Macroeconomics Test 3: Chap 6

A job paid $53,000 in 2002. The CPI in 1960 was​ 29.6, compared to 179.9 in 2002. In​ 1960, what salary would be comparable to​ 2002's $53,000 in real​ terms?

$8720.40 To convert $53,000 in 2002 into 1960​ dollars, multiply that amount by ratio of CPI in 1960 to the CPI in 2002. (53,000)(29.6 / 179.9) = $8720.40

Compute the percentage change in price for the commodities shown in the table below. Butter: Price January- $3.083 Price February- $3.033 Chicken: Price January- $2.321 Price February- $2.357 Milk: Price January- $3.871 Price February- $3.319

-1.6 % (3.083 - 3.033 / 3.033) x 100 = -1.6% 1.6% (2.357 - 2.321 / 2.321) x 100 = 1.6% -14.3% (3.319 - 3.871 / 3.871) x 100 = -14.3

Here are some data for the U.S. economy in January​ 2017: 256.78 million individuals 16 years of age and older. 154.43 million employed. 6.68 million unemployed. In the U.S.​ economy, the labor force is ??? million. The labor force participation rate is ??? percent. ​ The unemployment rate is ??? percent.

161.11 The labor force = number employed + unemployed. 62.74 % Labor force participation rate = size of the labor force / population aged 16 and older. 4.15 % Unemployment rate = unemployed individuals / size of the labor force.

If individuals who had previously left the labor force returned and began searching for a job​, the measured unemployment rate will - rise, fall, or stay the same

Rise

The total number of​ workers, both the employed and the unemployed is the ??? The percentage of the labor force that is unemployed is the ??? The percentage of the population over 16 years of age that is in the labor force is the ???

labor force unemployment rate labor force participation rate

Adults have substantially ??? unemployment rates than teenagers. Minorities have ??? unemployment rates. African American teenagers have extremely ??? unemployment rates. Unemployment rates for married men and married women are ??? than unemployment rates of women who maintain families alone.

lower higher high lower

Most economists believe that in reality all the price​ indexes, including the​ chain-weighted index for GDP and the​ CPI, ??? actual changes in prices. In other​ words, the increase in prices is probably ??? than the reported indexes tell us. A principal reason for this is that we have a difficult time measuring ??? improvements.

overstate, less, quality

Here are some data for the U.S. economy on February 01, 2020​: There were 228.7 million individuals 16 years of age and older. There were 158.8 million individuals employed. There were 5.8 million individuals unemployed. Using the information given above for the U.S.​ economy, on February 01, 2020​, the labor force was ??? million. Using the information given above for the U.S.​ economy, on February 01, 2020​, the labor force participation rate was ??? percent. Using the information given above for the U.S.​ economy, on February 01, 2020​, the unemployment rate was ??? percent.

164.6 The labor force = number employed + unemployed. 72 % Labor force participation rate = size of the labor force / population aged 16 and older. 3.5 % Unemployment rate = unemployed individuals / size of the labor force.

Suppose the starting salary for a new assistant economics professor was ​$25,000 in 1976 and ​$90,000 in 2014. The value of the CPI for 2014 was​ 236.7, compared to 56.9 in 1976. A​ newly-hired professor earned more in real terms in ??? with a real salary of ​???

1976, $43,937 After adjusting for​ inflation, newly-hired economics professors earned more in 2014 than in 1976. ​Specifically, in real terms​ (using CPI​ base-year dollars), you can compare by doing: (salary / CPI) x 100 = real salary 1976: (25,000 / 56.9) x 100 = $43934 2014: (90,000 / 236.7) x 100 = $38023

A country reports a price index of 50 in 2005 and 60 in 2006. What is the inflation rate between 2005 and​ 2006?

20 % (60 - 50 / 50) x 100 = 20 %

Most states do not replace the entire wages of individuals on unemployment​ insurance; instead, they replace about ??? percent. - 40, 5, or 95

40 %

If a price index is 50 in 1998 and 70 in​ 1999, the rate of inflation between the two years is ??? percent

40 % (70 - 50 / 50) x 100 = 40 %

An economy has 100,000,000 people​ employed, 6,000,000 ​unemployed, and 4,000,000 discouraged workers. The conventional measure of the unemployment rate is ??? percent. The best alternative measure that takes into account discouraged workers is an unemployment rate of ??? percent.

