Practice Questions

When OPEC raised the price of oil, it created a: demand-pull inflation. cost-push inflation. demand-push inflation. cost-pull inflation. cost-push deflation.

cost-push inflation

Suppose the consumer price index (CPI) for Year X is 130. This means the average price of goods and services is: currently $130. 130 percent more in Year X than in the base year. 130 percent more in the base year than in Year X. priced at 30 percent more in Year X than in the base year.

priced at 30 percent more in Year X than in the base year.

Economic growth is measured by the annual percentage increase in a nation's level of: nominal GDP. real GDP. real GDP deflator. economic indicators.

real GDP.

Gross private domestic investment does not include: spending for new houses. spending to build up inventories. unintentional inventory investment. spending on employee salaries. spending for office supplies.

spending on employee salaries.

A general mismatch between the skills of unemployed workers and the skills needed by employers with job openings results in: frictional unemployment. structural unemployment. cyclical unemployment. a higher labor force participation rate.

structural unemployment.

Assume that the real rate of interest is 5 percent and a lender charges a nominal interest rate of 15 percent. If a borrower expects that the rate of inflation next year will be 10 percent and the actual rate of inflation next year is 12 percent: neither the borrower nor the lender benefits from inflation. both the borrower and the lender lose from inflation. the borrower benefits from inflation, while the lender loses from inflation. the lender benefits from inflation, while the borrower loses from inflation.

the borrower benefits from inflation, while the lender loses from inflation

A criticism of the unemployment rate is that: underemployment is measured in the calculation. the data includes part-time workers as fully employed. discouraged workers are included in the calculation. all of these are problems.

the data includes part-time workers as fully employed

Consider an economy with only two goods: bread and wine. In 1982, the typical family bought 4 loaves of bread at 50¢ per loaf and 2 bottles of wine for $9 per bottle. In Year X, bread cost 75¢ per loaf and wine cost $10 per bottle. The CPI for Year X (using a 1982 base year) is: 100. 115. 126. 130.

115.

Find the BLS's rate of unemployment from the following data: frictional unemployment = 150, structural unemployment = 200, cyclical unemployment = 225, discouraged workers = 25, underemployed workers = 75, fully employed workers = 850, total population = 2,000. 17.5 percent 23.3 percent 24.6 percent 28.8 percent 38.3 percent

38.3 percent

Suppose that the consumer price index of a country was 160 at Year X and 168 at the end of Year Y. What was the country's inflation rate during Year Y? 5 percent. 8 percent. 60 percent. 68 percent.

5 percent.

Which of the following purchases would be counted as a final good in the GDP calculation? A family's purchase of a used car. A speculator's purchase of 100 shares of Apple Computer stock. A deli's purchase of bread for making its sandwiches. A business's purchase of new office equipment.

A business's purchase of new office equipment.

If you buy a brand new, American-made laptop computer to use for taking notes in your economics class, then it will be counted as: none of the following. C. I. G. (X - M).

C.

The likely result of an economy operating at full employment is: cost-push inflation. demand-pull inflation. a lower rate of growth. hyperinflation.

Demand-pull inflation.

Which one of the following statements is true? Resources flow from the government to households. Resources flow from firms to households. Taxes flow from firms to the government. Resource payments flow from firms to households Imports flow from firms to foreign economies.

Resource payments flow from firms to households

Which of the following is not a way to become officially unemployed? Quit your job to look for a better job in another part of the country. Be fired from your job. Look for a job after being out of the civilian labor force for five years. Retire. Look for a job only for the period in the summer that you are out of school.

Retire.

Why is it important to use real GDP rather than nominal GDP figures when making comparisons of output across time periods? The real GDP figures are a better measure of changes in the general level of prices. The real figures will reflect changes in the quantity of output and not changes in the general level of prices. The real figures will reflect changes in the general level of prices as well as changes in the quantity of output. The real GDP figures adjust for changes in the level of employment.

The real figures will reflect changes in the quantity of output and not changes in the general level of prices.

Which of the following offers an example of frictional unemployment? The rise in unemployment for stable workers after the development of gasoline-powered automobiles and the resulting long-tern decline in horse-and-buggy transportation. The rise in unemployment among farm workers after harvest. Unemployment resulting from the business cycle. None of the above are correct.

The rise in unemployment among farm workers after harvest

Suppose you received a 5 percent increase in your nominal wage. Over the year, inflation ran about 2 percent. Which of the following is true? Your real wage increased. Your nominal wage decreased. Both your nominal and real wages decreased. Although your nominal wage rose, your real wage decreased.

Your real wage increased.

Activities that are directly included in GDP accounts include: the value of housework done by householders. the selling of illegal drugs. unreported labor in sweatshops. buying a ticket to a Dodgers-Expos game on your day off.

buying a ticket to a Dodgers-Expos game on your day off.

The number of people officially unemployed is not the same as the number of people who can't find a job because: people who have jobs continue to look for better ones. the armed forces is included. discouraged workers are not counted. none of the above.

discouraged workers are not counted.

The expenditure approach to GDP accounting includes: wages and salaries. net exports. net interest. corporate profit. proprietors' income.

net exports.