Macroeconomics Ch. 10

If the CPI is currently 296.3 and the base year is 1967, how much was the CPI in 1967? 196.3 96.3 200 100

100

Suppose that the CPI doubles from 1995 to 2004. That means that prices have risen by 100%. 50%. 200%. 150%.

100%.

Suppose that on average each dollar in 1988 would buy what could have been purchased for 25 cents in 1967 (which you assume is the base year for the CPI). What is the CPI in 1988? 100 400 200 500

400

Suppose that on average each dollar in 1988 would buy what could have been purchased for 25 cents in 1967 (which you assume is the base year for the CPI). What is the CPI in 1988? 200 500 400 100

400

Which of the following people would be considered unemployed? All of the choices are correct A 55 year-old steel worker who was laid off 18 months ago and has given up trying to find a job A woman who has quit college to move to New York where she is looking for a modeling job A young man who has recently received his Ph.D. but who is driving a taxi because of an inability to find a teaching job

A woman who has quit college to move to New York where she is looking for a modeling job

Which of the following people would not be included among the unemployed? A recent college graduate who has not yet found a job. A recent high school graduate who has quit his first job as a stock clerk in a grocery store in order to look for a better job. A young mother on welfare because her husband has left her and she must stay home to tend her children. A construction worker laid off because of a slowdown in house building.

A young mother on welfare because her husband has left her and she must stay home to tend her children.

Which of the following people would not be included among the unemployed? A recent high school graduate who has quit his first job as a stock clerk in a grocery store in order to look for a better job. A recent college graduate who has not yet found a job. A young mother on welfare because her husband has left her and she must stay home to tend her children. A construction worker laid off because of a slowdown in house building.

A young mother on welfare because her husband has left her and she must stay home to tend her children.

Which statement is true? All people who collect unemployment insurance benefits are officially unemployed. All people who are unemployed collect unemployment insurance benefits. No one who is officially unemployed collects unemployment insurance benefits. No one who collects unemployment insurance benefits is officially unemployed.

All people who collect unemployment insurance benefits are officially unemployed.

Which statement is true? All people who collect unemployment insurance benefits are officially unemployed. No one who collects unemployment insurance benefits is officially unemployed. All people who are unemployed collect unemployment insurance benefits. No one who is officially unemployed collects unemployment insurance benefits.

All people who collect unemployment insurance benefits are officially unemployed.

Which statement is true? No one who is officially unemployed collects unemployment insurance benefits. All people who collect unemployment insurance benefits are officially unemployed. No one who collects unemployment insurance benefits is officially unemployed. All people who are unemployed collect unemployment insurance benefits.

All people who collect unemployment insurance benefits are officially unemployed.

In general _____ by unanticipated inflation. Creditors and debtors are both hurt Creditors are helped and debtors are hurt Creditors are hurt and debtors are helped Creditors and debtors are both helped

Creditors are hurt and debtors are helped

If the Consumer Price Index decreases, who will be harmed? Debtors Creditors Savers and creditors Savers

Debtors

Which of the following is defined as a rate of downward movement in the price level for an aggregate of goods and services? Inflation Deflation Reinflation Price index

Deflation

If the unemployment rate fell from 8 percent to 6 percent, the cyclical unemployment rate Fell by 2%. Fell by more than 2%. Went up. Stayed the same. Fell by less than 2%.

Fell by 2%.

If the unemployment rate fell from 8 percent to 6 percent, the cyclical unemployment rate Fell by less than 2%. Fell by more than 2%. Stayed the same. Went up. Fell by 2%.

Fell by 2%.

If the unemployment rate fell from 8 percent to 6 percent, the cyclical unemployment rate Fell by less than 2%. Stayed the same. Went up. Fell by 2%. Fell by more than 2%.

Fell by 2%.

