Unemployment/Inflation
Anna Graham is the new Treasury Secretary and she is trying to interpret some inflation measures. In year one, the aggregate price level increased by 7% and in year 2 the aggregate price level decreased by 1%. Describe the changes in nation's price level.
-In year one the economy is experiencing inflation -In year two the economy is experiencing deflation
In 2008, the rate of inflaction was 2%, which then rose to 3% in 2009 before falling back to 2% in 2010. Between 2008 and 2009, the economy experienced _______ and between 2009 and 2019, the economy experienced ______
-Inflation -Disinflation
Other things equal, if a recession gets worse, the # of discourages workers _____ and then # of those in labor force _______
-increase -decrease
If the inflation rate was 1% in 2014, 3% in 2015, and 2% in 2016, this economy experienced ____ from 2014-2015 and ____ from 2015-2016
-inflation -disinflation
Which of these would not lead to higher prices A. Increase in supply of money B. Increase in supply of food C. Strong consumer demand D. Higher gas prices
B. Increase in supply of food
Which of these causes inflation *A.* Short-run spending increase *B.* Slow growth in quantity of money *C.* Government printing too much money *D.* Unemployment
C. Government printing too much money
Which of the following persons would be considered employed? *A.* Sam a 12 year old who helps his mom stock shelves at her gift shop *B.* Ron, a recently enrolled full-time college student in hopes of finding a well-paying job *C.* Jennifer a teacher who is on two month maternity leave but will return to work *D.* All of the above persons are considered employed
C. Jennifer a teacher who is on two month maternity leave but will return to work
(inflation overstated, understated, none) Mary and Bob replace their old minivan with a new one. The new van costs 15% more than the old van, but the new model has many updated features like a camera to assist with backing up, GPS, and better fuel economy
Causes inflation to be overstated
(inflation overstated, understated, none) Zach loves bagels, but bagels are becoming more expensive so he changes his breakfast routine to include a muffin instead of b/c muffins remain relatively cheap
Causes inflation to be overstated
(inflation overstated, understated, none) Donna a confirmed chocoholic notices that her favorite candy bar shrank in size, but its price stayed the same
Causes inflation to be understated
(Structural/frictional/cyclical) Brock Lee used to work at a restaurant serving fun family fare. Business at the restaurant has been slow b/c the major employer in town has laid off a large number of people. There simply was not enough work to keep Brock Lee on the payroll.
Cyclical unemployment
(employed, discourages, underemployed, none, unemployed) Mason was released from his employment with a severance package for life, but he would like to continue to work. Months pass and he gets no offers, despite his resume. Mason gave up on the job hunt 4 weeks ago
Discourages worker
(Inflation,disinflation,deflation,hyperinflation) Bill Board notices that his rent for this year has increased but not as much as it had increase last year
Disinflation
____ is a reduction in rate of inflation
Disinflation
(inflation overstated, understated, none) Chris is an avid runner. He is loyal to one particular brand and buys new pairs of the same shoe every few months. The price of his shoes has doubled in the last 15 years
Does not cause inflation to be overstated or understated
(employed, discourages, underemployed, none, unemployed) Lily is a recent economics college grad and has started her first job as a business analyst
Employed
(employed, out of labor force, unemployed) Anna Conda is currently on a hiking vacation in the Amazon jungle from her part-time job as a herpetologist at the San Diego Zoo
Employed
(Structural/frictional/cyclical) Beau Tye decides to quit his job as a waiter in Pensacola, Florida, in order to pursue his dream of becoming an actor in Hollywood. Acting job exist, but he has not yet found one.
Frictional unemployment
Jobless recovery
GDP increases while there is no increase in employment
(Inflation,disinflation,deflation,hyperinflation) Anne Tek notices that her government has taken to printing money in trillion dollar bills in order to make everyday transaction easier
Hyperinflation
(Inflation,disinflation,deflation,hyperinflation) Berry Cade notices that the price of many items that he uses on a regular basis has steadily been increasing over the past 10 year
Inflation
(benefited-winners or harmed-losers by unexpected inflation) Herb, who keeps his savings in an old coffee can
Losers-harmed
(benefited-winners or harmed-losers by unexpected inflation) Karen, a retired school teacher who replies upon her fixed pension to pay for her expenses
Losers-harmed
(benefited-winners or harmed-losers by unexpected inflation) Third national, a bank that loaned many people money for home purchases
Losers-harmed
Which of the following persons would be considered unemployed? *A*. Nick, a union member on strike at his factory because he demands better job benefits *B.* Beth laid off from her job as a mechanic, chose to return to school instead of looking for another job *C.* Jack not having worked in 8 months, feels hopeless, which is why he does not bother applying for jobs *D*. None
None
(employed, out of labor force, unemployed) Bill Lonely does not have a job nor does he intend to look for one
Out of labor force
(employed, out of labor force, unemployed) Brighton Early is a student. He has no job outside of the home but spends give hours each week mowing the lawn and maintaining his yard. He is happy with his situation and is not looking for work.
