Chapter 5 Econ 102

If the CPI at the end of last year was 100 and the CPI at the end of this year was 115, the inflation rate was

15 percent

The percentage of people employed aged 16 years of age and older divided by the working age population is known as the

employment-to-population ratio

In September 2014, 32% of unemployed workers had been unemployed for 6 months or more. This long term unemployment is a particular concern because

long term unemployment is the most costly type of unemployment

The unemployment rate is at the natural unemployment rate when

cyclical unemployment equal zero

Cyclical unemployment __________

decreases during an expansion

Which of the following would be considered unemployed by the Bureau Labor of Statistics? I. Mrs. X retires from her job at the age of 55 and does not look for another job II. Mr. Y was laid off from his job as a welder, but expects to be rehired in 8 months

II only

Which of the following decreases the official U-3 unemployment rate?

None of the above because they all increase or do not change the unemployment rate

Between September 2013 and September 2014 the number of discouraged workers decreased from 852,000 to 698,000. Assuming the change resulted from discouraged workers starting to make specific efforts to find a job again, this change creates

an increase to the U-3 unemployment rate

Discouraged workers ___________ counted as officially unemployed because they ______________________

are not; are not actively seeking work

Structural unemployment is

associated with the general decline of specific industries

The cost of inflation to society includes I. the opportunity costs of resources used by people to protect themselves against inflation II. the diversion of productive resources to forecasting inflation

both I and II

The natural unemployment rate

rises with an increase in structural unemployment

An individual is structurally unemployed if

the individual lacks marketable job skills because technology has changed

Suppose the price level was 100 in 2011, 110 in 2012, and 130 in 2013. Over these three years

the inflation rate was positive and accelerating

When cyclical unemployment increases and other things reman the same, ________

the natural unemployment rate does not change.

Assume the inflation rate falls from 4 percent to 2 percent. This means that

the price level is increasing more slowly

In the table above, the size of the labor force is

42 million

In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012/2013 are listed in the table above. The reference base period for Dexter's CPI is 2012. What is the cost of the CPI basket in 2012?

$540

At the end of last year the CPI equaled 120. At the end of this year the CPI equals 132. What is the inflation rate over this year?

10 percent

In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012 and 2013 are listed in the table above. This reference base period for Dexter's CPI is 2012. What is the CPI in 2012?

100- always 100 for base year

The CPI basket contains 400 oranges and 800 pens. In the base year, the price of an orange is $1.00 and the price of a pen is $0.75. This year, urban consumers each buy 300 oranges at $2 and 850 pens at $1. The CPI this year is

160

What is the CPI in 2013?

169

If the basket of goods and services used to calculate the CPI cost $200 in the reference base period and $450 in the later year, the CPI for the later year, the CPI for the later year equal

225

In the above table, the unemployment rate is

29%

Suppose the economy is experiencing frictional unemployment of 1 percent, structural unemployment of 3 percent, and cyclical unemployment. What is natural unemployment?

4 percent

Suppose that last year the CPI was 124; this year it is 130.7. What was the inflation rate between these years?

5.4 percent

If the working age population is 300 million, with 70 million under age of 16/ instutionalized, another 70 million not in labor force, 10 million unemployed and 150 million employed, the employment-to-population ratio is

50%

In the table above, what inflation rate belongs in space B?

6.8 percent

In the table above, the labor force participation rate is

62%

Using the information in table, calculate the employment-to-population ratio

65%

Using the data in the above table, the labor force participation rate is

75.7%

In an economy, 23 million people are employed and 2 million are unemployed, but 5 million part-time workers would prefer full-time work. What is the unemployment rate?

8%

If the number of people unemployed is 100, the number of people employed is 1000, and the working age population is 1400, then the unemployment rate is

9.1%

The above table shows answers given by people interviewed in the current population survey. Which people are structurally unemployed?

B and C- At the age of 45, this person was laid off from the automobile industry when new equipment was installed and the person did not have the skills necessary to use the equipment. This person now is searching to find a new job. As a result of this person's spouse being transferred to a job in a new city, this person is looking for a new job.

The above table shows answers given by people interviewed in a government survey of households. Which individual/s are considered marginally attached?

D- this person was laid off last year when new equipment was installed at the plant, reducing the number of workers needed. Shortly after being laid off, this person looked for a new job, was unable to find one and then stopped looking, even though this person still wants a job and is available for work

From September 2013 to September 2014, the employment-to-population ratio increased from 58.6% to 59%. This change could have been the result of

a decrease in the working age population

Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as

frictionally unemployed

If the inflation rate is negative, the price level in an economy is

falling

When the economy is operating at full employment, the natural employment rate consists only of:

frictional and structural unemployment

The type of unemployment created by the normal rate of reentry and entry into the labor force is

frictional unemployment

When a person reenters the labor force and looks for a job after spending time at home to raise a child

frictional unemployment increases

When a worker quits a job to look for a better job

frictional unemployment increases

An example of new goods bias in the CPI is the

introduction of hybrid automobiles, vehicles that were not made until recently

Frictional unemployment

is unemployment associated with normal labor turnover

The biases in the CPI include the

new goods, quality change, and substitution biases

Which of the following is NOT included in the working age population

people in prison

In the 1990's, video recordings were made primarily on tapes. However, in the 2000s DVDs became increasingly popular, leading to a sharp decline in video tapes. As a result, many people who manufactured tapes lost their jobs and didn't have the skills necessary to work making DVDs. This occurrence is best considered an example of

structural unemployment

Structural unemployment is the result of

technological change or foreign competition.

Cyclical unemployment is the result of

the business cycle

The consumer Price index is a measure of the average of the pries paid by ___________ for a fixed basket of consumer goods and services.

urban customers