Use the following choices regarding the various types of unemployment to describe the following situation. After staying home for 23 years raising her four children, Susan has reentered the labor force looking for full-time employment. Frictional unemployment Structural unemployment Cyclical unemployment Natural unemployment

Frictional unemployment

Ross Pearl is a crackerjack salesperson. He could probably sell anything to anyone. The company he works for goes out of business. Until he finds a new position, Mr. Pearl is _____ unemployed. Cyclically Psychologically Frictionally Structurally

Frictionally

Ross Pearl is a crackerjack salesperson. He could probably sell anything to anyone. The company he works for goes out of business. Until he finds a new position, Mr. Pearl is _____ unemployed. Structurally Frictionally Psychologically Cyclically

Frictionally

Comparing factors that affect unemployment rates among modern industrial nations, Less than 50 percent of German and French workers qualify for unemployment benefits. Germany and French workers can collect nearly 60 percent as much as they could earn working, thus discouraging the incentive to work. Japanese and American unemployment benefits are 70 percent as much as workers could earn working, thus encouraging the incentive to work. Over 90 percent of Japanese and American workers easily qualify for unemployment benefits.

Germany and French workers can collect nearly 60 percent as much as they could earn working, thus discouraging the incentive to work.

Comparing factors that affect unemployment rates among modern industrial nations, Over 90 percent of Japanese and American workers easily qualify for unemployment benefits. Japanese and American unemployment benefits are 70 percent as much as workers could earn working, thus encouraging the incentive to work. Less than 50 percent of German and French workers qualify for unemployment benefits. Germany and French workers can collect nearly 60 percent as much as they could earn working, thus discouraging the incentive to work.

Germany and French workers can collect nearly 60 percent as much as they could earn working, thus discouraging the incentive to work.

The supply-side shocks that affected the United States in 1973 and 1979 were the result of periods of stagflation in which the United States had achieved low or negative rates of growth in real GDP. OPEC policies regarding the availability and price of crude oil. government tax policies. union wage demands.

OPEC policies regarding the availability and price of crude oil.

Which one of these groups is counted among the unemployed? Discouraged workers People out of the labor force People working part time People collecting unemployment benefits

People collecting unemployment benefits

Which ordering is correct? Recovery, recession, prosperity. Prosperity, recovery, recession. Recession, recovery, prosperity. Recession, prosperity, recovery.

Recession, recovery, prosperity.

The business cycle consists of several stages or phases. Which is the accurate sequence? Recession, peak, recovery Recession, trough, recovery Recession, recovery, trough Recession, peak, trough Recession, recovery, peak

Recession, trough, recovery

The business cycle consists of several stages or phases. Which is the accurate sequence? Recession, peak, trough Recession, recovery, peak Recession, peak, recovery Recession, recovery, trough Recession, trough, recovery

Recession, trough, recovery

The business cycle consists of several stages or phases. Which is the accurate sequence? Recession, trough, recovery Recession, recovery, peak Recession, recovery, trough Recession, peak, trough Recession, peak, recovery

Recession, trough, recovery

_____ results from shifts in the demand for goods and services or changes in technology in the economy. Frictional unemployment Structural unemployment None of the choices are correct Cyclical unemployment

Structural unemployment

A high school dropout with poor work habits, little experience, and no vocational training, who has been out of work for three years but is actively seeking employment, would be _____ unemployed. Frictionally Cyclically Structurally

Structurally

Which statement is true? Cyclical unemployment is generally zero. The sum of the frictional and structural unemployment rates is 5 percent. During very bad recessions and depressions the total of our frictional and structural unemployment rates is greater than our cyclical unemployment rate. When our overall unemployment rate declines, most of this decline is due to falling structural and frictional unemployment.

The sum of the frictional and structural unemployment rates is 5 percent.

If the number of unemployed stays the same and the number of people in the labor force declines the unemployment rate will stay the same. The unemployment rate will rise. There is not enough information to determine what will happen to the unemployment rate. the unemployment rate will fall.

The unemployment rate will rise.

