ECON 112 Exam 2 Chapter 9

What impact would including members of the military in​ employment, labor​ force, and​ working-age population statistics have on the unemployment rate and the labor force participation​ rate? A. Including members of the military would increase the unemployment rate and reduce the labor force participation rate. B. Including members of the military would reduce the unemployment rate and increase the labor force participation rate. C. Including the military would increase both the unemployment rate and the labor force participation rate. D. Including the military would reduce both the unemployment rate and the labor force participation rate.

Including members of the military would reduce the unemployment rate and increase the labor force participation rate.

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given workingminus−age ​population? A. labor force participation rate B. unemployment rate C. discouragedminus−worker ratio D. the ratio of minimum wage to inflation

Labor force participation rate

The cost to firms of changing prices A. is called a menu cost. B. does not exist if inflation is perfectly anticipated. C. is small even when there is rapid inflation. D. all of the above.

Menu cost

A fullminus−time student who is not working is categorized as A. not in the labor force. B. unemployed. C. a discouraged worker. D. frictionally unemployed. E. employed.

Not in the labor force

The inflation rate measures the average prices of goods and services in the economy. True False

False

Most economists believe that labor unions significantly increase the overall unemployment rate in the United States. True False

False. They increase unemployment but are not a significant cause of unemployment in the US.

The natural rate of unemployment consists of frictional unemployment plus cyclical unemployment. True False

False. it consists of frictional unemployment and structural unemployment

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower A. frictional unemployment. B. structural unemployment. C. unnatural unemployment. D. seasonal unemployment. E. cyclical unemployment.

Frictional unemployment

If the federal government implements programs so that the unemployed are more quickly matched with​ jobs, then A. the natural rate of unemployment will decrease. B. the natural rate of unemployment will not change. C. the natural rate of unemployment will increase. D. the natural rate of unemployment could either increase or decrease.

The natural rate of unemployment will decrease

When prices are​ rising, which of the following will be​ true? A. The real interest rate will be higher than the nominal interest rate. B. The real interest rate will be lower than the nominal interest rate. C. The real interest rate will be negative. D. The nominal interest rate will be negative.

The real interest rate will be lower than the nominal interest rate.

The increase in quality bias in the consumer price index refers to the idea that price increases in the CPI reflect pure​ inflation, but​ ______ quality increases. This causes the CPI to​ ______ the cost of the market basket. A. ​not; overstate B. ​also; understate C. ​also; overstate D. ​not; understate

not; overstate

Structural unemployment is the result of A. the search process of matching workers with jobs. B. a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. C. the ups and downs in inflation. D. a slowdown in the economy.

A persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.

Which of the following describes situations in which the person is hurt by​ inflation? A. a person paid a fixed income during an inflationary period B. a retiree whose pension is adjusted for inflation C. a person who lends money during a period when inflation is overminus−predicted D. a person who borrows money during a period when inflation is under predicted

A person paid a fixed income during an inflationary period

An example of a seasonally unemployed worker would be A. a General Motors employee loses her job because the company is downsizing its work force. B. a ski lift operator who loses his job when the snow melts in the spring. C. a day care provider who quits his job to go back to school. D. a software engineer who is laid off because of declining demand for the software he writes. E. a mother who quits her job to stay home with her children.

A ski lift operator who loses his job when the snow melts in the spring.

If inflation is​ unanticipated, no redistribution of income can occur. True False

False

The consumer price index is the A. cost of a market basket of goods and services typically consumed in the current period. B. cost of a market basket of goods and services typically consumed in the base year. C. average of the prices of the goods and services purchased by a typical urban family of four. D. average of the prices of new final goods and services produced in the economy over a period of time.

Average of the prices of the goods and services purchased by a typical urban family of four.

Due to low interest​ rates, increased banking​ regulations, and technological​ change, JPMorgan Chase announced it would​ ________ the number of persons it employed in 2015 and this would​ ________ the total number of persons unemployed in the economy.

Decrease; increase

If the CPI rises from 206.7 to 212.7 between two consecutive​ years, by how much has the cost of living changed between these two​ years? A. The cost of living has increased by​ 2.9%. B. The cost of living has increased by​ 12.7%. C. The cost of living has increased by​ 6%. D. The cost of living has decreased by​ 6%.

The cost of living has increased by​ 2.9%.