Macroecon Chapter 8 Quiz

When the rate of inflation is high, people usually transfer money from interest-bearing accounts into checking accounts more often than when inflation is low. This is an example of a menu cost.

false

Between 1921 and 1923 Germany underwent a period of hyperinflation.

true

Discouraged workers are not working, want to work, but are not actively looking for a job.

true

The U.S. inflation rate was lower in the 2000s than it was in the 1970s.

true

The natural rate of unemployment will rise for all of the following reasons EXCEPT:

an increase in labor productivity that translates into greater demand for labor.

Which of the following most accurately describes how to calculate the unemployment rate?

(unemployment/labor force) x 100

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 5 old dollars, then a loan of $10,000 would become a debt of _____ new dollars.

2,000

If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 4 old dollars, then an hourly wage of $10 would become an hourly wage of _____ new dollars.

2.50

A survey reveals that on a small island 1,000 people have jobs, 250 people are unemployed and looking for jobs, and 450 people are neither working nor looking for work. The unemployment rate on the island is:

20%

A survey reveals that on a small island 40 people have jobs, 10 people are not working but looking for jobs, and 30 people are neither working nor looking for work. The unemployment rate on the island is:

20%

If a country has a working-age population of 200 million, 120 million people with jobs, and 30 million people unemployed and seeking employment, then its unemployment rate is:

20%

Generous unemployment benefits are likely to cause:

an increase in the unemployment rate

The inflation rate for the current year is the price level in the current year minus the price level in the previous year.

False

Suppose that a bank wishes to make a 5% rate of return on a one-year loan but expects inflation over the course of the loan to be roughly 3%. Which of the following is TRUE?

If the bank charges 8% and the inflation rate is less than 3%, then the bank will have earned a higher rate of return than expected.

In the absence of minimum wages, efficiency wages, or labor unions, a decline in the demand for labor will likely result in _____ if wages are flexible.

a lower level of employment but likely no change in the unemployment rate

Efficiency wages are:

above equilibrium to encourage better performance.

To be counted as unemployed, one must:

be out of work and be actively looking for a job.

According to the Bureau of Labor Statistics, the actual unemployment rate was 8.3% in February 2012 and the natural rate of unemployment was 5.2%. The _____ unemployment rate was _____.

cyclical; 3.1%

It is generally accepted that a binding minimum wage does all of the following EXCEPT:

decrease the amount of labor supplied.

The natural rate of unemployment is:

equal to the sum of frictional and structural unemployment.

Suppose that Allison has an accounting degree, but she lost her job two months ago when her company merged with another firm. Allison hasn't been able to find another accounting job, so she has taken a part-time job as a sales clerk at a clothing store. As a result the official unemployment rate will:

increase temporarily, then fall back to its original level.

In general, for the U.S. economy, the relation between unemployment and economic growth is:

negative

Employment is the total:

number of people actively working, either full-time or part-time

A survey reveals that on a small island initially 1,000 people have jobs, 250 people are not working but are looking for jobs, and 450 people are neither working nor looking for work. Suppose that 150 of the 450 people who weren't looking for work now begin looking for work. There are now 400 people looking for work and 1,000 people working. The unemployment rate:

rises to 28.6%

Annie's credit union charges a fee for transferring funds from her money market account to her checking account. The rate of inflation has been 12% lately, so Annie has transferred funds from her money market account to her checking account more often than usual. This cost is an example of the _____ cost of high inflation.

shoe-leather

If a worker becomes unemployed because of an increase in the minimum wage, that worker is:

structurally unemployed.

Suppose that immigration laws are relaxed and many workers from other nations enter the U.S. labor force. The _____ for labor will _____.

supply; increase

Which of the following situations is likely to increase the natural rate of unemployment?

the entrance of many new people into the labor force

Menu costs are the:

the real costs of changing listed prices

Recent declines in union membership are likely _____ the natural rate of unemployment.

to decrease

According to historical economic data for the United States from 1949 to 2014, the unemployment rate is most likely to rise:

whenever the economy grows at a rate below 3.25%.

Efficiency wages encourage:

workers to stay in their current job.