Which of the following scenarios can cause cost-push inflation? a major union wage settlement that increases average wage levels a decrease in real interest rates an increase in net taxes an increase in government purchases

a major union wage settlement that increases average wage levels

The term recession refers to a fall in the general level of real wages. a fall in the rate of increase of real per capita GDP. a fall in the CPI. a period of decline in real GDP for two business quarters.

a period of decline in real GDP for two business quarters.

The term recession refers to a fall in the rate of increase of real per capita GDP. a fall in the general level of real wages. a period of decline in real GDP for two business quarters. a fall in the CPI.

a period of decline in real GDP for two business quarters.

Disinflation is a drop in the average level of prices. negative inflation. a reduction in the annual rate of inflation. a constant price level.

a reduction in the annual rate of inflation.

Disinflation is a reduction in the annual rate of inflation. a constant price level. negative inflation. a drop in the average level of prices.

a reduction in the annual rate of inflation.

Inflation is a rise in the average price level. a rise in the price of every good and service. a rise of exactly a specified percentage in the price of every good or service. a rise in average prices of at least 10 percent a year.

a rise in the average price level.

Inflation is a rise in the average price level. a rise of exactly a specified percentage in the price of every good or service. a rise in the price of every good and service. a rise in average prices of at least 10 percent a year.

a rise in the average price level.

The trough occurs more than twice in the same cycle. during the prosperity phase of the cycle. at the peak of the business cycle. at the bottom of the business cycle.

at the bottom of the business cycle.

American unemployment is lower than most European nations because almost all American workers are covered by unemployment insurance. despite approximately equal economic growth rates in the U.S. and Europe. because unemployment benefits are much more generous in Europe than in the U.S. despite the fact that in Europe there is a stigma attached with being unemployed.

because unemployment benefits are much more generous in Europe than in the U.S.

American unemployment is lower than most European nations despite approximately equal economic growth rates in the U.S. and Europe. because almost all American workers are covered by unemployment insurance. despite the fact that in Europe there is a stigma attached with being unemployed. because unemployment benefits are much more generous in Europe than in the U.S.

because unemployment benefits are much more generous in Europe than in the U.S.

The consumer price index is created by calculating the cost of a "basket" of consumer goods typically bought by an American family in any year as a percentage of their cost in a base year. dividing nominal dollar consumer expenditures by base year consumer expenditures. averaging the price increases for all consumer goods in the GDP and adding 100. the Congressional Budget Office.

calculating the cost of a "basket" of consumer goods typically bought by an American family in any year as a percentage of their cost in a base year.

The consumer price index is created by the Congressional Budget Office. averaging the price increases for all consumer goods in the GDP and adding 100. calculating the cost of a "basket" of consumer goods typically bought by an American family in any year as a percentage of their cost in a base year. dividing nominal dollar consumer expenditures by base year consumer expenditures.

calculating the cost of a "basket" of consumer goods typically bought by an American family in any year as a percentage of their cost in a base year.

Which of the following assets decreases the most in purchasing power during inflation? cash savings account money real estate government bonds

cash

Frictional unemployment is caused by a mismatch between the skills of unemployed workers and the skills required in jobs that have openings. caused because time is needed to enter the labor force to find a job or to move from one job to another. the lowest rate of unemployment that can be maintained without accelerating the rate of inflation. associated with downturns in the pace of economic activity.

caused because time is needed to enter the labor force to find a job or to move from one job to another.

Structural unemployment is often caused by striking workers. layoffs associated with seasonal slowdowns in construction and other industries. the recessionary stage of the business cycle. new labor force entrants. changes in economic organization and production which make some jobs and job skills obsolete.

changes in economic organization and production which make some jobs and job skills obsolete.

Structural unemployment is often caused by the recessionary stage of the business cycle. striking workers. layoffs associated with seasonal slowdowns in construction and other industries. changes in economic organization and production which make some jobs and job skills obsolete. new labor force entrants.

changes in economic organization and production which make some jobs and job skills obsolete.