5.66 % Conventional measure of unemployment is the number unemployed divided by the size of the labor force. (6,000,000 / 100,000,000 + 6,000,000) x 100 = 5.66 9.09 % Take into account both unemployed and discouraged (6,000,000 / 100,000,000 + 6,000,000 + 4,000,000) x 100

The costs of anticipated inflation include A. menu costs. B. lost skills. C. redistribution of income. D. All of the above.

A. menu costs.

Deflation is illustrated by inflation changing from A. 3% to −​0.3%. B. 0.1% to​ 1%. C. 3% to​ 5%. D. 5% to​ 3%.

A. 3% to −​0.3%. Deflation is a negative inflation rate or falling prices. It causes economic problems because as prices​ fall, producers cut production and employment.

When online movies began to replace stores renting​ DVDs, what type or types of unemployment was​ created? A. Structural and frictional. B. Structural and cyclical. C. Discouraged and cyclical. D. Frictional and cyclical.

A. Structural and frictional.

Why might you expect individuals who were unemployed in their 20s to have lower wages at the age of 40 than individuals with identical educational backgrounds but who were not​ unemployed? A. While​ unemployed, workers lose some of their skills. B. While​ unemployed, workers face financial hardships. C. While​ unemployed, workers receive unemployment insurance. D. All of the above.

A. While​ unemployed, workers lose some of their skills.

If there is unanticipated​ inflation, A. debtors will gain at the expense of creditors. B. individuals will spend more of their time trying to be more productive at their jobs. C. creditors will gain at the expense of debtors. D. potential homeowners will only be able to borrow from banks at fixed rates of interest.

A. debtors will gain at the expense of creditors.

The natural rate of unemployment consists of only A. frictional and structural unemployment and is the rate of unemployment when there is full employment. B. frictional and cyclical unemployment and is the rate of unemployment when there is no unemployment. C. cyclical and structural unemployment and is the rate of unemployment when there is full employment. D. frictional and structural unemployment and is the rate of unemployment when there is no unemployment.

A. frictional and structural unemployment and is the rate of unemployment when there is full employment.

The natural rate of unemployment consists solely of A. frictional and structural unemployment. B. cyclical and structural unemployment. C. frictional and cyclical unemployment. D. none of the above.

A. frictional and structural unemployment.

The elderly might consume a different basket of goods than the average for the U.S. population because their A. needs and wants are different because they are at a different stage of life. B. family takes care of them. C. income is lower. D. living situation is unpredictable. When considering expenditures​ categories, the elderly might have more expenditures in A. housing and medical care and less in​ transportation, education, and food. B. clothing, health care and​ food, and less in transportation and services. C. ​transportation, education, and food and less in housing and medical care. D. ​services, transportation and​ food, and less in​ education, housing and clothing.

A. needs and wants are different because they are at a different stage of life. A. housing and medical care and less in​ transportation, education, and food.

Which of the following is not a cost of​ unemployment? A. unemployment insurance reduces the length of time workers are unemployed B. workers lose skills C. there is increased​ crime, divorce, and suicide rates D. there is a loss of output and unused resources

A. unemployment insurance reduces the length of time workers are unemployed

In many African​ countries, the government and international corporations pay high wages for jobs in the major​ cities, and many people migrate to the cities from farms where earnings are low. Unemployment rates in the​ city, therefore, are large. This can be explained in terms of A. cyclical unemployment because people need to migrate. B. frictional unemployment because people are migrating and changing jobs. C. structural unemployment because there is a mismatch of skills and jobs. D. unexpected unemployment because they come from farms where earnings are low.

B. frictional unemployment because people are migrating and changing jobs. Frictional unemployment is the unemployment that occurs naturally during the normal workings of an economy. It occurs because it simply takes time for people to find the right jobs and for employers to find the right people to hire. This happens when people change​ jobs, move across the​ country, get laid off from their current jobs and search for new​ opportunities, or take their time after they enter the labor force to find an appropriate job.

Which of the following is not included in the labor​ force? A. People working 30 hours a week. B. People who are employed. C. People who do not have​ jobs, and do not want one. D. People who do not have​ jobs, but who are actively searching for one.

C. People who do not have​ jobs, and do not want one.

Robert is 62 & lost his job in an engineering firm. Pamela is 53 & lost her job. What options do you think Robert has that Pamela does​ not? A. Both Robert and Pamela can collect unemployment so their situation is the same. B. Robert has a better career network since he is older. C. Robert can retire and collect Social Security but Pamela cannot. D. None of the above. The labor force participation rates A. for men will decline if Robert retires but will be unchanged for women if Pamela seeks another job. B. for men will decline if Robert retires but will increase for women if Pamela seeks another job. C. for men will decline if Robert retires but will decrease for women if Pamela seeks another job. D. for men will rise if Robert retires but will be unchanged for women if Pamela seeks another job.

