macro econ chapter 7

If the natural rate of unemployment is 4.0​% and the economy has a 5.8​% rate of​ unemployment, then what is the cyclical rate of​ unemployment?

1.8% Natural rate of unemployment = Structural unemploy. + frictional unemploy

Suppose, you are lending money to your friend Julia and you want a real rate of return of 7.00​%. ​ Furthermore, you expect the inflation rate to be 4.50​%. Which of the following interest rates should you​ charge?

11.5%

The following information is available for the country of​ Tappania: 2000 Labor Force 120.0 million Employment 112.8 million 2010 Labor Force 134.4 million Employment 120.7 million Calculate the unemployment rates for 2000 and 2010. Unemployment Rate for 2000​ = nothing​%. ​(Enter your response rounded to one decimal​ place.)

2000 - 6% 2010 - 10.2%

The rate of inflation between 2013 and 2014 2014 and 2015

2013-2014 = 48.82% 2014-2015 = 2.03%

In the economy of​ Cycladia, the total unemployment rate is equal to 10.0 ​percent, the structural unemployment rate is 2.0 ​percent, and the frictional unemployment rate is 4.0 percent. The cyclical unemployment rate equals nothing percent. ​(Enter your response rounded to one decimal​ place.)

4% Structural unemploy. + frictional unemploy. + cyclical unemploy. = total unemployment

In the Republic of​ Priceland, in 2009 the consumer price index was 221.00. In 2010 the index increased to 230.95. Calculate the rate of inflation in Priceland between 2009 and 2010. Rate of inflation​ = nothing percent.

4.5%

In​ March, 2006 the labor department of the country of Jobland determined that the size of the labor force was 100 million out of which 92 million were employed. In May​ 2006, the labor department determined that 1.5 million people became​ "discouraged workers" in April. Assuming that no new jobs were created between March and​ April, calculate the unemployment rate for March and April. Jobland unemployment rate in March​ = nothing percent. ​(Enter your response rounded to one decimal​ place.)

8% - March 6.6% - April Discouraged workers are not included in the labor force. Thus the new labor force​ = 100minus1.5 ​= 98.5 million. Unemployment Rate​ = StartFraction number of unemployed Over number in the labor force EndFraction times 100 ​Therefore, since labor force​ = unemployed plus employed The number of unemployed​ = labor force minus number of employed

Suppose that the inflation rate is lower than​ expected, which of the following groups is most likely to be beneficially affected by this unexpected​ inflation?

A mortgage company scheduled to receive fixed interest rate mortgage payments.

Calculate the CPI for each year

CPI in 2013 = 100 CPI in 2014 = 148.82 CPI in 2015 = 151.84

Carlos got laid off from his job as a limo driver six months ago and gave up looking for a new job two months later.

Carlos is not in the labor force

Who among the following will not be included as part of the labor force ​?

Sally, who has given up looking for a job because she could not find one.

The consumer price index (CPI) is a​ fixed-weight index. It compares the price of a fixed bundle of goods in one year with the price of the same bundle of goods in some base year. Suppose the market basket to compute the consumer price index consists of 200 units of good​ X, 250 units of good ​Y, and 25 units of good Z. Year 2013 is the base year. Prices of these goods for the years​ 2013, 2014, and 2015 are given below. Good Amount in Market Basket Prices in 2013 Prices in 2014 Prices in 2015 X 200 ​$1.00 ​$1.60 ​$1.90 Y 250 2.50 3.75 3.75 Z 25 5.00 6.25 5.00 Using the information​ above, calculate the​ following:

The cost of the market basket in 2013 is ​$950 The cost of the market basket in 2014 is ​$1413.75 The cost of the market basket in 2015 is ​$1442.5

Consider the following​ statements: a. Fewer people are employed in Freedonia now than at any time in the past 75 years. b. The unemployment rate in Freedonia is lower now than it has been in 75 years. Can both of these statements be true at the same​ time?

Yes, these statements can be true if the labor force decreases at a faster rate than the rate of unemployment.

The producer price index is used

as a wholesale price index

The capacity for long-run economic growth for an economy is determined

by the size of its labor​ force, its capital​ stock, and productivity of labor and capital.

A price index that is computed each month by the BLS using a bundle of goods and services that represents the​ "market basket" is the

consumer price index

Tamara lost her job as a cashier in the retail store when the store went out of business due to a downturn in general business conditions. Tamara was

cyclically unemployed

Lex graduated from college two months ago with an undergraduate degree in Finance. He is now looking for a job in the financial sector.

frictionally unemployed

In the country of​ Wholand: The stock of capital and labor force are both increasing at the annual rate of 4​%. Output is growing at the annual rate of 6​%. This is possible in the short run if _________ and in the long run if ______________

if unemployment falls and or the rate of capacity utilization increases if there is a technological improvement leading to higher labor and or capital productivity

On​ average, nations in Europe pay higher unemployment benefits for longer periods of time than does the United States. The increased size and duration of unemployment benefits can be expected to

increase frictional unemployment

During a​ recession, the duration of unemployment

increases

If all​ wages, salaries, welfare​ benefits, and other sources of income were indexed to​ inflation,

inflation may not have negative impacts on​ people's purchasing​ power, but it will still have harmful effects on the economy by increasing administrative costs and inefficiencies.

The most important economic cost of recession is

loss of output that could be produced

The CPI tends to

overestimate the extent of inflation because it uses fixed weights and ignores substitution of lower priced items for higher priced items.

A price index for products at all stages in the production process is the

producer price index

An article in the Gotham Times states that the stock of capital and the workforce in Gotham are both increasing at an annual rate of 3 percent. The same article states that real output is growing by 6 percent. This is possible in the long run because the economy is experiencing an increase in​ ____________. This is possible in the short run because​ ____________.

productivity growth A. more of the existing capital stock is used. B. more of the capacity is utilized. C. more of the labor force becomes employed. D. all of the above.

Per capita output is _________ output per worker or productivity.

smaller than

John's grandfather was a coal miner in Pennsylvania. After the mines shut down in the​ 1940's he could not find a job. He was

structurally unemployed

Suppose that in one month the number of discouraged workers as classified by the Bureau of Labor Statistics increases by​ 50,000. As a​ result,

the number of unemployed workers declines by​ 50,000; the size of the labor force falls by​ 50,000; unemployment rate falls.

Suppose that the economy consists of two groups of​ individuals: ​1.) ​ Producers-sellers who produce and sell goods and services ​2.) Wage earners who work for wages and buy goods and services. If there is an inflation rate of 7​% and nominal wages increase by 4​%,

the purchasing power is redistributed from wage earners to producers-sellers

The unemployment rate that is consistent with​ "full employment" and the​ "natural rate of​ unemployment" is

the sum of the frictional rate and structural rate.

If prices fall and the fall is​ unanticipated, borrowers will gain at the expense of lenders.

true