HW 4 Unemployment; Inflation
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
The cost to firms of changing prices A.
is called a menu cost.
The real interest rate
is equal to the nominal interest rate minus the inflation rate.
The unemployment rate
shows the percentage of the labor force that is considered unemployed.
The advice to "retrain" would be most appropriate for which of the following types of unemployment?
structural unemployment
By offering training to workers whose firms laid them off because of competition from foreign firms, the federal government is attempting to reduce
structural unemployment.
People who lost their jobs as hand−drawn animators because of the popularity of computer−generated 3D animation are examples of persons who are suffering
structural unemployment.
According to the text, economists consider full employment to occur when
the unemployment rate consists of only frictional and structural unemployment.
If the minimum wage is set above the market wage,
unemployment will rise.
Discouraged workers are
workers who have stopped looking for work because they believe there are no jobs for them.
The formula for calculating the CPI is
(Expenditures in the current year/Expenditures in the base year) × 100.
f the number of unemployed workers is 200 million, the number of employed workers is 300 million, and the working−age population is 800 million, what is the labor force participation rate?
62.5%
Which of the following groups of people would not be considered employed?
Housewives raising kids at home
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.
Based on the graph of the labor market above, if a minimum wage of $8 per hour is imposed, which of the following will result?
The quantity of labor demanded by firms will fall.
Suppose you are available for work but have not looked for a job for at least the last four weeks because you believe that no jobs are available. You would then be counted as __________.
a discouraged worker
Structural unemployment is the result of
a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.
Which of the following describes situations in which the person is hurt by inflation?
a person paid a fixed income during an inflationary period
An example of a seasonally unemployed worker would be
a ski lift operator who loses his job when the snow melts in the spring.
Cyclical unemployment is the result of
a slowdown in the economy.
The substitution bias in the consumer price index refers to the idea that consumers ______ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket.
change; over−estimates
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 cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?
discouraged workers
A worker is said to be unemployed if he ________.
does not have a job, has been actively looking for one in the prior 4 weeks, and is available for work
The labor force is the sum of
employed workers and unemployed workers.
The advice to "keep searching, there are plenty of jobs around here for which you are qualified", would be most appropriate for which of the following types of unemployment? A.
frictional unemployment
Which of the following would decrease the unemployment rate?
government aid to retrain unemployed workers
An employed individual is one who ________.
has a full−time or part−time paid job
If inflation is positive and is perfectly anticipated,
hose that hold paper money lose.
The percent increase in the CPI from one year to the next is a measure of the
inflation rate.
frictional unemployment is the result of
the search process of matching workers with jobs.
Why might firms pay wages that are above the equilibrium wage in a market?
to increase the productivity of their workers
If the nominal interest rate is 6% and the inflation rate is 9%, then the real interest rate is
-3%
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: Base Year (2013) 2018 Product Quantity Price Price Milk 50 $1.20 $1.50 Bread 100 1.00 1.10 The Consumer Price Index for 2018 equals
116.
Suppose that the data in the table reflect the price levels in the economy. What is the inflation rate in between 2017 and 2018?
20%
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 percent
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
If the number of employed people in a country is 21 million and the number of unemployed workers in a country is 10 million, the size of the labor force in the country is equal to ________.
31 million
If the number employed is 190 million, the working−age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is
5%
f the number employed is 190 million, the number unemployed is 10 million, and the working−age population is 250 million, then the labor force participation rate is
80%
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.
The producer price index tracks the prices firms receive for goods and services at:
at all stages of production.
If firms pay what are called "efficiency wages", they pay wages that
motivate workers to increase their productivity.
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 cyclical unemployment is eliminated in the economy, then
the economy is considered to be at full employment
The real rate of interest is
the nominal interest rate minus the inflation rate.