Econ test 3

Table: CPI YearCPI (end-of-year value) 1999-110 2000-115 2001-117 2002-115 According to the table, in which of the following years did this country experience disinflation? both 2001 and 2002 2001 neither 2001 nor 2002 2002

2001

Frictional unemployment is caused by:

incomplete information

Table: Employment, Unemployment, and Labor Force Participation 2009 2010 Population 380 million 400 million Adults in labor force 255 million 260 million Adults not in labor force 78 million 80 million Employed workers 245 million 247 million What was the unemployment rate of the country in 2009? 3.0% 5.0% 4.0% 3.9%

3.9%

Which is an example of someone who is fooled by money illusion in a certain country with a 4% inflation rate? An employee thinks he can buy 7% more goods and services after receiving a 7% raise. A saver thinks she is losing purchasing power on savings that earns 3% interest. An employee thinks she can buy 2% more goods and services after receiving a 6% raise. A saver thinks he is earning a 1% real return on savings that earns 5% interest.

An employee thinks he can buy 7% more goods and services after receiving a 7% raise.

Which of the following would be considered unemployed? Tim, a 13-year-old high-school student, is looking for a part-time job. Mark, laid off from his job as a bricklayer, returned to school full time. Janice, who graduated from the university in May, is waiting for her new job to start in July. Sarah, who earned nearly $80,000 per year in her previous job, is a stay-at-home mom.

Janice, who graduated from the university in May, is waiting for her new job to start in July.

The quantity theory of money predicts that the main cause of inflation is increases in: prices. the money supply. consumption. real output.

money supply

According to the Fisher effect, what harms borrowers and benefits lenders?

when expected inflation > actual inflation

The quantity theory of money is a theory of: money growth in the United States. economic growth. inflation. the growth of tax burdens.

inflation.

Which is NOT a standard price index used in the United States? producer price index GDP deflator national inflation index consumer price index

national inflation index

Two of the challenging factors faced by the U.S. Bureau of Labor Statistics when computing the consumer price index are: new goods and inferior goods. new goods and better-quality goods. used goods and better-quality goods. used goods and inferior goods.

new goods and better-quality goods.

Suppose a 30-year fixed-rate mortgage loan was issued at a nominal interest rate of 5.5% when the expected inflation rate was 2.5%. Eight years later, the actual inflation rate was 4%. After eight years, the real interest rate was _____ and _____ benefited from the actual inflation rate being higher than expected. 2.5%; lenders 5.5%; borrowers 1.5%; borrowers 3.0%; lenders

1.5%; borrowers

Suppose that the CPI was 206 in 2018, 210 in 2019, and 217 in 2020. What was the inflation rate in 2019? 3.33% 3.18% 1.90% 1.94%

1.94%

Table: Employment, Unemployment, and Labor Force Participation 2009 2010 Population 380 million 400 million Adults in labor force 255 million 260 million Adults not in labor force 78 million 80 million Employed workers 245 million 247 million What was the labor force participation rate of this country in 2010? 85% 93% 72% 76%

76%

In the late 1990s, the rising popularity of Barnes & Noble and Borders shifted workers from independent bookshops to larger chains. What type of unemployment was associated with this reallocation of the workforce?

frictional unemployment

Structural unemployment is caused by:

long-lasting shocks to permanent features of an economy that make it more difficult for some workers to find jobs.

Inflation is best defined as an increase in: the price of one product relative to the price of another product. all prices in an economy. the real price of a good or service. the average price level.

the average price level.

The text states that "inflation is a type of tax." This tax refers to _____ when inflation occurs. the lower purchasing power of money a higher tax rate that the government must impose a higher nominal interest rate of a typical loan a special tax on taxpayers in order for the government to balance its budget

the lower purchasing power of money

A country has 50 million people, 30 million of whom are adults. Of the adults, 5 million are not interested in working, another 5 million are interested in working but have given up looking for work, and 5 million are still looking for work. Of those who do have jobs, 5 million are working part time but would like to work full time, and the remaining 10 million are working full time. How many people in this country are in the labor force? 15 million 25 million 30 million 20 million

20 million

Suppose that the CPI was 144 in 2016, 150 in 2017, 157 in 2018, and 166 in 2019. What was the inflation rate in 2018? 5.73% 4.67% 4.45% 6.00%

4.67%

Table: Employment, Unemployment, and Labor Force Participation 2009 2010 Population 380 million 400 million Adults in labor force 255 million 260 million Adults not in labor force 78 million 80 million Employed workers 245 million 247 million What was the unemployment rate of the country in 2010? 5% 3% 4% 6%

5%

Table: Employment, Unemployment, and Labor Force Participation 2009 2010 Population 380 million 400 million Adults in labor force 255 million 260 million Adults not in labor force 78 million 80 million Employed workers 245 million 247 million What was the employment rate of the country in 2010? 98% 96% 95% 97%

95%

Which correctly describes a country's labor force?

A country's labor force consists of those employed and unemployed.

A country's total civilian noninstitutionalized adult population is 1 million, and 500,000 people in this country are working, with another 20,000 people looking for work. Which of the following statements about the labor force statistics in this country is accurate? The employment rate is 96.15% and the labor force participation rate is 52%. The labor force is 500,000 and the labor force participation rate is 50%. The employment rate is 50% and the unemployment rate is 2%. The unemployment rate is 2% and the labor force participation rate is 52%.

The employment rate is 96.15% and the labor force participation rate is 52%.

All individuals who do not have a job are counted as unemployed.

false

When the unemployment rate is equal to the natural rate, frictional and structural unemployment are zero.

false

In a year without a recession, the majority of U.S. unemployment is:

frictional

If the price of gasoline increased 100% during a period of time when inflation was 100%, then the relative real price of gasoline would: increase or decrease, depending on whether income had changed or not. increase. remain constant. decrease.

remain constant.

The persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy is called:

structural unemployment.

A worker repairing VHS cassette-tape players was laid off because most of his customers have started using DVD players and streaming services. This worker is now:

structurally unemployed.