Econ Chp 9 Quiz

Suppose that in​ 2018, all prices in the economy double and that all wages and salaries also double. In 2018 you

are no better off or worse off than you were in 2017 as the purchasing power of your salary has remained the same.

Which of the following describes situations in which the person is hurt by​ inflation?

a person paid a fixed income during an inflationary period

The real wage equals the nominal wage​ ________ the​ CPI, all times 100.

divided by

The labor force equals the number of people

employed plus unemployed.

The natural rate of unemployment is the amount of unemployment

equal to frictional plus structural unemployment.

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

not in the labor force.

The broadest measure of the price level that includes all final goods and services is

the GDP deflator.

Suppose the workingminusage population of a fictional economy falls into the following​ categories: 90 are retired or​ homemakers; 60 have fullminustime ​employment; 20 have partminustime ​employment; 20 do not have​ employment, but are actively looking for​ employment; and 10 would like employment but do not have employment and are not actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal

20/100 X 100

Consider the data in the table above for a simple economy. The labor force participation rate for this simple economy equals total population: 20,000 working-age pop: 15,000 Employment: 1000 unemployment: 100

1,100/15,000 X 100

Consider the data in the table above for a simple economy. The unemployment rate for this simple economy equals Total population: 20,000 Working age pop: 15,000 Employment: 1000 unemployment: 100

100/1,100 X 100

Monthly expenditures for a family of 4 in 2017 averaged​ $1,400. In​ 2018, the cost of the same purchases was​ $1,500. If 2017 is the base​ year, what was the CPI in​ 2018?

107

Assume the market basket for the consumer price index has two​ products, bread and​ milk, with the following values in 2013 and 2018 for price and​ quantity: milk: 50, 1.20, 1.50 Bread: 100, 1.00, 1.10 The Consumer Price Index for 2018 equals

116

Assume the market basket for the consumer price index has two​ products, meat and​ potatoes, with the following values in 2013 and 2018 for price and​ quantity: Meat: 100, 10, 120, 12 Potatoes: 200, 2, 180, 3 The consumer Price Index for 2018 equals:

129

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 an economy has only three goods and the typical family purchases the amounts given in the table. If 2013 is the base​ year, then what is the CPI for​ 2018? hair cuts: 6, 50, 300, 70, 420 backpacks: 4, 25, 100, 30, 120 Taco: 100, 1 ,100, 5, 500 Total: 500, 1040

208

Assume the average annual CPI values for 2017 and 2018 were 207.3 and​ 215.3, respectively. What was the percent increase in the CPI between these two​ years?

3.86

Looking at the​ table, what is the rate of growth of the average price level from 2016 to​ 2017? 2016: 10, 100 2017: 10, 105 2018: 12, 110

5%

The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. 1965: 2..65, 32 2010: 22.59, 219 The real average hourly earnings for 1965 in​ 1982-1984 dollars equal

8.28

Which of the following is true about the consumer price​ index?

It assumes that consumers purchase the same amount of each product in the market basket each month.

When actual inflation is less than expected inflation

borrowers lose and lenders gain.

Which of the following would be the best measure of the cost of​ living?

consumer price index

Most of the unemployment that occurred during the Great Depression was

cyclical unemployment.

Workers laid off as a result of a recession suffer

cyclical unemployment.

Counting part- time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy.

false

Jack just told his boss that he thinks his boss is an idiot. It is likely that Jack will be experiencing​ ________ unemployment in the near future.

frictional

The percent increase in the CPI from one year to the next is a measure of the

inflation rate.

The costs to firms of changing prices are called

menu costs.

Jack just received a promotion at work and now works 50 hours per week instead of 35. As a​ result,

neither the unemployment rate nor the labor force participation rate changed.

The​ "new product​ bias" in the consumer price index refers to the idea that

new​ products' prices often decrease after their initial​ introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers.

The Bureau of Labor Statistics would categorize a retiree who is not working as​ _________.

out of the labor force

Which of the following would most likely suffer the least from the costs of​ inflation?

persons whose incomes rise more rapidly than inflation

If cyclical unemployment is eliminated in the​ economy, then

the economy is considered to be at full employment.

What is outlet​ bias?

the tendency for households to spend their money at discount stores as prices rise

Mike has been unemployed for over a year. He​ hasn't looked for a job in the last three​ months, but​ he's just started looking for work again. Because Mike started looking for a new​ job,

the unemployment rate increased.

Jack lost his job six months​ ago, and​ he's been actively looking for a new job ever since. The Bureau of Labor Statistics would classify Jack as

unemployed

Discouraged workers are

workers who have stopped looking for work because they believe there are no jobs for them.

The CPI in 1990 was​ 131, and the CPI in 2010 was 218. If you earned a salary of​ $40,000 in​ 1990, what would be a salary with equivalent purchasing power in​ 2010?

​$66,565

Suppose your grandfather earned a salary of​ $12,000 in 1964. If the CPI is 31 in 1964 and 219 in​ 2018, then the value of your​ grandfather's salary in 2018 dollars is approximately

​$84,775.

Inflation that is​ ________ than what is expected benefits​ ________ and hurts​ ________.

​less; lenders; borrowers

The increase in quality bias in the consumer price index refers to the idea that price increases in the CPI reflect pure​ inflation, but​ ______ quality increases. This causes the CPI to​ ______ the cost of the market basket.

​not; overstate

If your nominal wage rises faster than the price​ level, we can say your real wage has​ ________ and the purchasing power of your income has​ ________.

​risen; risen