A current value for the CPI of 125 means that the purchasing power of a given money income is 25 percent larger during the base year than when the index was formulated. average price level currently is 125 times higher than the average price level during the base year. consumer must now pay $1.25 to purchase goods that cost $1.00, on the average, in the base year. purchasing power of money has increased 125 percent over time.

consumer must now pay $1.25 to purchase goods that cost $1.00, on the average, in the base year.

When there is full employment, there is no _____ unemployment. cyclical structural frictional

cyclical

Unemployment caused by economic decline or recession is called cyclical unemployment. frictional unemployment. natural unemployment. necessary unemployment.

cyclical unemployment.

Each of the following people would be hurt by unanticipated inflation except landlords who have granted long-term leases. debtors. long-term bondholders. retired people on fixed pensions.

debtors.

Each of the following people would be hurt by unanticipated inflation except retired people on fixed pensions. debtors. landlords who have granted long-term leases. long-term bondholders.

debtors.

A person who has not worked in six months and has given up looking for work is officially classified as unemployed. discouraged. in the labor force. employed.

discouraged

If people cannot find work and drop out of the labor force, they are classified as unemployed. as part of the institutionalized population. employed. discouraged workers.

discouraged workers.

The price index for a market basket of goods can be found by dividing the value of the market basket by the rate of inflation. multiplying the base-year cost of the basket by the current-year cost of the basket divided by 100. dividing the current-year value of the market basket by the base-year value of the basket and multiplying the result by 100. multiplying the value of the market basket by the rate of inflation.

dividing the current-year value of the market basket by the base-year value of the basket and multiplying the result by 100.

Our natural unemployment rate is most closely related to frictional unemployment. full employment. seasonal unemployment. structural unemployment.

full employment.

Our natural unemployment rate is most closely related to full employment. seasonal unemployment. frictional unemployment. structural unemployment.

full employment.

Our natural unemployment rate is most closely related to structural unemployment. full employment. seasonal unemployment. frictional unemployment.

full employment.

The _____ the unemployment rate and the _____ the rate of inflation, the higher the misery index. lower; higher higher; higher lower; lower higher; lower

higher; higher

The _____ the unemployment rate and the _____ the rate of inflation, the higher the misery index. lower; lower higher; higher higher; lower lower; higher

higher; higher

If the number of employed people goes down at the same time that the unemployment rate goes down, then we may conclude that some people must have entered the labor force. either retired or died. been forced off unemployment benefits. left the labor force.

left the labor force.

If the number of employed people goes down at the same time that the unemployment rate goes down, then we may conclude that some people must have entered the labor force. left the labor force. either retired or died. been forced off unemployment benefits.

left the labor force.

Imports tend to raise our rate of inflation. have no effect on our rate of inflation. lower our rate of inflation.

lower our rate of inflation.

The business cycle dating committee determines when peaks and troughs occur by looking at mainly at the unemployment rate. mainly at real GDP figures. mainly at employment, industrial production, personal income, and manufacturing and trade revenue. data from our economy and comparing it to data from other major nations.

mainly at employment, industrial production, personal income, and manufacturing and trade revenue.

When the Consumer Price Index is overhauled, Social Security benefit payments will probably rise faster. more slowly. at about the same rate.

more slowly.

If the number of unemployed is greater than the number of employed, the unemployment rate is None of the choices are correct. over 100%. less than 50%. more than 50%.

more than 50%.

If the number of unemployed is greater than the number of employed, the unemployment rate is over 100%. more than 50%. None of the choices are correct. less than 50%.

more than 50%.

Suppose a person lost a factory job six months ago, spent 3 months in a fruitless search for work, and then stopped looking. In the collection of official statistics, such a person is considered structurally unemployed. frictionally unemployed. out of the labor force. cyclically unemployed.

out of the labor force.

