Macro Quiz 2
Which of the following groups of people would benefit from unanticipated inflation? Savers Borrowers Lenders
II. Borrowers only
The table below shows the cost of the same representative basket of goods in the base year 2012 and in 2013, and the average weekly nominal wage rate in 2012 and 2013. If 2012 is the base year, which of the following is true?
The CPI in year 2013 is 120. [(12,000-10,000)/10,000 x 100] CPI in base year is 100, CPi in 2013 is 120.
Which of the following statements exemplifies the concept of structural unemployment?
Workers are fired because their skills are no longer in demand.
The recent popularity of job search Web sites that enable job seekers and potential employers to more efficiently contact each other is most likely to cause
a reduction in the frictional unemployment rate
A criticism of the consumer price index as a measure of the cost of living is that it
overstates the rate of inflation because it ignores consumers' ability to substitute among similar items when prices change
The consumer price index (CPI) measures the
prices of a specific group of goods and services purchased by consumers
Alice, who has left her job in New York, is moving to Atlanta and looking for a job. In terms of employment status, Alice can most accurately be described as
Frictionally unemployed
The consumer price index measures which of the following?
The change over time of the weighted prices of a particular group of goods and services
GDP does NOT account for which of the following?
The depletion of natural resources
As a measure of economic welfare, gross domestic product underestimates a country's production of goods and services when there is an increase in
household production
Scarcity exists because
human wants exceed the productive capacity of the economy
The official unemployment rate understates the unemployment level in the economy because the official unemployment rate
ignores underemployed and discouraged workers
The consumer price index (CPI) does not measure the true cost of inflation because
improvements in the quality of goods or services are not fully reflected
Olivia volunteers full time at an animal shelter and will not accept any offers for a paid job for the next six months. Olivia is
not in the labor force
The consumer price index (CPI) is criticized for
overstating the true burden of inflation because it does not recognize consumers' ability to substitute goods and services as prices change
The unemployment rate measures the percentage of
people in the labor force who do not have jobs
Suppose that the consumer price index rises from 100 to 200. From this information we may conclude that
the prices in an average consumer's market basket are doubled
The fundamental economic problem is
the scarcity of resources
The concept of opportunity cost would no longer be relevant if
the supply of all resources were unlimited
If unemployed workers become discouraged and give up trying to find work, the number of workers employed and the unemployment rate would change in which of the following ways?
Number of workers employed: no change Unemployment rate: decreases
Which of the following individuals is considered officially unemployed?
Pat, who recently left a job to look for a different job in another town
An increase in the number of discouraged workers causes the unemployment rate to
decrease along with the labor-force participation rate
Which of the following is an example of structural unemployment?
An autoworker who is replaced by a robot
The table above shows the consumer price index for selected years. On the basis of these data, how much did it cost in 1995 to buy the same goods and services that cost $50 in 1929 ?
$300
The table above gives population and labor-market data for an economy. The unemployment rate in this economy is
10%
The population of Country X is 250,000, and the labor force is 200,000 persons. If 175,000 people are employed, what is the unemployment rate?
12.5%
If the consumer price index increases from 200 to 240 in a one-year period, then the inflation rate is
20 percent
Which of the following allows an individual to gain from unexpected inflation?
Borrowing money at a fixed interest rate
The table below shows market statistics for a nation What is the nation's unemployment rate?
9% (Frictional+structural+cyclical)/100 million (labor force) x 100= 9%
Which of the following is an example of frictional unemployment?
A college graduate interviewing for two available positions
A leftward shift of the supply curve for computers could be caused by which of the following in the short run?
A decrease in the number of computer manufacturers
Which of the following will cause a movement along the demand curve for chicken, a normal good, resulting in an increase in the quantity demanded?
A decrease in the price of chicken
The diagram above shows two demand curves for video games identified as D1 and D2 Which of the following changes will most likely result in a movement from point X to point Y along the demand curve D1?
A decrease in the price of video games
Which of the following is an example of frictional unemployment?
A person quits a job to search for another job.
Which of the following individuals is classified as unemployed?
