ap econ chapter 21-23 test

the unemployment rate is equal to

(number of unemployed people/labor force) x 100

unemployment rate is equal to

(unemployed people seeking work/labor force) x100

in the current year, the cpi is 160 and during the previous year the cpi was 181. the inflation rate between these years is

-11.6%

if the cpi this year is 175.2 and next year the cpi is 176.1, what was the inflation rate over the year

0.5%

the value of the cpi for the reference base period is always

100

the inflation rate between last year and this year was 14%. the cpi was 118 this year. what was the cpi last year

103.5

if the base year cpi market basket costs $250 and next year the cpi market basket costs $275, what is the next year's cpi

110

Assume the U.S. population is 300 million. If 200 million people are of working age, 125 million are employed, and 15 million are unemployed, what is the size of the labor force?

140 million

A country's CPI was 84.5 last year and 100.0 this year. The inflation rate was

18.3%

the reference base period that the bls uses to measure the cpi is

1982-1984

suppose the current unemployment rate is 5%, the labor force is 400 million people, the labor force participation rate is 80% and the working age population is 500 million people. what is the number of people who are defined as unemployed

20 million

market value

The amount of money property will bring in a competitive open market.

what is a marginally attached worker

a person who does not have a job, is available and willing to work, has not made specific efforts to find a job within the previous four weeks, but has looked for work sometime in the recent past

To measure the CPI, the BLS economic assistants check the prices of

about 80,000 goods and services every year

the working-age population consists of all the people in the population

aged sixteen and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces

Julie works part-time for economic reasons. She would be considered

an involuntary part-time worker

If higher prices cause buyers to shop at discount stores, the CPI has

an outlet substitution bias

is the cpi a biased measure of the inflation rate? explain your answer

cpi is a biased measure of inflation because it is an overestimate due to outlet substitution, good substitution, new goods, and quality improvements

which type of unemployment is the consequence of downturns in the business cycle

cyclical

Janae was fired from her job with Microsoft in the 2008-09 recession because Microsoft's sales dipped. Janae's unemployment would be best classified as

cyclical unemployment

full employment occurs when

cyclical unemployment is zero

Rick lost his job as a logistics and distribution coordinator nearly three years ago. After a long and failed search, Rick finally gives up and stops looking for a new job. Rick's decision to suspend his job search causes the unemployment rate to ________ and the labor force participation rate to ________.

decrease; decrease

when the price of, say, a package of rice changes, what must the bls do next

determine if the size, quality, weight, or packing of the rice has changed and adjust the price accordingly

people who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called

discouraged workers

part-time workers for noneconomic reasons are people who

do not want to work full time

A weakness that could be noted about the unemployment rate is that it

does not account for the underutilization of workers

suppose a 23 year old graduate student is looking for a full-time job, but has to take a part-time job instead. He or she will be categorized in the Current Population Survey as ____ when calculating the unemployment rate

employed

an unpaid worker in a family business is classified as

employed if the person worked at least 15 hours in the previous week

core inflation

excludes prices of food and energy

the consumer price index measures the average of the prices paid by urban consumers for a ___ of consumer goods and services

fixed market basket

Bill just graduated with his degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered

frictionally unemployed

Jordan recently quit her job as a marketing consultant in Washington, D.C. and is looking for a better-paying job with an advertising agency in New York. Jordan is considered to be

frictionally unemployed

number of people in the labor force is equal to

full time workers + part time workers + active searchers

the unemployment rate tends to

generally rise during a recession and fall during an expansion

the items included in the cpi are

goods and services consumed by the typical urban household

final goods and services

goods and services produced for final use

for the cpi to provide an accurate measure of the prices paid by urban consumers, it is necessary to

have a market basket that is consistent and corresponds to what normal households actually purchase

according to the cpi basket, the largest category of items in the households' budgets is

housing

which of the following is a bias in the cpi i. new goods bias ii. index change bias iii. commodity substitution bias

i an iii

constructing the cpi involves which of the following stages i. conducting the monthly price survey ii. converting the cpi to an international index iii. selecting the cpi market basket

i and iii

When the nominal price of a good increases over time, must its real price also increase? why or why not?

if nominal price rises, real price would not increase if the country had just experienced a recession

labor force participation rate equation

labor force/adult population x 100

the more money an average household spends on one specific type of good or service per month, the

larger the relative importance of that item in the cpi market basket

part-time workers are defined as people who are working

less than 35 hours per week

If the CPI decreases from one year to the next, then the inflation rate is

negative

can frictional unemployment ever be eliminated? explain

no because businesses are always opening and closing and the market demand for labor will never stay constant

to be considered unemployed, a worker must have had

no employment during the week before the survey and be actively looking for a job

the difference between nominal and real is

nominal is measured in current dollars and real is measured in dollars of a given year

explain the difference between a nominal value and a real value

nominal value considers prices of the current year, but real value considers the prices adjusted from the base year

define the nominal wage rate and the real wage rate. can the nominal wage rate increase faster than the real wage rate?

nominal wage rate is the wage rate in current dollars, but real wage rate considers the reference base year. nominal can increase faster than real due to inflation

frictional unemployment is the result of

normal labor market turnover

In August of 2013, the number of employed persons in the United States was 144.2 million, the number of unemployed persons was 11.3 million, and the number of persons not in the labor force was 90.5 million. What was the working age population in August of 2013?

