Econ ReviewQuiz:Ch. 7 Quiz

Bill lends Joann​ $1,000 for a year at a nominal interest rate of 66​%. If both Bill and Joann expect the inflation rate to be 22​% next​ year, then the real rate of interest is A. 44​%. Your answer is correct. B. 88​%. C. negative 4−4​%. D. 1212​%.

A

Consider an economy where the natural rate of unemployment is equal to 33​%. If the actual unemployment rate is equal to 77​%, then A. cyclical unemployment rate is 44​% . This is the correct answer. B. cyclical unemployment rate is 1010​% . C. structural unemployment rate is 44​% . Your answer is not correct. D. frictional unemployment rate is 44​%.

A

It has been widely reported that an increasing number of US women have joined the labor force during the last few decades. ​Directions: Double click on the graph to the right. Select Multiple Time Series Data. For Y Axis1 select the labor force participation rate of​ men, and for Y Axis2 select the labor force participation rate of women. After selecting these series the data will be plotted in the graph. According to data shown on the graph on the​ right, it is clear that the labor force participation rates for men and women in the US A. tended to converge over almost the entire period. Your answer is correct. B. tended to diverge during the entire period. C. neither tended to converge nor tended to diverge during almost all of the period of​ 1970-2004. D. remained constant during the entire period of​ 1970-2004.

A

James worked for an automobile plant that has now closed comma as the parts produced are no longer needed.James worked for an automobile plant that has now closed, as the parts produced are no longer needed. Which type of unemployment is​ this? A. structural unemploymentstructural unemployment This is the correct answer. B. frictional unemploymentfrictional unemployment C. cyclical unemploymentcyclical unemployment Your answer is not correct. D. seasonal unemployment

A

The table on the right shows four major price indices of the US​ economy: the Consumer Price Index​ (CPI), the Producer Price Index​ (PPI), the Personal Consumption Expenditure Index​ (PCE) and the GDP deflator. All four indices are used to measure inflation. Based on the data from the four indices in the​ table, which price index suggests the highest rate of inflation between the years 2000 and​ 2004, and between 1998 and 1999. What were the corresponding rates suggested by these​ indices? A. The PPI indicating the highest inflation rate of​ 10.5% for​ 2000-2004; the CPI indicating the highest inflation rate of​ 2.19% for​ 1998-1999. Your answer is correct. B. The CPI indicating the highest inflation rate at​ 9.69% for​ 2000-2004; the GDP deflator indicating the highest inflation rate of​ 1.45% for​ 1998-1999. C. The PPI indicates the highest inflation rate at​ 4.07% for​ 2000-2004; the CPI indicates the highest inflation rate of​ 2.19% for​ 1998-1999. D. The PCE indicating the highest inflation rate of​ 8.25% for​ 2000-2004; the GDP deflator indicating the highest inflation rate of​ 1.45% for​ 1998-1999.

A

Which of the following is most likely to gain from unanticipated​ inflation? A. A consumer with a five year auto loan. Your answer is correct. B. A bank that specializes in mortgage lending. C. A senior citizen who receives Social Security payments. D. A restaurant that has printed menus.

A

Which of the following statements is true concerning the historical picture of business activity in the United​ States? A. The frequency and size of fluctuations around the trend has decreased since World War II. Your answer is correct. B. All recessions have been caused by external shocks. C. The largest expansion since World War II took place in the early 1960s. D. Business fluctuations are regular and take 8 years from the start of a recession to the end of the peak period.

A

The nominal value of anything is its price expressed in​ ________, and the real value of anything is its value expressed in​ ________. A. purchasing​ power; today's dollars B. ​today's dollars; purchasing power Your answer is correct. C. purchasing​ power; the value of a dollar one year from today D. the value of a dollar one year from​ today; today's dollars

B

The type of unemployment that rises as the economy goes into a recession is called A. structural. B. cyclical. Your answer is correct. C. seasonal. D. frictional.

B

The unemployment rate is calculated as A. StartFraction the number of people in the labor force Over the number of unemployed EndFraction times 100the number of people in the labor forcethe number of unemployed×100. B. StartFraction the number of unemployed Over the number of people in the labor force EndFraction times 100the number of unemployedthe number of people in the labor force×100. Your answer is correct. C. StartFraction the number of unemployed Over the size of the population EndFraction times 100the number of unemployedthe size of the population×100. D. StartFraction the number of unemployed times the number of people in the labor force Over 100 EndFractionthe number of unemployed×the number of people in the labor force100.

B

Unemployment due to the fact that workers must search for appropriate job offers is called frictional unemployment. A. False B. True

B

​Directions: Click on the graph to the right and select Multiple Plots. For each Y​ listbox, select one of the four countries​ (the EU15 represents the 15 countries that made up the European Union prior to May​ 1, 2004). Then click on the plot​ button, and roll your cursor over each line to identify the data. According to the​ graph, which country had the lowest unemployment rate over the longest period during the years​ 1993-2004? A. The European Union​ (EU15). B. Japan. Your answer is correct. C. The United States. D. Canada. 1993199519971999200120030123456789101112 The image shows a blank graphical space where the horizontal axis measures the time period from 1993 to 2003, with a gap of 2 years, and the vertical axis measures the unemployment rate from 0 to 12. Data​ source: ​ Eurostat, Bureau of Labor​ Statistics, Economic Report of the President

B

​Directions: Click on the graph to the right and select Multiple Plots. Then select RGDP​ (real chain weighted​ GDP) for Y1 and NGDP​ (nominal GDP) for Y2. Roll your cursor over each plotted line to identify the data. Note that the​ chain-weighted GDP is a measure of GDP that the Bureau of Economic Analysis​ (BEA) of the U.S. Department of Commerce calculates by continuously updating the weights of the various components of GDP to reflect changes in the relative prices and shares of the various components of GDP. According to the​ graph, A. NGDP and RGDP have continually increased. Your answer is not correct. B. RGDP has increased and decreased. This is the correct answer. C. RGDP has continually decreased. D. NGDP both increased and decreased over time.

