Chapter 9: Unemployment and Inflation
An efficiency wage is
an above-market wage paid by a firm to maximize worker productivity.
Even perfectly anticipated inflation imposes costs. Why?
1) inevitably will be redistribution of income 2) firms and consumers have to hold some paper money to facilitate buying and selling, w/ inflation the purchasing power will decrease 3) menu costs: costs to firms of changing prices (having to make sure everything is updated price wise) 4) taxes paid by investors will increase
Why is the unemployment rate, as measured by the Bureau of Labor Statistics, an imperfect measure of the extent of joblessness in the economy?
A. Underemployed people are considered employed. B. It fails to account for illegal activities. C. Discouraged workers are not considered unemployed. D. It does not account for inaccurate responses to the Current Population Survey.
Suppose that Sally J. Society recently lost her job as an underwater welder. In looking for a new job, she discovers that the only available jobs are for economists and that there are no openings for underwater welders because the trade is now obsolete. If Sally J. Society decides to return to school to earn an Economics degree, what is the best classification of her unemployment status?
structurally
If a 3-month Treasury bill pays 5.5% and the change in the consumer price index (CPI) is 4.7%, what is the real interest rate (the true return to lending)?
0.8
The BLS uses the establishment survey LOADING... to collect information on employment in the economy. Indicate one drawback of the establishment survey compared to the current population survey and indicate one advantage.
It does not include information about self-employed people. It is based on company payroll and not on unverifiable answers.
Which of the following is a problem of unanticipated inflation?
Redistribution of income from lenders to borrowers
What effect do labor unions LOADING... have on the unemployment rate?
Since few non-government workers are unionized, there is no significant effect on the unemployment rate.
How does the U.S. economy create and destroy millions of jobs each year?
ome businesses are expanding, while others are contracting AND In the market system, new firms are constantly entering and exiting various industries.
Which of the following can give an early warning of future increases in the price level?
producer price index PPI
When compared to the Great Depression, the typical length of unemployment in the modern (post-Great Depression-era) U.S. economy is
relatively brief
How do unemployment insurance payments in the United States and social insurance programs in other countries increase the unemployment rate?
They decrease the opportunity cost of job search.
Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment rate?
Number of unemployed/Number in labor force×100.
When the economy is at full employment,
A. the natural rate of unemployment prevails. B. all remaining unemployment is either frictional or structural. C. the unemployment rate is greater than zero