An increase in the quality of items included in the Consumer Price Index would cause the index to understate the true amount of inflation. overstate the true amount of unemployment. understate the true amount of unemployment. overstate the true amount of inflation

overstate the true amount of inflation

According to conservatives the Bureau of Labor Statistics overstates the number of unemployed and overstates the unemployment rate. understates the number of unemployed and understates the unemployment rate. understates the number of unemployed and overstates the unemployment rate. overstates the number of unemployed and understates the unemployment rate

overstates the number of unemployed and overstates the unemployment rate.

According to conservatives the Bureau of Labor Statistics understates the number of unemployed and overstates the unemployment rate. understates the number of unemployed and understates the unemployment rate. overstates the number of unemployed and understates the unemployment rate. overstates the number of unemployed and overstates the unemployment rate.

overstates the number of unemployed and overstates the unemployment rate.

Frictional unemployment describes seasonal layoffs and periods without work, such as construction and public school teaching. the growing number of job seekers whose absence of skills makes them unemployable in any line of work except unskilled, dead-end jobs. extended periods of unemployment during which retraining for new jobs occurs. recent entrants, re-entrants, and voluntary quits who require only a short time to find new employment. the loss of jobs resulting from periods of recession.

recent entrants, re-entrants, and voluntary quits who require only a short time to find new employment.

If the number of unemployed workers doubled and the number of employed workers stayed the same, the unemployment rate would stay the same. fall. rise by less than 100%. rise by 100%. rise by more than 100%.

rise by less than 100%.

The unemployment that occurs as jobs are eliminated because of changing technology is known as cyclical. fundamental. structural. voluntary. frictional.

structural

A worker who loses a job at a petroleum refinery because consumers and business firms switch from the use of oil to natural gas is an example of disguised unemployment. frictional unemployment. cyclical unemployment. structural unemployment.

structural unemployment.

When individuals are out of work because they do not have the skills necessary to perform available jobs, we call this the natural rate of unemployment. cyclical unemployment. frictional unemployment. full employment (5 to 6 percent unemployment). structural unemployment.

structural unemployment.

Structural unemployment occurs when the people without jobs have skills that don't match the available job openings. the business cycle is in a downturn and people are laid off. workers have quit one job and are looking for a better one. high school graduates enter the labor market every June.

the people without jobs have skills that don't match the available job openings.

Structural unemployment occurs when workers have quit one job and are looking for a better one. the business cycle is in a downturn and people are laid off. the people without jobs have skills that don't match the available job openings. high school graduates enter the labor market every June.

the people without jobs have skills that don't match the available job openings.

In calculating the Consumer Price Index neither price nor quantity of each item is allowed to change between the base period and current year. the price of each item is allowed to change between the base period and current year but the quantity is held constant. the quantity of each item is allowed to change between the base period and current year but the price is held constant. both the price and quantity of each item is allowed to change between the base period and current year.

the price of each item is allowed to change between the base period and current year but the quantity is held constant.

In calculating the Consumer Price Index the quantity of each item is allowed to change between the base period and current year but the price is held constant. neither price nor quantity of each item is allowed to change between the base period and current year. both the price and quantity of each item is allowed to change between the base period and current year. the price of each item is allowed to change between the base period and current year but the quantity is held constant.

the price of each item is allowed to change between the base period and current year but the quantity is held constant.

Mr. Kent, a middle-aged bachelor, quit his news reporter job and currently is looking for a better job. The BLS counts Mr. Kent as: not in the labor force. employed. unemployed. a discouraged worker.

unemployed

Mr. Kent, a middle-aged bachelor, quit his news reporter job and currently is looking for a better job. The BLS counts Mr. Kent as: employed. unemployed. a discouraged worker. not in the labor force.

unemployed.

Stagflation involves simultaneous high levels of economic growth and inflation. unemployment and inflation. interest rates and inflation. unemployment and interest rates.

unemployment and inflation.

Stagflation involves simultaneous high levels of economic growth and inflation. unemployment and interest rates. unemployment and inflation. interest rates and inflation.

unemployment and inflation.

Stagflation involves simultaneous high levels of unemployment and interest rates. unemployment and inflation. economic growth and inflation. interest rates and inflation.

unemployment and inflation.