not enough information

Phillip is a 22-year old who has no job and is available for work, but has not actively looked for a job in the last month. The Current Population Survey identifies Phillip as ________, ________ the labor force, and ________ the working-age population.

not unemployed; not part of; part of

labor force is the...

number of employed people plus the number of unemployed people

How is the unemployment rate calculated?

number of unemployed/labor force x 100

the inflation rate is the

percentage change in the CPI from one year to the next year.

the unemployment rate is the

percentage of the labor force that does not have a job

the consumer price index (cpi) measures the changes of the...

prices paid by urban consumers for a fixed market basket of consumer goods and services

Suppose the CPI for this year is 133.7. This number means that

prices rose 33.7% over the base year

when discussing the cpi, the term "commodity substitution bias" refers to changes in

prices that lead households to change the items they buy

to find the cost of the cpi market basket in the base period prices we have to multiply the

quantities in the cpi market basket by the base period prices

When the CPI rises ________, the inflation rate is ________.

rapidly; high

during a recession

real GDP is less than potential GDP

the period for which the consumer price index is defined to equal 100 is called the

reference base period

during a recession the unemployment rate generally ___ and during an expansion the unemployment rate generally ___

rises; falls

a marginally attached worker is

someone who does not have a job but is available and willing to work but has not made specific efforts to find a job during the past 4 weeks.

which type of unemployment is most likely to lead unemployed workers to retrain or relocate

structural

After 15 years with Ford Motor Corporation, one summer Cameron loses his job. His boss explained that his position has been downsized after the technological advances in automobile production. Cameron is best considered

structurally unemployed

Structural unemployment is the result of

technological change or foreign competition

define gdp

the market value of all final goods and services produced within a country in a given period of time

full employment occurs when the unemployment rate equals

the natural unemployment rate

When the cost of the CPI market basket increases from one year to the next, we know that

the prices of the goods and services contained in the cpi market basket have increased on the average

to compare the real price of gas in 1975 to the real price in 2013, we need to know

the two prices in both years and the cpi in both years

at full employment there still exists some unemployment because

the u.s. economy is constantly creating and destroying jobs

How are part-time workers and discouraged workers counted in the unemployment figures?

they aren't

what item accounts for the second largest share in the cpi basket

transportation

The presence of new goods that are of higher quality than the old goods leads the BLS to

try to separate price differences from improvements in quality

If a private wage contract is agreed upon with a cost of living adjustment such that wage hikes are equal to increases in the CPI,

workers benefit because the cpi increases more rapidly than does the true cost of living

To be classified as employed...

you must work at least one hour per week at a paid job or fifteen hours or more as an unpaid worker in your family business

February 2010, the price of gasoline in the Florida was $2.629 per gallon and the CPI was 202.4 with a base period of 1982 to 1984. What was the real price of gasoline per gallon in base period dollars?

$1.29 per gallon

suppose the base reference period is 1982-1984. if your nominal wage rate is $8/hour when the cpi is 180, what is your wage rate in 1982-1984 dollars

$4.44

if you have the cost of the cpi market basket at current prices and the cost of the cpi market basket at base period prices, how do you calculate the cpi

(cost of current cpi market basket/cost of base cpi market basket) x100

suppose the working-age population is 150 million, the labor force is 125 million, and the employment is 120 million. suppose that all 2 million students find jobs. what is the unemployment rate now?

3.9%

suppose the working age population is 500 million, the labor force is 200 million, and the unemployment rate is 15%. the number of unemployed people is

30 million

suppose the working-age population is 150 million, the labor force is 125 million, and the employment is 120 million. what is the unemployment rate

4%

If the cost of the CPI market basket at current period prices is $1000 and the cost of the CPI market basket at base period prices is $250, the CPI is

400

suppose the working-age population is 150 million, the labor force is 125 million, and the employment is 120 million. now suppose that 2 million students graduate from college and begin to look for jobs. what is the new unemployment rate if none of the students have found jobs yet

5.5%

In August of 2013, the number of employed persons in the United States was 144.2 million, the number of unemployed persons was 11.3 million, and the number of persons not in the labor force was 90.5 million. What was the labor force participation rate in August of 2013?

63.2%

in august of 2013, the number of employed persons in the United States was 144.2 million, the number of unemployed persons was 11.3 million, and the number of persons not in the labor force was 90.5 million. What was the unemployment rate in August of 2013?

7.3%

formula for inflation rate

CPI this year - CPI last year / CPI last year x 100

which of the following statements about the cpi is correct i. the only significant bias in the cpi is the commodity substitution bias ii. the cpi probably overstates the inflation by approximately 1.1% per year iii. as far as the bias in the cpi is concerned, the new goods bias and the outlet substitution bias are irrelevant

ii

discouraged workers are included in the calculation of the i. unemployment rate ii. labor force participation rate iii. working age population

iii only

people over the age of sixteen with full-time jobs are considered to be

in the labor force and employed

in measuring the unemployment rate, part-time workers are ___, and discouraged workers are ___

included as employed; excluded

If the CPI is used as a cost of living index, incomes that are adjusted to reflect the changes in the CPI will

increase by more than the actual change in the cost of living

Since 1960, the labor force participation rate in the United States has

increased for women and decreased for men

during a recession, cyclical unemployment ___ and real gap ___

increases; decreases

deflation is a situation in which

inflation rate is negative

Economists agree that the CPI

is a possibly biased measure of the cost of living

desire, a wealthy hedge fund manager who just took early retirement

is not considered part of the labor force