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In the 1970s and 1980s, labor unions commonly negotiated wage contracts that had cost-of-living adjustments (COLAs) which guaranteed that their wages would keep up with inflation. These contracts were sometimes written as, for example, COLA plus 3%. Thus, if inflation was 6%, the wage increase would automatically be 9%, but if inflation rose to 7%,the wage increase would automatically be________%.COLAs are a form of indexing applied to wages.

10

Which one of the following is an example of a frictionally unemployed individual?

A demographic "bulge" of new entrants into the labor force

Which of the following individuals benefits from inflation?

Ben, who borrowed $1,000 from a friend and agreed to pay the same amount one year later

The variation in unemployment caused by the economy moving from expansion to recession or from recession to expansion is known as:

Cyclical unemployment.

Which of the following is NOT a consequence of deflation?

Deflation causes the real value of money to fall.

Which of the following reduces the duration of frictional unemployment?

Establishing employment agencies which give out information about job vacancies

Workers who are in the process of changing jobs are counted as being:

Helena, who has just graduated from law school and is searching for a job

When economies shift from a controlled economy to a market-oriented economy an outburst of high inflation that is often seen is termed as:

Hyperinflation

What is hyperinflation?

Hyperinflation refers to an inflation rate in excess of 200 percent per year.

Which of the following affect the values of inflation and unemployment? I. changes in government spending II. expectations about the price level III. changes in nominal wages IV. changes in money supply

I, II, III, and IV

A period marked by ongoing rise in the level of prices in an economy is :

Inflationary phase

Which of the following is true of unanticipated inflation?

It helps borrowers because they repay their debts with money that is now worth less.

Which of the following is NOT a consequence of unanticipated inflation?

It increases the purchasing power of money.

What is a sub-prime mortgage?

It is a mortgage loan made to a buyer whose credit or income would not ordinarily qualify for a mortgage loan.

Which of the following is true of cyclical unemployment?

It occurs only during a recession.

What does the phrase "jobless recovery" refer to?

It refers to a situation where an economy is moving out of a recession without a significant increase in employment.

What is a business cycle?

It refers to a situation where an economy is moving out of a recession without a significant increase in employment.

The CPI and the implicit price deflator can be used to calculate inflation.

It refers to an increase in the average level of prices.

Which of the following statements is true of inflation?

It refers to an increase in the average level of prices.

Which of the following individuals would NOT be included in the labor force?

Kit, who has retired and is not looking for work

Which of the following statements is false?

Out of labor force: Out of paid work and looking for a job.

Individuals fall under the umbrella of the term"hidden unemployment are except:

Permanent employed

Only national governments have the power to cause hyperinflation. Hyperinflation typically happens when government faces extraordinary demands for spending, which it cannot finance by taxes or borrowing. The only option is to :

Print more money

In general,If the most prices are falling in the economy it is known as deflation or negative inflation. the period of lowest inflation in twentieth century for U.S was

Tends to overstate the rise in a consumer's true cost of living.

Which of the following is NOT true of price indexes?

They are used to compute the growth rate of real output in the economy.

The unemployment rate is not the percentage of the total adult population without jobs, but rather the percentage of adults who are in the labor force but who do not have jobs: Which is correct?

Unemployment rate =( Unemployed people/ Total labor force) × 100

The United States experienced______________ workers tend to have higher unemployment.

Younger age

To calculate price level , economist begin with the concept of a hypothetical group of different items, with specified quantities of each one meant to represent a "typical" set of consumer purchases, used as a basis for calculating how the price level changes over time is :

basket of goods and services

What Causes Changes in Unemployment over the Long Run

basket of goods and services

To measure the "core" inflation rate, the Bureau of Economic Analysis uses a price measure that:

excludes food and energy prices because the prices of these items can be volatile.

Which of the following statements is true? Economists generally agree that

factors other than money growth may influence the inflation rate from one year to the next, but they are not likely to cause sustained inflation.

Falling inflation means

inflation rates also have very high money growth rates.

The insider-outsider model of the labor force, in simple terms, argues that those already working for firms are "_______," while new employees, at least for a time, are "________" A firm depends on its ____________to grease the wheels of the organization, to be familiar with routine procedures, to train new employees, and so on. However, cutting wages will alienate the insiders and damage the firm's productivity and prospects.

insiders, outsiders , insiders

Frictional unemployment exists because

it takes time for people seeking jobs and employers seeking workers to find each other.

Structural unemployment exists because

job training programs to retool workers with new skills.

Unemployment that results from a mismatch between worker qualifications and the characteristics employers require is called _____ unemployment.

structural

Rising inflation means

that the price level is rising at an increasing rate.

When the media reports the U.S. inflation rate, the number cited is usually a rate computed using:

the consumer price index.

The lowest wage that a worker would accept, if offered a job, is called

the reservation wage.

Which of the following is true of a price index that uses a fixed market basket?

those who are employed plus those who are unemployed.