 percent.
C
59) Suppose the country of Quasiland experienced a decrease in real GDP and people were laid off from their jobs. The people would be considered part of A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) discouraged workers.
C
59) Suppose the current unemployment rate is 5 percent, the labor force is 400 million people, the labor force participation rate is 80 percent and the working-age population is 500 million people. What number of people are unemployed? A) 100 million people B) 25 million people C) 20 million people D) 5 million people
C
61) The biases in the CPI are A) not important since they are so small. B) important only to economists, not the real world. C) important since they effect nearly 1/3 of federal government spending. D) not important although they are large.
C
63) If the economy enters an expansion, A) cyclical unemployment increases. B) structural unemployment increases. C) cyclical unemployment decreases. D) structural unemployment decreases.
C
63) In the table above, the size of the labor force is A) 80 million. B) 46 million. C) 42 million. D) 40 million.
C
68) Cyclical unemployment _____during expansions and ___ during recessions. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
C
69) The technique currently used to calculate the CPI implicitly assumes that over time consumers buy A) relatively more of goods whose relative prices are rising. B) relatively less of goods whose relative prices are rising. C) the same relative quantities of goods as in a base year. D) goods and services whose quality improves at the rate of growth of real income.
C
7) Hyperinflation is defined as A) declining inflation rates. B) rising but low inflation rates. C) very high inflation rates. D) very low inflation rates.
C
7) Suppose the working age population in Tiny Town is 100 people. If 25 of these people are NOT in the labor force, the ___equals _____ A) unemployment rate; 25/100 × 100 B) unemployment rate; 25/75 × 100 C) labor force; 75 D) labor force; 25/100 × 100
C
70) If the economy enters a recession, A) frictional unemployment increases. B) structural unemployment decreases. C) cyclical unemployment increases. D) the number of workers on layoff decreases.
C
71) Recessions and expansions affect most strongly which type of unemployment? A) frictional unemployment B) structural unemployment C) cyclical unemployment D) seasonal unemployment
C
71) The percentage of the people of working age who have jobs is called the ____________ . A) labor force B) inverse of the unemployment rate C) employment-to-population ratio D) employment-to-working-age-population ratio
C
73) Bill is a high-school drop out who lost his job in a fast food restaurant when the economy plunged into a recession. After 8 months, Bill is still looking for work. He is an example of A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) the natural unemployment rate
C
74) If the number of people unemployed is 100, the number of people employed is 1000, and the working-age population is 1400, then the employment-to-population ratio is A) 78.6 percent. B) 75 percent. C) 71.4 percent. D) 66.6 percent.
C
75) Which of the following situations best describes an individual who is cyclically unemployed? A) Catherine is a ski instructor who is not working because it is summer. B) Matthew was an artillery man, but he has been unable to find work since he left the army. C) Nicholas was laid-off when orders for General Motors cars fell during a recession. D) Susan quit her job as a preschool teacher to try to find a better paying job.
C
8) The labor force is the sum of the A) working-age population and the number of unemployed people. B) number of employed people and the working-age population. C) number of employed people and the number of unemployed people. D) total population and the number of unemployed people.
C
83) An economy is at full employment when ________ . A) the unemployment rate is zero B) there is no frictional unemployment C) the unemployment rate equals the natural unemployment rate D) there is no structural unemployment
C
85) Full employment means A) zero unemployment. B) only cyclical unemployment exists. C) only frictional and structural unemployment exists. D) None of the above answers are correct.
C
86) When economists speak of full employment, they refer to the case in which the sum of frictional and structural unemployment is A) falling over time. B) equal to zero. C) equal to the actual amount of unemployment. D) greater than the level of deficient demand unemployment.
C
88) Suppose there are currently 100 people unemployed, 1500 people employed, and 2000 people in the working age population. The labor force participation rate equals 100 times A) 100/1500. B) 100/1600. C) 1500/2000. D) 1600/2000.
C
91) The unemployment rate is at the natural unemployment rate when A) frictional unemployment equals zero. B) structural unemployment equals zero. C) cyclical unemployment equals zero. D) all types of unemployment equal zero.
C
92) In the above table, the working age population is A) 225 million. B) 100 million. C) 140 million. D) 155 million.
C
92) The natural unemployment rate is the unemployment rate that exists when there is no A) structural unemployment. B) frictional unemployment. C) cyclical unemployment. D) cyclical or structural unemployment.
C
93) In the above table, the size of the labor force is A) 210 million. B) 155 million. C) 140 million. D) 100 million.
C
94) In the above table, the unemployment rate is A) 6 percent. B) 24 percent. C) 18 percent. D) 29 percent.