C. Robert can retire and collect Social Security but Pamela cannot. A. for men will decline if Robert retires but will be unchanged for women if Pamela seeks another job.

The three key types of unemployment are A. ​frictional, natural, and total. B. cyclical, natural, and full. C. cyclical, frictional, and structural. D. none of the above.

C. cyclical, frictional, and structural.

The single largest component of the basket of goods that comprises the CPI is the category for A. medical services. B. food and beverages. C. rent. D. transportation

C. rent.

How do you think the Internet and online shopping would affect the menu costs of​ inflation? A. Prices on the Internet will be changed faster than prices in​ print, saving money by allowing quicker adjustments. B. Prices on the Internet will be changed at lower cost than prices on menus or billboards because​ they're not in print. C. Prices on the Internet will be more expensive to change than prices in print because an employee with computer skills must be hired to make the changes. D. Any of the above are reasonable arguments.

D. Any of the above are reasonable arguments.

Paul and Karen are married. Karen works as a stockbroker. He has decided to work part time and to also take care of their kids at home. He is happy with this arrangement. Paul is considered to be A. unemployed. B. voluntarily unemployed. C. working part time for economic reasons. D. employed.

D. employed. Workers who would like to be employed​ full-time but hold​ part-time jobs are counted as employed by the Bureau of Labor​ Statistics, because they have a job.​ However, they would like to be working more hours. They are known as individuals working part time for economic reasons. Individuals who prefer​ part-time employment are not included in this category.

Suppose the U.S. government hires workers who are currently unemployed but does not give them any work to do. What will happen to the measured U.S. unemployment​ rate? The unemployment rate will ??? Under these​ circumstances, do changes in the measured U.S. unemployment rate accurately reflect changes in the underlying economic situation and​ production? A. No. GDP will increase though the underlying economic situation will not have improved. B. Yes. GDP will increase and the underlying economic situation will have improved. C. No. GDP will remain unchanged and the underlying economic situation will not have improved. D. Yes. GDP will remain unchanged though the underlying economic situation will have improved

Decrease A. No. GDP will increase though the underlying economic situation will not have improved.

Individuals who have stopped looking for work because they became discouraged are not counted as unemployed in the traditional unemployment statistics. - true or false

True

When the economy is at full​ employment, there is no cyclical unemployment. - true or false

True The economy is at full employment when unemployment is at the natural rate. The natural rate of unemployment occurs when there is only frictional and structural​ (but no​ cyclical) unemployment.

Debtors gain from unanticipated inflation - true or false Creditors lose from unanticipated inflation. - true or false

True, true Creditors lose from unanticipated inflation because the amount​ they're paid back from loans is worth less than expected.​ Conversely, debtors gain from unanticipated inflation because it will be easier for them to repay their loans with inflated dollars.​ Thus, unanticipated inflation arbitrarily redistributes income from creditors to debtors.

Unemployment that occurs during fluctuations in real GDP is ??? unemployment. Unemployment that occurs with the normal workings of the​ economy, such as workers taking time to search for suitable jobs and firms taking time to search for qualified employees is ???unemployment. Unemployment that occurs when there is a mismatch of skills and jobs is ??? unemployment.

cynical frictional structual

Individuals who want to work and have searched for work in the prior​ year, but are not currently looking for work because they believe they​ won't be able to find a job are called ??? workers. They ??? included in the labor force. Individuals who would like to work and have searched for work in the recent​ past, but have stopped looking for work for a variety of reasons are known as ??? workers. They ??? included in the labor force. Workers who would like to be employed full time but hold​ part-time jobs are ??? workers. These individuals ??? included in the labor force.

discouraged, are not marginally attached, are not employed, are

Unemployment: 12,580 Civilian labor force: 160,143 Employment level​ part-time for economic reasons: 4,936 When employed individuals become​ unemployed, the civilian labor force ??? The civilian unemployment rate is ??? percent. The civilian unemployment rate including persons who are underemployed​ (part-time for economic​ reasons) is ??? percent.

does not change 7.86 % Unemployment rate = unemployed individuals / size of the labor force. 10.94 % Unemployment rate = unemployed + part time / size of the labor force.