A recent college graduate who is looking for her first job
The diagram above shows two demand curves for video games identified as D1 and D2 Which of the following changes will most likely cause a shift of the demand curve from D1 to D2 as shown in the diagram?
An increase in consumers' income, assuming that video games are a normal good
Which of the following describes the law of supply?
An increase in the price of a good will increase the quantity supplied.
If a worker's nominal wage rate increases from $10 to $12 per hour and at the same time the general price level increases by 10 percent, the worker's real wage has
Approximately increased by 10%
Which of the following will happen if the actual inflation rate is greater than the expected inflation rate?
Borrowers of fixed interest rate loans will be better off.
Which of the following types of unemployment is caused by a recession?
Cyclical
Which of the following would cause the official unemployment rate to understate the problem of unemployment?
Discouraged workers
Melanie quits her job to look for a better one that has opportunity for advancement. Melanie will be classified in which category of unemployment?
Frictional
Suppose that a typical consumer buys the following quantities of three commodities in 1993 and 1994. Which of the following can be concluded about the consumer price index (CPI) for this individual from 1993 to 1994?
It increased by 25%.
Which of the following unemployed individuals represents frictional unemployment?
Janet, an accounting graduate who is interviewing with a number of accounting firms.
In 2017 Sabrina earned an annual salary of $100,000 as an engineer. In 2018, her income rose to $105,000. The inflation rate in 2018 was 2%. How did Sabrina's nominal income and real income change in 2018 compared to 2017?
Nominal income increased and real income increased. Sabrina's nominal income increased by (105,000-100,000)/100,000 x 100= 5%. Her real wage increase was increased by 3%. Her real income increased by 3% percent because the inflation rate (2%) is lower than the increase in nominal income (5%).
An increase in the number of which of the following will lead to an increase in the unemployment rate?
Persons quitting part-time jobs to look for full-time ones
Which of the following is an example of how the consumer price index (CPI) exhibits bias in its estimates of changes in the cost of living?
Product improvements are not always fully reflected in the calculation of the CPI.
As a measure of economic performance, GDP accounts for which of the following?
Souvenir gifts purchased by tourists domestically
Which of the following is the most fundamental issue that economics addresses?
Use of scarce resources
Using 2010 as the base year, the gross domestic product (GDP) deflator in 2011 was 97. Which of the following must be true?
The inflation rate in 2011 was negative.
Which of the following describes scarcity?
Wants exceed resources.
The table below shows the labor market statistics for a nation. Based on the above table which of the following is most likely correct?
The natural rate of unemployment is 5 percent. (Structural percent + frictional percent)= 3% + 2%
Which of the following transactions will be included in the calculation of Country X's Gross Domestic Product (GDP) (GDP) in 2020?
The purchase of new construction equipment
If the wage rate of workers producing a good decreases, then which of the following will most likely occur?
The supply of the good will increase.
Public policy that generates an unexpected increase in consumer prices will inflict short-run costs on all of the following EXCEPT
borrowers
The consumer price index (CPI) is designed to measure changes in the
cost of a select market basket of goods and services
People who have given up looking for jobs are classified as
discouraged workers
The measured unemployment rate is often criticized for understating the level of joblessness because
discouraged workers are not counted in the labor force
The natural rate of unemployment can be defined as the
economy's long-run equilibrium rate of unemployment
A continuous increase in the consumer price index (CPI) is
inflation Inflation occurs when the aggregate price level as measured by the CPI increases. The percentage change in the CPI measures the inflation rate from one period to another.
A nation's unemployment rate is the ratio of the number of unemployed seeking employment to the nation's
labor force
An increase in the labor force participation rate will
make it more difficult to reduce unemployment
An industry historically used employees with specific skills. If this industry experiences technological advances that require new skills, there will most likely be
structural unemployment
Structural unemployment is best described as unemployment arising from
the elimination of jobs as a result of technological change
The unemployment rate is calculated as
the number of people not working but actively seeking employment divided by the number of people in the labor force
The official unemployment rate is not an accurate indicator of actual unemployment in the economy because
the official rate does not include persons who have given up looking for work