C
94) The natural unemployment rate A) is a constant figure of about 4 percent. B) fluctuates with the rate of inflation. C) is the unemployment rate that occurs when the economy is at full employment. D) is equal to cyclical unemployment.
C
95) In the above table, the labor force participation rate is A) 55 percent. B) 44 percent. C) 62 percent. D) 69 percent.
C
97) In the above table, the number of marginally attached workers is A) 40 million. B) 55 million. C) 15 million. D) 100 million.
C
97) The natural unemployment rate A) occurs when the unemployment rate is 0 percent. B) is the unemployment rate when there is no structural unemployment. C) is the unemployment rate at full employment. D) is the unemployment rate when there is only cyclical unemployment.
C
1) Bob inherits a large sum of money from his dead uncleʹs estate. Bob decides to retire young, so he quits his job and heads to the Bahamas. Bob is an example of A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) None of the above is correct.
D
101) Using the information in the table above, calculate the number of people in the labor force. A) 2500 B) 2100 C) 1500 D) 800
D
101) When cyclical unemployment increases and other things remain the same, . A) the natural unemployment rate increases B) the amount of frictional unemployment increases C) the amount of structural unemployment decreases D) the natural unemployment rate does not change
D
106) Cyclical unemployment exists when A) frictional and structural unemployment is zero. B) real national income exceeds potential income. C) real GDP exceeds potential GDP. D) real GDP is less than potential GDP.
D
106) The employment-to-population ratio is A) 67 percent. B) 64 percent. C) 50 percent. D) 62 percent.
D
109) A discouraged worker___ counted as officially unemployed and _____counted as in the labor force. A) is; is B) is; is not C) is not; is D) is not; is not
D
111) During a recession, the . A) number of discouraged workers decreases B) unemployment rate decreases C) employment-to-population ratio increases D) number of marginally attached workers increases
D
111) The unemployment rate generally falls during ____ in the business cycle. A) a peak B) a recession C) a trough D) an expansion
D
113) If the economy is at full employment, A) the entire population is employed. B) the entire labor force is employed. C) the only unemployment is frictional unemployment plus discouraged workers. D) real GDP equals potential GDP.
D
113) When an individual who has not been working but has been looking for work decides to terminate the search process, the official unemployment rate A) will fall. B) will rise. C) will remain unchanged. D) may fall or rise depending on whether or not the individual resumes his education.
D
114) Marginally attached workers fall into which of the following population categories? A) employed B) unemployed C) labor force D) not in the labor force
D
115) Who of the following is counted as unemployed? A) Rene, a retired chemist B) Homer, a full-time student at a vocational school C) Kim, a worker on strike from her company for a week D) Glenn, a student who just graduated from college last week and is currently looking for a job
D
119) In a country with a working-age population of 130 million, 90 million workers are employed and 10 million workers are unemployed. What is the unemployment rate? A) 5.0 percent B) 7.1 percent C) 7.7 percent D) 10.0 percent
D
12) If the CPI basket costs $35 in the base period but costs $42, what is the CPI in the next period? A) 83.3 B) $42 C) 20 percent D) 120
D
13) Suppose the Consumer Price Index is 143.6. What does that number mean? A) On average, goods cost $143.60. B) On average, goods cost $243.60. C) Prices rose 143.6 percent over the reference base period, on average. D) Prices rose 43.6 percent over the reference base period, on average.
D
14) The labor force is defined as the number of A) people 16 and over. B) unemployed people. C) people with jobs, both part-time and full-time. D) people who are employed and unemployed.
D
17) The labor force includes A) only the number of people employed. B) discouraged workers. C) only the number of people unemployed. D) both employed and unemployed workers.
D
18) An individual with good job prospects who is between jobs is best considered as A) structurally unemployed. B) cyclically unemployed. C) not in the labor force. D) frictionally unemployed.
D
19) A recent accounting graduate from a major business school is searching for a place to begin his career as an accountant. This individual is best considered as A) structurally unemployed. B) seasonally unemployed. C) cyclically unemployed. D) frictionally unemployed.
D
2) Inflation is a problem when A) it is unpredictable. B) it causes the value of money to vary unpredictably. C) it causes resources to be diverted from productive uses. D) All of the above answers are correct.
D
2) The three types of unemployment are A) voluntary, involuntary, and structural. B) voluntary, part-time, and cyclical. C) frictional, part-time, and involuntary. D) frictional, structural, and cyclical.
D
2) The working-age population can be divided into two groups, A) people in the labor force and people looking for work. B) people in the labor force and people with a job. C) people looking for work and those in the armed forces. D) people in the labor force and people who are not in the labor force.
D
20) When a worker quits a job to look for a better job, A) structural and cyclical unemployment increase. B) structural unemployment decreases. C) cyclical unemployment increases. D) frictional unemployment increases.
