Maybe I'll get an A this time?
A person's subjective measure of well-being or satisfaction is called aversion.
False
Every adult who was not employed during the previous four weeks is included in the Bureau of Labor Statistics' "unemployed" category.
False
Long-run unemployment arises from a single problem that has a single solution.
False
More than three-fourths of the unemployed are recent entrants into the labor force.
False
Risk-averse individuals like good things more than they dislike comparable bad things.
False
The fact that we observe a trade-off between risk and return is puzzling to economists, because that observation conflicts with the notion that most people are risk averse
False
The natural rate of unemployment is the desirable rate of unemployment for an economy.
False
On which of these bonds is the prospect of default most likely?
Junk Bonds
Meredith is looking for work as a computer programmer. Her prospects are good but so far she has not taken a job. Julie is looking for work in a steel mill. Every time Julie shows up for an interview, there are more people looking for work than there are openings. She realizes that it has been that way for a long time.
Meredith is frictionally unemployed, and Julie is structurally unemployed.
More than one-third of the unemployed are recent entrants into the labor force.
True
People who are risk averse dislike bad outcomes more than they like comparable. good outcomes.
True
Workers in unions reap the benefit of collective bargaining, while workers not in unions bear some of the cost.
True
An American worker who becomes unemployed typically receives 100% of her former salary during the first six months she is unemployed.
False
Sectoral shifts contribute to structural unemployment.
False
The Bureau of Labor Statistics defines discouraged workers as marginally attached workers who have given a job-market related reason for not currently looking for a job.
False
The Bureau of Labor Statistics' household survey and establishment survey both yield the same results about total employment.
False
Which of the following best illustrates diversification?
Instead of holding the stocks of companies engaged in banking business, a person decides to hold stock in a number of different companies producing goods and services.
You hold bonds issued by the city of Sacramento, California. The interest you earn each year on these bonds
Is not subject to federal income tax and so these bonds pay a lower interest rate than otherwise comparable bonds issued by the United States government
Refer to Figure 26-2. What is measured along the horizontal axis of the graph?
Real Interest Rate
Evidence from research studies by economists
Shows that increased unemployment benefits decreases the job search efforts of the unemployed.
In a closed economy, what does (Y - T - C) represent?
private saving
A larger budget deficit
raises the interest rate and reduces investment
We associate the term debt finance with
the bond market, and we associate the term equity finance with the stock market.
Suppose the U.S. offered a tax credit for firms that built new factories in the U.S. Then the
the demand for loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate
Consider the expressions T - G and Y - T - C. Which of the following statements is correct?
the first of these is public saving; the second one is private saving
The natural rate of unemployment
the normal rate of unemployment around which the unemployment rate fluctuates
Collective bargaining refers to
the process by which unions and firms agree on the terms of employment.
Available evidence indicates that stock prices, even if not exactly a random walk, are very close to a random walk.
true
If you are faced with the choice of receiving SS00 today or $800 6 years from today, you will be indifferent between the two possibilities if the interest rate is 8.148 percent.
true
The normal rate of unemployment around which the unemployment rate fluctuates is called the natural rate of unemployment.
The natural rate of unemployment
Which of the following is true concerning interest rates on bonds?
The tax treatment of interest earned on municipals bonds makes the interest rate on them lower than otherwise. High default risk makes the interest rate on a bond higher than otherwise.
Fundamental analysis shows that stock in Garske Software Corporation has a present value that is higher than its price.
This stock is undervalued; you should consider adding it to your portfolio
Advocates of unions contend that unions are a necessary antidote to the market power of the firms that hire workers and that unions are important for helping firms respond efficiently to workers' concerns.
True
Frictional unemployment is thought to explain relatively
short spells of unemployment, while structural unemployment is thought to explain relatively long spells of unemployment.
In the 1990s Ireland made unemployment benefits less generous. This change would likely have reduced
frictional unemployment but not the natural rate of unemployment.
Causes of the decline in the U.S. men's labor-force participation rate over the past several decades include young men now staying in school longer than their fathers and grandfathers did, older men now retiring earlier and living longer, and more fathers now staying at home to raise their children.
True
Some degree of unemployment is inevitable in a complex economy.
True
The Bureau of Labor Statistics computes unemployment rates for the entire adult population and for groups based on age, gender, and race.
True
A bond buyer is a
saver. Long term bonds have more risk than short term bonds.
The Bureau of Labor Statistics' "unemployed" category includes those who were not employed, were available for work, and had tried to find employment during the previous four weeks.
True
The demand for labor by a certain firm fluctuates as the demand for that firm's product fluctuates.
True
The sooner a payment is received and the higher the interest rate, the greater the present value of a future payment.
True
The unemployment that results from the process of matching workers and jobs is called frictional unemployment.
True
At the broadest level, the financial system moves the economy's scarce resources from
savers to borrowers
Frictional unemployment is inevitable because
sectoral shifts are always happening
When a country keeps its workers as fully employed as possible, it achieves a higher level of GDP than if many of its workers were idle.
True
Refer to Table 28-1: How many in the sample are in the labor force?
10
Most spells of unemployment are
short, but most unemployment observed at any given time is long term.
Cyclical unemployment refers to
short-run fluctuations around the natural rate of unemployment
Hector puts $150 into an account when the interest rate is 4 percent. Later he checks his balance and finds he has about $168. 73. How long did Hector wait to check his balance?
