Macro (HW 3)
Hyperinflation is an inflation rate of _____ or higher that grinds the economy to a halt and causes a society to collapse. A. 50 percent a month B. 20 percent a year C. 50 percent a year D. 20 percent a month
50 percent a month; A
Describe the trends and fluctuations in the U.S. unemployment rate from 1980 to 2017. A. Each peak unemployment rate in the recessions of 1982, 1990-1991, and 2001 was lower than the previous one. B. The unemployment rate decreases in a recession and increases in an expansion. C. The unemployment rate shows an upward trend before 2000 and then a downward trend. D. The average unemployment rate from 1980 to 2017 was 5.5 percent.
The unemployment rate decreases in a recession and increases in an expansion; B
The output gap is real GDP minus _____ expressed as a percentage of _____. A. investment; potential GDP B. interest rate; interest rate C. potential GDP; potential GDP D. potential GDP; real GDP
potential GDP; real GDP
When the CPI _______. A. is constant, the inflation rate is negative B. falls, the inflation rate is positive and low C. rises slowly, the inflation rate is negative D. rises slowly, the inflation rate is low
rises slowly, the inflation rate is low; D
The labor force participation rate is the percentage of the _____ who are members of the labor force. A. number unemployed B. number of women C. part-time workers D. working-age population
working-age population
CPI = ______. A. [(Cost of CPI basket at current-period prices−Cost of CPI basket at base-period prices)÷Cost of CPI basket at current-period prices]×100 B. (Cost of CPI basket at base-period prices÷Cost of CPI basket at current-period prices)×100 C. (Cost of CPI basket at current-period prices÷Cost of CPI basket at base-period prices)×100 D. [(Cost of CPI basket at base-period prices−Cost of CPI basket at current-period prices)÷Cost of CPI basket at current-period prices]×100
(Cost of CPI basket at current-period prices÷Cost of CPI basket at base-period prices)×100; C
What problems arise from the CPI bias? A. The bias in the CPI eliminates the need for people to shop in discount stores. B. Accumulated over a decade, a CPI bias of 1 percent a year adds up to almost a trillion dollars of additional government expenditures. C. The bias in the CPI decreases government outlays. D. A wage contract linked to the CPI gives the workers less real income than the firm intended.
Accumulated over a decade, a CPI bias of 1 percent a year adds up to almost a trillion dollars of additional government expenditures; B
An unemployed person ______. A. can hold a part-time job and be searching for a full-time job B. is not in the labor force C. wants work, has made specific efforts to find a job within the previous four weeks, or is waiting to be called back to a job from which he or she has been laid off, or is waiting to start a new job within 30 days D. may be a person who is employed at a job that does not use the skills they have accumulated at college or on previous jobs
C
Who in the following statements is a discouraged worker? A. Nick is changing his job because he has had differences with his co-workers in his current company. B. Rachel does not find her current job profile interesting and is looking for alternate opportunities. C. Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer. D. Ned is available to work and has been sending job applications whenever he sees any suitable opportunity.
Dan; C
Which of the following statements illustrates structural unemployment? A. Dell laid off many employees when the company's profits dropped during the recession. B. Jen quit her current job and found another one with a better pay scale. C. Many women quit jobs to raise their kids. D. Outsourcing resulted in many job losses in the mid 2000s.
Outsourcing resulted in many job losses in the mid 2000s; D
Which of the following statements illustrates frictional unemployment? A. Many bank tellers lost their jobs due to the installation of ATM machines. B. Thousands of employees were laid off during the 2008-09 recession. C. Robin is quitting his current job to find another that has better prospects. D. Dave lost his job as he did not possess the technical skills required to do his duty.
Robin is quitting his current job to find another that has better prospects; C
Choose the correct statement. A. When the quality of a good improves over time, the CPI does not include the portion of the price rise attributable to the higher quality in its calculation. B. The CPI calculation assumes that everyone shops at discount stores and no one shops at convenience stores. C. Changes in relative prices lead consumers to change the items they buy, and the CPI reflects this substitution. D. When relative prices change and people substitute to the lower priced good, the CPI ignores the substitution and the CPI overstates inflation.