D
20) Which of the following is NOT considered to be in the labor force? A) a student who works part-time B) a person who is not working but who has tried to find a job in the past week C) a person who is waiting to start a new job in the next 30 days D) a person who is not working and who has not tried to find a job
D
21) When a woman reenters the labor force and looks for a job after spending time at home raising a child, A) cyclical unemployment increases. B) structural unemployment decreases. C) frictional and cyclical unemployment increase. D) frictional unemployment increases.
D
22) If the CPI was 132.5 at the end of last year and 140.2 at the end of this year, the inflation rate over these two years was A) 7.7 percent. B) 5.4 percent. C) 4.4 percent. D) 5.8 percent.
D
27) Using the definition of unemployment, which of the following individuals would be unemployed? A) A full-time student quits school, enters the labor market for the first time, and searches for employment. B) Because of the increased level of automobile imports, an employee of General Motors is laid off but expects to be called back to work soon. C) Because of a reduction in the military budget, your next door neighbor loses her job in a plant where nuclear warheads are made and must look for a new job. D) All of these individuals are unemployed.
D
34) An individual is structurally unemployed if A) there is a recession and the individual is laid off. B) the individual wants to work just during certain months of the year. C) the individual quits a job in order to search for a better one. D) the individual lacks marketable job skills because technology has changed.
D
34) The unemployment rate equals the number of A) unemployed workers multiplied by 100. B) unemployed workers divided by the population then multiplied by 100. C) unemployed workers divided by the number of employed workers then multiplied by 100. D) unemployed workers divided by the labor force then multiplied by 100.
D
36) The unemployment rate equals A) the total number of people without jobs in a given period. B) the percentage of the population not currently employed. C) the rate of change in unemployment figures from one period to another. D) the percentage of the labor force currently unemployed.
D
40) The nationʹs structural unemployment will increase when A) bad economic policies send the economy into a recession. B) there is influx into the labor market of new college graduates. C) there is an increase in post-Christmas layoffs of workers. D) an increase in textile imports displaces older textile workers who do not have the skills necessary to find new jobs.
D
41) A major characteristic of structural unemployment that differentiates it from frictional unemployment is that structural unemployment A) exists only during a recession. B) exists in an expansion whereas there is no frictional unemployment in an expansion. C) is a short-term problem. D) usually lasts longer than frictional unemployment.
D
42) In the table above, what inflation rate belongs in space C? A) 17.0 percent B) 6.8 percent C) 8.3 percent D) -4.0 percent
D
44) In the table above, what inflation rate belongs in space E? A) 17.0 percent B) 6.8 percent C) 8.3 percent D) 15.4 percent
D
44) Suppose the population of Tiny Town is 100 people and the working age population is 70. If 10 of these people are unemployed, the unemployment rate in Tiny Town is A) 10 percent. B) 10/70 × 100. C) 10/80 × 100. D) There is not enough information provided to calculate the unemployment rate.
D
45) How would you best describe a manufacturing employee who has been fired because he was replaced by a robot (new technology) and does not have the skills necessary to help operate the robot? A) job leaver B) entrant/reentrant C) cyclically unemployed D) structurally unemployed
D
46) In 2010, consumers in Dexter consumed only books and pens. The prices and quantities for 2010 and 2011 are listed in the table above. The reference base period for Dexterʹs CPI is 2010. What is the CPI in 2010? A) 320 B) 1.00 C) 3.20 D) 100
D
48) Andrew just lost his job as a corkscrew operator since his company has found a machine to perform his work tasks. Andrew did not have the skills needed to operate the machine. Andrew has searched for a new job for 6 months and continues to search. Therefore, Andrew is considered to be A) frictionally unemployed. B) a discouraged worker. C) cyclically unemployed. D) structurally unemployed.
D
5) Which of the following is NOT included in the working-age population? A) discouraged workers B) people waiting to be called back to a job after being laid off C) retirees under the age of 55 D) people in prison
D
51) The above table shows answers given by people interviewed in the Current Population Survey. Which person is cyclically unemployed? A) A B) B C) C D) None of the people
D
52) Cyclical unemployment A) is due mainly to job leavers. B) may increase or decrease during an expansion. C) occurs when technology improvements change job requirements. D) fluctuates over the business cycle.
D
54) Cyclical unemployment A) is always present in an economy. B) is higher during an expansion. C) decreases during a recession. D) fluctuates over the business cycle.
D
56) Cyclical unemployment occurs when A) individuals enter into the labor market making the rounds of potential employers. B) individuals with skills no longer valued in the labor market cannot find employment. C) individuals give up the search for employment. D) a business cycle recession decreases employment.
