MACRO ch7

In which of the following industries are workers least likely to suffer from cyclical unemployment? a. new home construction b. automobile manufacturing c. carpet installation d. education e. tourism

D.

Sharon was being treated unfairly by her boss, so she stormed off the job and two weeks later found another position. For two weeks Sharon experienced a. cyclical unemployment b. structural unemployment c. seasonal unemployment d. frictional unemployment e. being out of the labor force

D.

The only job Justin ever holds is preparing income tax forms at H&R Block from January 2 to April 15. In March, while he is still working, he sends his resume to prospective employers. In March, he was counted as a. cyclically unemployed b. structurally unemployed c. frictionally unemployed d. part of the labor force e. out of the labor force

D.

Unanticipated inflation redistributes income across groups in society. Among the winners are a. those who loan money b. those on fixed incomes c. small savers d. those who borrow at fixed interest rates e. those who hold large amounts of cash

D.

Which of the following is not considered a cost of unemployment? a. loss of self-respect by those who are unemployed b.waste of the economy's resources c.negative psychological effects on those who have lost their jobs d.higher inflation rates e. loss of income by those who are unemployed

D.

The unemployment rate will increase whenever there is a(n) a. increase in the number of persons classified as unemployed b. increase in the number of unemployed relative to the size of the labor force c. increase in the size of the U.S. population and there is no change in the number of persons classified as employed d. reduction in the size of the labor force e. reduction in the size of the labor force while the number of unemployed decreases

B.

The difference between demand-pull inflation and cost-push inflation is that a. demand-pull inflation is caused by movements of the aggregate supply curve; cost-push inflation is caused by changes in firms' costs of production b. cost-push inflation is caused by movements of the aggregate demand curve; demand-pull inflation is caused by cyclical activity in the economy c.demand-pull inflation is caused by movements of the aggregate demand curve; cost-push inflation is caused by movements of the aggregate supply curve d. demand-pull inflation is caused by government deficit spending; cost-push inflation is caused by firms e. demand-pull inflation is caused by foreign demand; cost-push inflation is caused by domestic production problems

C.

The labor force participation rate is the number of people a. employed divided by the adult population b. employed divided by the number of people in the labor force c. in the labor force divided by the adult population d. unemployed divided by the number of people in the labor force e. in the labor force divided by the number of people employed

C.

The view that union wage demands may be a source of inflation would be best associated with the a. supply shock view of inflation b. demand pull view of inflation c. cost push view of inflation d. demand push view of inflation e. monetary view of inflation

C.

Which of the following is most likely to reduce structural unemployment? a. a reduction in wage rates b. increasing efficiency of the job search through better information on local job openings c. keeping workers updated in marketable skills d. promotion of full employment through government stabilization policies e. reducing the cost of job loss through enhanced unemployment compensation

C.

Seasonal unemployment refers to unemployment that results from a. a mismatch of skills b. being in the wrong geographical location c. taking the time to find the best job d. seasonal decreases in demand for labor e. a recession in the economy

D.

The labor force consists of all a. the people in the economy who are not retired b. people in the economy over 16 years of age c. the adults in the economy between 18 and 65 years old who are able to work d. the noninstitutionalized population over 16 in the economy who hold jobs or are looking for them e. the citizens in the economy who are graduates of high school

D.

Demand-pull inflation is worse for an economy than cost-push inflation because in addition to higher prices, demand- pull inflation also reduces employment. True or False

False

Inflation can only be caused by an increase in aggregate demand.True or False

False

If the inflation rate is higher than expected, which of the following groups in society would be most likely to gain? a. borrowers b. lenders c. persons holding large amounts of money d. persons on fixed incomes e. workers under contract without a cost of living adjustment

A.

If the official unemployment rate increases in January from its December level because the Christmas season is over, we can conclude that __________ unemployment is responsible for the increase. a. seasonal b. cyclical c. structural d. frictional e. any one of the causes of

A.

If two parties to a loan contract agree that the lender should earn an 8 percent increase in purchasing power as a result of a loan, and the inflation rate is 5 percent, what is the nominal interest rate? a. 13 percent b. 8 percent c. 5 percent d. 3 percent e. 1 percent

A.

Most of the unemployment experienced in the United States during the Great Depression was a. cyclical b. structural c. seasonal d. frictional e. voluntary

A.

Suppose you received a 3 percent increase in your nominal wage. Over the year, inflation ran about 6 percent. Which of the following is true? a. Your real wage fell. b. Your nominal wage fell. c. Both your nominal and real wages decreased. d. Although your nominal wage fell, your real wage increased. e. Both nominal and real wages increased.

A.

