Economics 202 Ch. 6

What is real GDP in 2014 if nominal GDP in 2014 is $15,000 billion, the GDP deflator in 2014 is 110, and the GDP deflator in 2010 was 100?

13,636 billion

__(Table) According to the table, what is the labor force of this economy?

350

The twin perils of the modern macroeconomy are said to be:

Inflation and unemployment

Which of the following statements is INCORRECT?

The natural rate of unemployment is the level at which inflationary pressures in the economy are at their maximum.

Jennifer did not work during college. She just obtained a bachelor's degree in marketing, and she is now looking for a marketing job in the retail industry. Jennifer is considered:

Frictionally unemployed

Johnny is 17 and works in his father's bubble gum store 10 hours a week after school. His father pays him no money but buys video games for him. Johnny earns a spot on the high school football team and no longer works in his father's store. How is Johnny categorized in the unemployment figures?

Johnny is not part of the labor force

There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is Marketstan's unemployment rate?

10%

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is:

125

__(Table) According to the table, what is the unemployment rate of this economy?

14.3%

The biggest group missing from the reported unemployment rate is:

those working part time for economic reasons.

What is your new salary if you earned $40,000 last year, the consumer price index went from 120 to 125, and your salary is adjusted by the rate of inflation annually?

$41,666.67

Suppose an economist breaks the unemployment rate into the following components: frictional (2%), structural (1%), and cyclical (4%). Based on these estimates, the natural rate of unemployment is:

3%

Scott, who has a Ph.D. in physics, waits on tables for a living. Scott is categorized as:

underemployed

The nation of Workovia has a population of 15 million, of whom 10 million are in the labor force and 9 million are working. Workovia's unemployment rate is:

10%

(Table) According to the table, the number of people in the labor force is:

115

_____ unemployment includes workers who voluntarily quit their jobs to search for better positions.

Frictional

Suppose Robert has a wage contract subject to an escalator clause. He earned $22 an hour last year; in that same year, the consumer price index rose from 120.0 to 126.0. What should his new wage be?

$23.10 an hour

Unemployment rates over the past 50 years have tended to hover around:

5% to 6%

Last year the consumer price index (CPI) was 115 and this year's CPI is 125. The rate of inflation is:

8.7%

Arlina got a 5% raise while the rate of inflation was 6%. Arlina's standard of living:

fell by about 1%

Core inflation is found by removing _________ from the consumer price index.

food and energy

Which of the following groups benefits from an unanticipated rise in the inflation rate?

homeowners with fixed-rate mortgages

Which of the following items is NOT included in the GDP deflator?

imported mangoes

Which one of the following would NOT lead to higher prices?

increases in the supply of food

Wages set high to discourage employee turnover are called ________ wages.

Efficiency

U.S. steelworkers who have lost their job to workers receiving lower wages overseas are part of ____________ unemployment.

Structural

Lexie works Monday to Friday from 4 P.M. to 6 P.M. in the after-school program at a local elementary school. She began looking for a full-time job last week and has already scheduled three job interviews. According to the Bureau of Labor Statistics, Lexie is:

Employed

Jennifer just got news that she is getting a 5% raise. However, the Bureau of Labor Statistics just reported that prices are rising by 7%.

Jennifer is losing purchasing power by 2%.

In 2009, a market basket of goods and services cost $100 in Merryland; the same basket cost $200 in Berryland. In 2010, the cost in Merryland was $150 and in Berryland it was $225. Based on that information, which of the following statements is true?

The rate of inflation is four times as large in Merryland as in Berryland.

The mortgage crisis caused a lot of consumers to stop spending money. The decrease in spending led to a decrease in production. Which type of unemployment resulted?

cyclical

Which of the following pairs is NOT synonymous?

cyclical unemployment and full employment

If the cost of a typical market basket in 2019 is 400 and the cost of a typical market basket in 2020 is 390, then during this period the economy is undergoing:

disinflation

Suppose three years ago a nation's inflation rate was 8%, two years ago it was 5%, and last year it was 2%. This nation is undergoing:

disinflation

A passive job search:

entails merely talking to friends about jobs.

All of the following types of wages can cause unemployment EXCEPT:

equilibrium wages.

The costs of cyclical unemployment can be minimized by:

keeping the economy on a steady, low-inflationary growth path.

The natural rate of unemployment:

is associated with the economy's maximum sustainable output rate.

Dave brags to his dad that his $45,000 starting salary as a computer programmer is much higher than his dad's $28,000 starting salary some years ago. If the consumer price index the year Dave begins work is 180.5 and the year his dad started work it was 110.8, Dave is:

mistaken. Adjusting for price changes, his salary is less than his dad's salary.

Tom is living with his parents. He looks at the help wanted ads but has not replied to any in the past four weeks. Tom is:

not in the labor force

The consumer price index does NOT include:

property taxes

During the 1970s, when handheld calculators became popular and replaced slide rules in performing computations, workers in the slide rule industry lost their jobs. These workers' unemployment status is:

structural

Since the invention of automatic teller machines, many bank tellers have lost their job. This is an example of ______ unemployment.

structural

Which of the following statements describes a difference between the consumer price index (CPI) and the producer price index (PPI)?

Only the PPI measures net revenues received by firms.

Zach has been laid off from his job as an aircraft worker and is afraid that he will not be recalled. He has been actively looking for a job but has had no luck for the past six weeks. According to the Bureau of Labor Statistics, Zach is:

unemployed

_____ is a reduction in the rate of inflation.

Disinflation