Out of labor force
What is most directly related to cyclical unemployment?
Recessions
Which of the following is least likely to result in inflation? *A.* The government printing money to finance deficits *B.* A reduction in consumer confidence *C.* A drought in Cali that causes farm production to fall *D.* Rising instability in oil-producing nations
Reduction in consumer confidence
(Structural/frictional/cyclical) Anna Prentice has worked for years fixing broken typewriters. She is laid off from her job as fewer and fewer people use typewriters. She is looking for work but cant find a job in her area of specialty
Structural unemployment
What is true if a nation is currently experiencing full employment
The rate of cyclical unemployment is 0%
Suppose that due to a poor economy, 1 million workers lost their jobs, causing the unemployment rate to increase to 10%. After a few months of searching, 300,000 of these unemployed workers give up looking for work. How would the decision by these 300,000 people affect the unemployment rate all else equal?
The unemployment rate would decrease
Who reports the official US unemployment rate?
U.S. Bureau of Labor Statistics -Monthly
Misery index
Unemployment rate + inflation rate
(benefited-winners or harmed-losers by unexpected inflation) Joy, who borrowed $40,000 to pay fro her college education
Winners-benefited
(benefited-winners or harmed-losers by unexpected inflation) The U.S federal government which has almost $15 trillion in debt in 2011
Winners-benefited
(Inflation,disinflation,deflation,hyperinflation) Barb Dwyer notices that during economic downturns, such as recessions, the prices tend to decrease at least for the duration of these economic events
deflation
Inflation
an increase in the overall price level has occurred
If inflation is positive and is perfectly anticipated, a) those that borrow money lose. b) those that lend money lose. c) those that hold paper money lose. d) no one in the economy loses.
c) those that hold paper money lose.
Suppose that anticipated inflation is 4% for the coming year, with loan contracts set at 7% with the expectation of a 3% return after inflation. If the actual inflation rate at the end of the year is 2%
creditors gain at the expense of debtors
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: a.) inflation. b.) disinflation. c.) deflation. d.) hyperinflation.
deflation
Individuals who want to work by have given up searching for a job because of limited prospects
discouraged workers
Anita Job is that new Treasury Secretary, and she is trying to interpret the inflation measure for 2 consecutive years. In year one, the aggregate price level increased by 11% and in year 2 the aggregate price level increased by 5%.What term describes the change in price level from year 1 to 2
disinflation
Jonathon is currently enrolled in college full-time; however, he works part-time at a restaurant on weekends to earn some spending cash, Jonathon would be considered
employed
The natural rate of unemployment is the amount of unemployment
equal to frictional plus structural unemployment
Arlina got a 5% raise while the rate of inflation was 6%. Arlina's standard of living:
fell by 1%
Core inflation is found by removing _____ from consumer price index
food and energy
The advice to "keep searching, there are plenty of jobs for which you are qualified," describes
frictional unemployment
The short-term unemployment arising from the process of matching workers with jobs is called
frictional unemployment.
Chelsea was a manager at a vinyl records store who recently quit b/c she felt the recent popularity of vinyl is a current fad that will eventually fade away. She is now actively looking for a job in the hospitality industry. Chelsea is considered
frictionally unemployed
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
GDP deflator is an index that includes prices of all of the following except a. imports b. investment goods c. government goods and service d. consumer goods
imports
The two perils of the modern macro economy are said to be
inflation and unemployment
This group, consisting of individuals who would like to work but have not looked for work during the past 4 weeks is
marginally attached workers
(employed, discourages, underemployed, none, unemployed) Chloe, age 17, is a full-time student and has not interest in working
none
The average price of goods and services in the economy is also known as
price level
A lumberjack loses his job because timber cutting restrictions were imposed by the EPA to protect the spotted owl habitat. This lumberjack would be
structurally unemployed.
In 2017, Boeing announced that it was laying off 1,800 employees in addition to the 7,000 workers it had cut the year before. The laid-off employees who were not able to find jobs at another aircraft manufacturer due to a permanent decline in employee demand in the aircraft industry would be considered
structurally unemployed.
If an economy experiences deflation, then
the aggregate price level is declining
(employed, discourages, underemployed, none, unemployed) Fred, a computer programmer, recently quit his job due to onset of carpal tunnel syndrome and is now trying to find a new job that will not hurt his wrists as much. He is confident as many startups are hiring
underemployed
(employed, discourages, underemployed, none, unemployed) Olivia has a PhD in economics, but due to severe recession has a hard time finding a job. She takes a part-time job as a consultant, but would prefer a full-time gig so that she can have insurance benefits
underemployed
Individuals who are involuntarily working part-time are considered
underemployed
By excluding underemployed, marginally attached workers, and discouraged workers the BLS calculation method....
understates the true level of unemployment
(employed, out of labor force, unemployed) Bonnie Ann Clyde has not had any work at all for 6 months despite the fact that he has been filling out at least 8 job applications each day
unemployed
