MACRO EXAM 2

Suppose the CPI in 2008 was 215.3 and the CPI in 2009 was 214.6, what was the inflation rate between 2008 and 2009?

-0.3 percent

Which of these persons is officially unemployed?

A non-working individual who has looked for a job in the past week

Jackie was laid off due to the recent downturn in the overall economy.

Cyclically Unemployed

Jim lost his retail job due to an overall decline in the country's spending.

Cyclically Unemployed

When the economy is at full employment, which types of unemployment remain?

Frictional and structural

Nick quit his job as a banker to pursue a new career in music, but he has not yet made any money as a musician.

Frictionally Unemployed

Which of these are included in the labor force?

Those who are employed and those who are unemployed

What is the impact of unanticipated inflation?

Unanticipated inflation creates arbitrary redistributions of income.

At full employment,

cyclical unemployment is zero

A sustained decrease in the average level of prices in the economy is __________.

deflation

Mike recently graduated from the local technical school with a certificate in auto mechanics, but his job does not start until one month from now.

frictionally unemployed

The "normal or natural" underlying level of unemployment in the economy is the __________.

full employment rate of unemployment

Unanticipated deflation __________.

hurts borrowers

A sustained increase in the overall level of prices is known as:

inflation

The consumer price index

measures the average of prices paid by urban consumers for a fixed basket of consumer goods and services

The history of hyperinflations includes __________.

recent events. Hyperinflations have occurred in recent times as well as the past

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and job requirements is called __________.

structural unemployment

If the consumer price index was 73 in 1979 and 225 in 2011, then prices in 2011 were on average:

three times as high as 1979

The natural rate of unemployment is the

unemployment rate an economy will experience when real GDP equals potential GDP

Greg volunteers 30 hours a week in a local soup kitchen.

Not in Labor Force

Kayla stopped looking for work two weeks ago after sending her resume out of 30 potential employers and only receiving one interview (in which she did not receive a job offer).

Not in Labor Force

Micah wants to work but has not looked for work for six weeks, because he feels there are no jobs in residential construction.

Not in Labor Force

Amanda used to work at a travel agency that has closed recently due to lack of business caused by online travel websites.

Structurally Unemployed

Nika is currently looking for, but cannot find, a job. She is either over qualified or under qualified for the jobs in her search.

Structurally Unemployed

Shaunak lost his job as a reporter for the area newspaper due to a decline in newspaper subscriptions.

Structurally Unemployed

Zhoa recently lost his job because his company closed down and is moving overseas.

Structurally Unemployed

Joyce lost her manufacturing job due to the most recent recession.

Cyclically Unemployed

Larry lost his job due to a decrease in his customers' overall spending resulting from a drop-off in the country's overall demand for goods and services.

Cyclically Unemployed

Jesse works 10 hours as a phone representative at the local call center, 15 hours out of her home as a beautician, and 8 hours as a waitress each week.

Employed

Morgan works 20 hours each week at an on campus bookstore.

Employed

Xuan works from home as a retail blogger.

Employed

Of the eight categories in the CPI market basket, which three categories make up more than 70% of the basket?

Housing, transportation, and food

If the cost of a market basket of goods in 1992, the base year, is $200, and the cost of the same market basket is $300 in 2008, what is the CPI in 2008?

150

Tenecia is currently on a four-week vacation from her medical practice.

Employed

Julie recently graduated from college with a degree in Marketing and is now sending out resumes in hopes of finding a job.

Frictionally Unemployed

Which of these groups is included in the labor force?

The unemployed

Which one of these groups is most hurt by unanticipated inflation?

Wealthy people who hold cash in their wall safes

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

The consumer price index is an index computed using prices of a

fixed basket of goods and services purchased by the typical consumer

The short-term unemployment that arises from workers, in the process of changing jobs, is called

frictional unemployment

Many economists believe the CPI __________ inflation because it fails to consider quality improvements in products.

overstates

The output gap is the difference between __________.

potential GDP and actual GDP

If the inflation rate is low, steady, and anticipated,

inflation may not be a major problem

The percentage rate of change in the price level is the definition of the:

inflation rate

If inflation is anticipated,

it costs less to society than if unanticipated