Chapter 9 MacroEco Homework
The labor force equals the number of people
employed plus unemployed.
Total Population-20,000 Working−Age Population-15,000 Employment-1,000 Unemployment-100 Consider the data in the table above for a simple economy. The unemployment rate for this simple economy equals
(100/1,100)x100
Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment rate?
(Number of unemployed/number in labor force)x100
If the nominal interest rate is 6% and the inflation rate is 9%, then the real interest rate is
-3%
If a 3-month Treasury bill pays 5.5% and the change in the consumer price index (CPI) is 4.7%, what is the real interest rate (the true return to lending)?
0.8%
Monthly expenditures for a family of 4 in 2015 averaged $1,400. In 2016, the cost of the same purchases was $1,500. If 2015 is the base year, what was the CPI in 2016?
107
Assume the market basket for the consumer price index has two products, bread and milk, with the following values in 2011 and 2016 for price and quantity: The Consumer Price Index for 2016 equals
116
Assume the market basket for the consumer price index has three products, Cokes, hamburgers, and CDs, with the following values in 2011 and 2016 for price and quantity:
121
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 the consumer price index (CPI) of a country follows the path shown in the figure to the right. During which period did the country experience zero inflation?.../ During which period did the country experience an increasing rate of inflation?.../ During which period did the country experience a slow down in inflation, although the inflation rate remained positive? (This situation is called "disinflation.").../ During which period did the country experience deflation?
2000 to 2005.../ 1990 to 1995..../ 1995 to 2000..../ 2005 to 2010.
Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2011 is the base year, then what is the CPI for 2016?
208
Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflation rate was 7%, what was the real interest rate you paid?
3 precent
If the nominal rate of interest is 6.5% and the inflation rate is 3.0%, what is the real rate of interest?
3.5%
Assume the average annual CPI values for 2015 and 2016 were 207.3 and 215.3, respectively. What was the percent increase in the CPI between these two years?
3.86
Consider the following values of the consumer price index for 2015 and 2016: The inflation rate for 2016 was equal to
3.9 percent
Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid?
8 percent
Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2011 is the base year, then what is the CPI for 2016?
87.5
Why is the unemployment rate, as measured by the Bureau of Labor Statistics, an imperfect measure of the extent of joblessness in the economy?
A. Underemployed people are considered employed. B. It fails to account for illegal activities. C. Discouraged workers are not considered unemployed. D. It does not account for inaccurate responses to the Current Population Survey. E. All of the above.(CORRECT ANSWER)
When the economy is at full employment,
A. the unemployment rate is greater than zero. B. all remaining unemployment is either frictional or structural. C. the natural rate of unemployment prevails. D. (CORRECT ANSWER) All of the above
As of August 2015, which of the following demographic groups has the highest unemployment rate?
African Americans
Suppose that the economy enters into a recession and that, as a result, Rusty Z. Wrench loses his job as a delivery truck mechanic and remains unemployed. When the economy recovers, Rusty's previous employer rehires him. What is the best classification for his time as an unemployed truck mechanic?
Cyclically unemployed
Which of the following can give an early warning of future increases in the price level?
Producer price index
________________Is the percentage of the working-age population in the labor force..../Suppose an economy is given by: Population = 223223 million Working-age population = 143143 million Labor force = 8787 million The number of people employed = 8080 million The number of people unemployed = 77 million The labor force participation rate for this economy is ____.
The labor force participation rate//// 60.8%
How would it affect the unemployment rate if the Bureau of Labor Statistics counted as unemployed both (1) discouraged workers and (2) people who work part-time but would prefer to work full-time?
The unemployment rate would increase.
Which of the following price indices comes closest to measuring the cost of living of the typical household?
consumer price index
Which of the following would be the best measure of the cost of living?
consumer price index
What index is used to measure the average prices paid by a typical family? An average of the prices of the goods and services purchased by a typical family is the:.../ Suppose the economy's consumer price index (CPI) in 2008 was 183183 and the CPI in 2009 was 197197. The inflation rate over the period from 2008-2009 was equal to ____%
consumer price index (CPI)..../ 7.7%
What index is used to measure the average prices paid by a typical family? An average of the prices of the goods and services purchased by a typical family is the:..../ Suppose the economy's consumer price index (CPI) in 2008 was 188188 and the CPI in 2009 was 196196. The inflation rate over the period from 2008-2009 was equal to ___%
consumer price index (CPI).../ 4.3%
Workers who lose their jobs because of a recession are experiencing
cyclical unemployment.
When the economy is at full employment, which types of unemployment remain?.../ The "normal" underlying level of unemployment in the economy is...
frictional and structural.../ A.the full-employment rate of unemployment. B.the natural rate of unemployment. C.the sum of structural unemployment and frictional unemployment. D.All of the above.(CORRECT ANSWER IS D)
The BLS surveys 30,000 households on their spending habits. The results are used to construct a market basket of goods and services purchased by the typical urban family of four. The chart on the right shows these goods and services grouped into eight broad categories for December 20142014. The percentages represent the expenditure shares of the categories within the market basket. Which of the following categories make up about three-quarters of the market basket?
housing, transportation, and food
The real interest rate.../ Suppose an economy has an inflation rate of 3.7% and a bank makes a loan with an interest rate of 7.3%. In this case, the real interest rate is____.
is equal to the nominal interest rate minus the inflation rate./ 3.6%
Your grandfather tells you that he earned $7,000/year in his first job in 1961. You earn $35,000/year in your first job in 2016. You know that average prices have risen steadily since 1961. You earn
less than 5 times as much as your grandfather in terms of real income.
The stated interest rate on a loan is the
nominal interest rate
The Bureau of Labor Statistics would categorize a retiree who is not working as _________.
out of the labor force
The nominal interest rate equals the real interest rate ________ the inflation rate
plus
The unemployment rate.../ Suppose an economy is given by the following: Population = 243243 million Labor force = 111111 million The number of people employed = 103.2103.2 million The number of people unemployed = 7.87.8 million Given the information above, the unemployment rate is ___
shows the percentage of the labor force that is considered unemployed.../ 7%
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called
structural unemployment.
The broadest measure of the price level that includes all final goods and services is
the GDP deflator.
The most widely used measure of inflation is based on which of the following price indices?
the consumer price index
The CPI is also referred to as
the cost−of−living index