Econ Chp 9 Quiz
Suppose that in 2018, all prices in the economy double and that all wages and salaries also double. In 2018 you
are no better off or worse off than you were in 2017 as the purchasing power of your salary has remained the same.
Which of the following describes situations in which the person is hurt by inflation?
a person paid a fixed income during an inflationary period
The real wage equals the nominal wage ________ the CPI, all times 100.
divided by
The labor force equals the number of people
employed plus unemployed.
The natural rate of unemployment is the amount of unemployment
equal to frictional plus structural unemployment.
Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as
not in the labor force.
The broadest measure of the price level that includes all final goods and services is
the GDP deflator.
Suppose the workingminusage population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have fullminustime employment; 20 have partminustime employment; 20 do not have employment, but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal
20/100 X 100
Consider the data in the table above for a simple economy. The labor force participation rate for this simple economy equals total population: 20,000 working-age pop: 15,000 Employment: 1000 unemployment: 100
1,100/15,000 X 100
Consider the data in the table above for a simple economy. The unemployment rate for this simple economy equals Total population: 20,000 Working age pop: 15,000 Employment: 1000 unemployment: 100
100/1,100 X 100
Monthly expenditures for a family of 4 in 2017 averaged $1,400. In 2018, the cost of the same purchases was $1,500. If 2017 is the base year, what was the CPI in 2018?
107
Assume the market basket for the consumer price index has two products, bread and milk, with the following values in 2013 and 2018 for price and quantity: milk: 50, 1.20, 1.50 Bread: 100, 1.00, 1.10 The Consumer Price Index for 2018 equals
116
Assume the market basket for the consumer price index has two products, meat and potatoes, with the following values in 2013 and 2018 for price and quantity: Meat: 100, 10, 120, 12 Potatoes: 200, 2, 180, 3 The consumer Price Index for 2018 equals:
129
Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to
2.5 percent.
Suppose an economy has only three goods and the typical family purchases the amounts given in the table. If 2013 is the base year, then what is the CPI for 2018? hair cuts: 6, 50, 300, 70, 420 backpacks: 4, 25, 100, 30, 120 Taco: 100, 1 ,100, 5, 500 Total: 500, 1040
208
Assume the average annual CPI values for 2017 and 2018 were 207.3 and 215.3, respectively. What was the percent increase in the CPI between these two years?
3.86
Looking at the table, what is the rate of growth of the average price level from 2016 to 2017? 2016: 10, 100 2017: 10, 105 2018: 12, 110
5%
The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. 1965: 2..65, 32 2010: 22.59, 219 The real average hourly earnings for 1965 in 1982-1984 dollars equal
8.28
Which of the following is true about the consumer price index?
It assumes that consumers purchase the same amount of each product in the market basket each month.
When actual inflation is less than expected inflation
borrowers lose and lenders gain.
Which of the following would be the best measure of the cost of living?
consumer price index
Most of the unemployment that occurred during the Great Depression was
cyclical unemployment.
Workers laid off as a result of a recession suffer
cyclical unemployment.
Counting part- time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy.
false
Jack just told his boss that he thinks his boss is an idiot. It is likely that Jack will be experiencing ________ unemployment in the near future.
frictional
The percent increase in the CPI from one year to the next is a measure of the
inflation rate.
The costs to firms of changing prices are called
menu costs.
Jack just received a promotion at work and now works 50 hours per week instead of 35. As a result,
neither the unemployment rate nor the labor force participation rate changed.
The "new product bias" in the consumer price index refers to the idea that
new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers.
The Bureau of Labor Statistics would categorize a retiree who is not working as _________.
out of the labor force
Which of the following would most likely suffer the least from the costs of inflation?
persons whose incomes rise more rapidly than inflation
If cyclical unemployment is eliminated in the economy, then
the economy is considered to be at full employment.
What is outlet bias?
the tendency for households to spend their money at discount stores as prices rise
Mike has been unemployed for over a year. He hasn't looked for a job in the last three months, but he's just started looking for work again. Because Mike started looking for a new job,
the unemployment rate increased.
Jack lost his job six months ago, and he's been actively looking for a new job ever since. The Bureau of Labor Statistics would classify Jack as
unemployed
Discouraged workers are
workers who have stopped looking for work because they believe there are no jobs for them.
The CPI in 1990 was 131, and the CPI in 2010 was 218. If you earned a salary of $40,000 in 1990, what would be a salary with equivalent purchasing power in 2010?
$66,565
Suppose your grandfather earned a salary of $12,000 in 1964. If the CPI is 31 in 1964 and 219 in 2018, then the value of your grandfather's salary in 2018 dollars is approximately
$84,775.
Inflation that is ________ than what is expected benefits ________ and hurts ________.
less; lenders; borrowers
The increase in quality bias in the consumer price index refers to the idea that price increases in the CPI reflect pure inflation, but ______ quality increases. This causes the CPI to ______ the cost of the market basket.
not; overstate
If your nominal wage rises faster than the price level, we can say your real wage has ________ and the purchasing power of your income has ________.
risen; risen