Which of the following groups tends to have the highest unemployment rate in the United States? a. black teenagers b. black men c. white women d. black women e. white teenagers

A.

Which of the following people would be classified as unemployed? a. a person who wants a job as a fashion model but cannot find work in that field b. someone who quits a part-time job to attend school full-time c. someone who gives up looking for a job d. a person who works at a job that underemploys his or her skills e. a person who works part-time and would rather work full-time

A.

A worker would be hurt least by inflation when the a. worker anticipates inflation and increases savings at the bank b. worker is protected by a cost-of-living adjustment clause in an employment contract c. the price level increases but at a decreasing rate d. worker is protected by fixed annual increases in wages and benefits it an employment contract e. government increases the level of social security retirement benefits to correct for the effects of unanticipated inflation

B.

Because of the way discouraged workers and part-time employment are measured, the official unemployment rate a. overstates the unemployment problem b. understates the unemployment problem c. truly reflects the level of unemployment d. overstates the size of the labor force e. understates the size of the labor force

B.

Jamal lost his job as a shipbuilder during 2004. His shipyard never reopened, and so his very specialized skills are no longer in demand. Jamal's unemployment is best classified as a. cyclical b. structural c. seasonal d. frictional e. voluntary

B.

Juanita earned a B.S. in engineering and went to work for a defense contractor. When the government cut spending, Juanita and 99 others were laid off. The only other business in the town is growing grapes, but the growers refuse to hire laid-off engineers, knowing they will leave at the first opportunity. The unemployment Juanita is experiencing is a. cyclical b. structural c. seasonal d. frictional e. voluntary

B.

The labor force participation rate for women in the United States has a. stayed the same over the last 30 years b. increased significantly since the 1950s c. been influenced by decreasing real wages since 1960 d. fluctuated substantially both upward and downward since the 1950s e. increased only very slightly since the 1950s

B.

The unemployment rate is the a. percentage of people in the economy who do not hold jobs b. percentage of the labor force that does not have a job c. number of people in the economy who have given up looking for employment d. number of people in the labor force without jobs e. ratio of unemployed to employed high school graduates in the economy

B.

Cyclical unemployment results from a. a mismatch of skills b. being in the wrong geographical location c. taking the time to find the best job d. seasonal decreases in demand for labor e. a recession in the economy

E.

If the expected inflation rate is 4 percent and the nominal interest rate is 9 percent, the expected real interest rate is a. 13 percent b. -5 percent c. 9 percent d. -13 percent e. 5 percent

E.

If top government officials claim that "more people are working now than ever before," which of the following must be true? a. The unemployment rate is lower now than ever before. b. The number of people unemployed is lower now than ever before. c. The employment rate is higher now than ever before. d. The number of people in the labor force is higher now than ever before. e. The number of people employed is higher now than ever before.

E.

Inflation can be caused by a. increases in aggregate demand only b. increases in aggregate supply only c. decreases in aggregate supply only d. increases in aggregate supply or decreases in aggregate demand e. increases in aggregate demand or decreases in aggregate supply

E.

When workers are over-qualified for their current jobs or can find only part-time work, we say they are a. unemployed b. discouraged workers c. not in the labor force d. overemployed e. underemployed

E.

Which of the following is not a cost of unemployment? a. Unemployed individuals suffer a loss of income. b. Unemployed individuals are more likely to have emotional or psychological problems. c. Unemployed individuals can lose their job skills over time. d. Unemployment causes production to decrease from what it could be. e. The opportunity cost of unemployment is a higher inflation rate.

E.

Which of the following people would be counted as unemployed? a. a retired naval officer b. a full-time student in high school c. a father of preschool children who does not want to work d. an inner-city teenager who has given up looking for work after a year of trying e. a downhill ski instructor who is looking for any work during the summer

E.

Anticipated inflation distorts markets more than does unanticipated inflation. True or False

False

Full employment is when the unemployment rate is zero. True or False

False

A major cost of unemployment is lost production. True or False

True

Full employment does not mean zero unemployment rate.True or False

True

If Dave loans funds at 2 percent while the inflation rate is 4 percent, his real rate of interest is -2 percent. True or False

True

If nominal wages increase 7 percent while the price level rises by 5 percent, real wages rise. True or False

True

Inflation is the hardest on those living on fixed incomes. True or False

True

Policy actions that shift the economy's AD to the right can increase spending, GDP, and employment, but they can also increase the price level and inflation. True or False

True

The misery index is the sum of the unemployment rate and the inflation rate. True or False

True

The real interest rate can be negative. True or False

True

The unemployment rate for blacks in the United States is higher than that for whites. True or False

True