3 Years
Suppose that the adult population in the country of Atlantis is 115 million. If 80 million people are employed and 5 million are unemployed, then
30 million people are not in the labor force
At an annual interest rate of 10 percent, about how many years will it take $100 to double in value?
7
What is the U-5 measure of labor underutilization?
7.9%
Which of the following actions best illustrates adverse selection?
A person intending to take up dangerous hobbies applies for life insurance.
Who of the following is not included in the Bureau of Labor Statistics' "employed" category? certain unpaid workers part-time workers workers on vacation
All of the above are correct.
Veronica deposited $1,000 into an account two years ago. The first ye.ar she earned 7 percent interest; the second year she earned 5 percent. How much money does Veronica have in her account today?
$1,123.50
Which of the following is an explanation for the existence of frictional unemployment?
Job Search
Which of the following statements is correct?
When people purchase a stock, they do not know what their return is going to be - either short term or in the long run.
Other things the same, as the maturity of a bond becomes longer, the bond will pay
a higher interest rate because it has more risk.
Which of the following is an example of an efficiency wage?
an above-equilibrium wage paid by a firm to reduce turnover costs
If the Apple corporation sells a bond it is
borrowing directly from the public
Unions contribute to
both structural unemployment and the natural rate of unemployment
Refer to Scenario 26-1. This economy's government is running a budget
budget deficit of $3,000.
The unemployment rate is computed as the number of unemployed
divided by the labor force times 100.
To be counted as "employed" in the U.S. labor force statistics, a person
does not have to be working for pay if they are working for a family business and does not have to be working full time
Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has
gradually decreased
Index funds typically have a
have a higher rate of return than managed funds. This tends to support the efficient market hypothesis.
Sectoral shifts in demand for output
increase unemployment due to job search
The source of the supply of loanable funds
is saving and the source of demand for loanable funds is investment
In a closed economy, what remains after paying for consumption and government purchases is
national saving.
According to the theory of efficiency wages, it may be profitable for firms to keep wages high even in the presence of a surplus of labor.
True
Diversification can reduce firm-specific risk.
True
Refer to Table 28-3: What is the U-1 measure of labor underutilization?
1.6%
Refer to Table 28-1. How many in the sample are in the labor force?
10
Suppose that some country had an adult population of about 46 million, a labor-force participation rate of 75 percent, and an unemployment rate of 8 percent. How many people were unemployed?
2.76 million
Assuming the interest rate is 6 percent, which of the following has the greatest present value?
285$ Today
Refer to Figure 28-1. If the government imposes a minimum wage of 8$, then how many workers will be unemployed
50
Financial intermediaries are
A financial intermediary is an organisation that raises money from investors and provides financing for individuals, companies and other organisations e.g. banks, insurance companies and investment funds
Esmerelda worked part-time for her mother's business without pay. Tabitha was absent from work because she had strep throat. Who is counted as "employed" by the Bureau of Labor Statistics?
Both Esmerelda and Tabitha
Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one
Corporate bond, U.S. government bond, municipal bond
Sandy has graduated from college and is devoting her time to searching for a job. She bas seen plenty of openings but has not yet been offered one that best suits her tastes and skills. Sandy is
Frictionally unemployed. Frictional unemployment exists even in the long run.
Sandy has graduated from college and is devoting her time to searching for a job. She has seen plenty of openings but has not yet been offered one that best suits her tastes and skills. Sandy is
Frictionally unemployed. Frictional unemployment exists even in the long run.
Suppose rate is 7 percent. Consider four payment options Option A: $500 Today Option B: $550 one year from today. Option C: $575 two years from today. Option D: $600 three years from today. Which of the payments has the highest present value today?
Option B: 550$ one year from today
According to fundamental analysis, when choosing stocks for your portfolio, you should prefer undervalued stocks.
True
On the Internet you find the following offers for opening an online account. Which of them is the best offer if you have $2,000 to save for two years?
an interest rate of 4 percent, with the bank giving you a $65 bonus at the time you open your account
Matilda just graduated from college. In order to devote all her efforts to college, she didn't hold a job. She is going to tour around the country on her motorcycle for a month before she starts looking for work. Other things the same, the unemployment rate
and the labor-force participation rate are both unaffected.
If the natural rate of unemployment is 5.2 percent and the actual rate. of unemployment is 5.7 percent, then by definition there is
cyclical unemployment amounting to 0.5 percent of the labor force
Policies that reduce the time it takes unemployed workers to find new jobs can reduce the economy's natural rate of unemployment.
can reduce both frictional unemployment and the natural rate of unemployment.
public policy
can reduce both frictional unemployment and the natural rate of unemployment.
Other things the same, when the interest rate rises, people would want to lend
people would want to lend more, making the quantity of loanable funds supplied increase.
An increase in the government's budget surplus means public saving is
public saving is greater than $0 and increasing.
If the government's expenditures exceeded its receipts, it would likely
sell bonds directly to the public.
Whenever the price of an asset rises above what appears to be its fundamental value, the market is said to be experiencing a
speculative bubble
The amount of unemployment varies
substantially over time and across countries
Other things being constant, when a firm sells new shares of stock, the
supply of the stock increases and the price decreases as a result.
Minimum wages create unemployment in markets where they create a
surplus of labor. Minimum wage laws are not the predominant reason for unemployment in the U.S.
From the standpoint of the economy as a whole, the role of insurance is to greatly reduce or eliminate the risks inherent in life.
false
Institutions that help to match one person's saving with another person's investment are collectively called the
financial system
The labor force equals the
number of people employed plus the number of people unemployed