B

By providing information and reducing the costs of job​ search, the​ Internet's impact on the job market is to reduce A. structural unemployment. B. cyclical unemployment. C. frictional unemployment. Your answer is correct. D. seasonal unemployment.

C

The total 20022002 US employment status of the​ non-institutional adult population is depicted in the figure on the right. It is measured in millions of workers and as a percentage. According to the labor data in the pie​ chart, the unemployment​ rate, the labor​ force, and the labor force participation rate​ are: A. 5.785.78​%, 144.87144.87​, 72.7172.71​%. B. 8.388.38​%, 144.87144.87​, 66.5866.58​%. C. 5.785.78​%, 144.87144.87​, 66.5866.58​%. This is the correct answer. D. 5.785.78​%, 217.58217.58​, 66.5866.58​%.

C

Which of the following is the definition of the GDP DeflatorGDP Deflator​? A. Upper A weighted average of prices of a market basket of goods and services purchased by typical urban consumersA weighted average of prices of a market basket of goods and services purchased by typical urban consumers. B. Upper A statistical measure of average prices using annually updated weights based on surveys of consumer spendingA statistical measure of average prices using annually updated weights based on surveys of consumer spending. C. Upper A broad price index measuring the changes in prices of all new goods and services producedA broad price index measuring the changes in prices of all new goods and services produced. Your answer is correct. D. Upper A statistical measure of a weighted average of prices of goods and services that firms produce and sellA statistical measure of a weighted average of prices of goods and services that firms produce and sell.

C

​Directions: Click on the graph in the window on the right and select Multiple Plots to compare the volatility of four major U.S. price indices over the years​ 1948-2005. For each Y​ listbox, select a different​ option: the Consumer Price Index​ (CPI), the Producer Price Index​ (PPI), the Personal Consumption Expenditure Index​ (PCE) and the GDP deflator. Roll your cursor over each plotted line to identify the data. Which of these price indices shows the greatest price​ volatility? A. CPI. B. PCE. C. PPI. Your answer is correct. D. GDP deflator.

C

​Jim's favorite breakfast is two​ eggs, 1/5 lb. of​ bacon, 1/7 lb. of white​ toast, 1/6 can​ (16 ounce​ can) of frozen concentrate orange​ juice, and 1 lb. of grapefruit. The following table contains 1991 and 2001 prices for these five items. Using 1991 as the base​ year, compute the price index for​ Jim's breakfast for 2001. Item 1991 Price 2001 Price One dozen eggs ​$1.08 $1.02 One pound bacon ​$2.15 $2.75 One pound bread ​$0.63 $0.98 One can orange juice ​$1.98 $1.86 One pound grapefruit ​$0.57 $0.55 A. 89.53 B. 93.02 C. 107.5 This is the correct answer. D. 111.7

C

The table on the right shows four major price indices of the US​ economy: the Consumer Price Index​ (CPI), the Producer Price Index​ (PPI), the Personal Consumption Expenditure Index​ (PCE) and the GDP deflator. All four indices are used to measure inflation. Based on the data from the four indices in the​ table, which price index suggests the highest rate of inflation between the years 19981998 and 19991999​? A. The PPIPPI indicating the highest inflation rate ​(0.840.84​%). B. The CPICPI indicating the highest inflation rate ​(1.451.45​%). C. The PCEPCE indicating the highest inflation rate ​(1.691.69​%). D. The CPICPI indicating the highest inflation rate ​(2.192.19​%) .

D

​Directions: Click on the graph to the right and select Multiple Plots. Then select RGDP​ (real chain weighted​ GDP) for Y1 and NGDP​ (nominal GDP) for Y2. Roll your cursor over each plotted line to identify the data. The values of NGDP for the years 1981 and 1982 are​ $3.1284 and​ $3.255 trillion, respectively. The values for RGDP for 1981 and 1982 are​ $5.2917 and​ $5.1893 trillion, respectively. According to the graph of NGDP and RGDP and the values of the two time series variables for 1981 and​ 1982, it is correct to state that A. NGDP has always been​ increasing, while RGDP has both increased and decreased. Between 1981 and​ 1982, NGDP increased by​ $.1266 trillion, corresponding to a rate of growth of​ 5%. RGDP decreased by​ $.1024 trillion, corresponding to a negative rate of growth of​ 5%. B. NGDP has always been​ increasing, while RGDP has been both increasing and decreasing. Between 1981 and​ 1982, NGDP increased by​ $.3024 trillion and RGDP decreased by​ $.2013 trillion, respectively. C. Both NGDP and RGDP have always been increasing in absolute amounts and in terms of their respective rates of growth. Your answer is not correct. D. NGDP has always been​ increasing, but RGDP has been both increasing and decreasing. Between 1981 and​ 1982, NGDP increased by​ $.1266 trillion, corresponding to a rate of growth of​ 4.05%. RGDP decreased by​ $.1024 trillion, corresponding to a negative rate of growth of​ 1.94%.

D