D
57) Unemployment caused by the fluctuation of the business cycle is called unemployment. A) structural B) recession-related C) frictional D) cyclical
D
60) 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) C and D B) B, C, and D C) A, C, and D D) A, B, and C
D
60) Which of the following means that the CPI overstates the actual inflation rate? A) new goods bias B) quality change bias C) outlet substitution bias D) All of the above cause the CPI to overstate inflation
D
61) If a worker is temporarily laid off because the economy is in a recession, A) frictional unemployment increases. B) structural unemployment increases. C) the size of the labor force rises. D) cyclical unemployment increases.
D
64) In the table above, the number of people officially unemployed is ________ . A) 40 million B) 6 million C) 4 million D) 2 million
D
65) In the table above, the official U-3 unemployment rate is A) 50 percent. B) 15 percent. C) 10 percent. D) 5 percent.
D
66) In the table above, the number of marginally attached workers is __________ A) 40 million B) 6 million C) 2 million D) 4 million
D
67) The employment-to-population ratio equals A) (labor force)/(working-age population) × 100. B) (number of people employed)/(labor force) × 100. C) (number of people with full-time jobs)/(labor force) × 100. D) (number of people employed)/(working-age population) × 100.
D
68) The employment-to-population ratio is defined as A) total employment divided by labor hours then multiplied by 100. B) the labor force divided by the working-age population then multiplied by 100. C) total employment divided by the labor force then multiplied by 100. D) total employment divided by the working-age population then multiplied by 100.
D
73) Of the following sequences of price levels, which correctly represents a 5 percent inflation rate? A) 100, 100, 100, 100 B) 100, 105, 105, 105 C) 100, 105, 110, 115 D) 100, 105, 110.25, 115.76
D
73) Suppose the number of people employed is 25 million and the number of people in the labor force is 75 million. What is the employment-to-population ratio? A) 33 percent B) 25 percent C) 75 percent D) There is not enough information given to answer the question.
D
74) The commodity substitution bias is that A) consumers substitute high-quality goods for low-quality goods. B) government spending is a good substitute for investment expenditures. C) national saving and foreign borrowing are interchangeable. D) consumers decrease the quantity they buy of goods whose relative prices rise and increase the quantity of goods whose relative price falls.
D
76) Based on the following data for the country of Tiny Town, the employment -to-population ratio equals )___ multiplied by 100. Population = 200 Working age population = 100 Labor Force = 90 Number of employed persons = 75 A) 90/100. B) 75/200 C) 90/200. D) 75/100.
D
79) The labor force participation rate is calculated as the A) labor force divided by the number of persons employed then multiplied by 100. B) number of persons unemployed divided by the labor force then multiplied by 100. C) labor force divided by the unemployment rate then multiplied by 100. D) labor force divided by the working age population then multiplied by 100.
D
81) The labor force participation rate shows the percentage of A) people not working, but who want to work. B) people who are not actively participating in meaningful economic activity. C) new entrants into the labor force. D) non-institutionalized working-age people who are actually working or seeking employment.
D
83) Which of the following pieces of information do you need to calculate the labor force participation rate? I. the number of employed persons II. the number of unemployed persons III. the population IV. the working age population A) I and II B) I and III C) I, II and III D) I, II and IV
D
84) If the people who take early retirement are not counted in the working -age population, then A) the unemployment rate would be lower. B) the labor force participation rate would be less. C) the unemployment rate would be higher. D) the labor force participation rate would be higher.
D
84) Suppose the natural unemployment rate equals 6 percent and the current unemployment rate is 8 percent. We can conclude that A) there is no structural unemployment. B) there is no frictional unemployment. C) there is no cyclical unemployment. D) full employment is not occurring.
D
89) The natural unemployment rate i) occurs when only there is no cyclical unemployment present. ii) is the unemployment rate when the economy is at potential GDP. A) i only. B) ii only C) neither i nor ii. D) i and ii
D
9) Which of the following correctly describes ʺfrictional unemploymentʺ? A) Frictional unemployment is due mainly to job losers. B) Frictional unemployment is due mainly to job leavers. C) Frictional unemployment occurs mainly during recessions. D) Frictional unemployment is a normal occurrence in a growing economy.
D
93) When cyclical unemployment is zero, A) frictional unemployment is zero. B) cyclical and frictional unemployment are zero. C) structural unemployment is zero. D) the unemployment rate equals the natural unemployment rate.
D
98) Full employment exists when A) there is only frictional and structural unemployment. B) the economy is at the natural unemployment rate. C) there is no cyclical unemployment. D) All of the above answers are correct.
D
98) Using the data in the above table, the unemployment rate is A) 4.0 percent. B) 4.16 percent. C) 5.55 percent. D) 28.0 percent.
D