When relative prices change and people substitute to the lower priced good, the CPI ignores the substitution and the CPI overstates inflation; D
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _____ and decreases during _____. A. imports; exports B. technological stagnation; technological advancements C. an expansion; a recession D. a recession; an expansion
a recession; an expansion
The natural unemployment rate is the unemployment rate when the economy is _____. A. facing high inflation B. facing high interest rates C. at full employment D. not at full employment
at full employment
A marginally attached worker is a person who does not have a job, is _____ and _____ to work, has _____ specific efforts to find a job within the previous _____ weeks, but has looked for work sometime in the recent past. A. not available; not willing; not made; four B. available; willing; made; six C. available; willing; not made; four D. available; willing; not made; six
available; willing, not made; four
The four price indexes that are alternatives to the CPI are ______. A. chained CPI, personal consumption expenditure deflator, core GDP deflator, and CPI deflator B. CPI deflator, chained personal consumption expenditure deflator, GDP deflator, and core PCE C. CPI deflator, personal consumption expenditure deflator, core GDP deflator, and core PCE D. chained CPI, personal consumption expenditure deflator, GDP deflator, and core PCE
chained CPI, personal consumption expenditure deflator, GDP deflator, and core PCE; D
The natural unemployment rate _______. A. changes as frictions and structural change occur in the economy B. constantly increases as technology moves jobs from labor to capital C. changes with the business cycle D. does not change. It remains constant until recalculated by the Congressional Budget Office
changes as frictions and structural change occur in the economy; A
Full employment is when there is no _____ unemployment or, equivalently, when all the unemployment is _____ or _____. A. cyclical; frictional; structural B. structural; frictional; natural C. frictional; structural; cyclical D. cyclical; structural; natural
cyclical; frictional; structural
A person is in the labor force if that person is _______. A. aged 16 and over and not in jail, hospital, or some other form of institutional care B. waiting to start a new job within the next 3 months C. either employed or unemployed D. neither working nor looking for work but has indicated that he or she wants and is available for a job and looked for work sometime in the recent past
either employed or unemployed
A person is not in the labor force if they are ______. A. in the working-age population but neither employed nor unemployed B. between the ages of 16 and 19 C. over 65 years of age D. unemployed
in the working-age population but neither employed or unemployed; A
The unemployment rate is the percentage of the people in the _____ who are unemployed. A. labor force B. age group of 20 - 60 C. number of women and children D. number of disabled
labor force
The CPI is a _______. A. measure of inflation B. list of the items that an average urban household buys and the percentage weight of total expenditure given to each item C. measure of the price level of all goods and services that are counted as part of GDP D. measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services
measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services; D
The labor force is the number of people employed plus the _____. A. number of women unemployed B. working-age population C. number unemployed D. working-age population
number unemployed
The chained CPI ______. A. overcomes the sources of bias in the CPI by eliminating measures of the goods and services with the most volatile prices B. overcomes the sources of bias in the CPI by giving extra weight to the measures of the goods and services with the most volatile prices C. does not overcome the source of bias in the CPI D. overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities
overcomes the sources of bias in the CPI by incorporating substitutions and using current and previous period quantities; D
Some unemployment is unavoidable because ______. A. many part-time workers would like to have full-time work B. people are making transitions through the stages of life and businesses are making transitions C. often people become discouraged workers D. many people in the working-age population attend school and are unemployed
people are making transitions through the stages of life and businesses are making transitions; B
Unemployment arises when ______. A. people leave their jobs and spend time searching for another job that better suits their abilities B. people leave the labor force C. firms close, people lose their jobs, and they become discouraged workers D. students decide to take time to travel following graduation
people leave their jobs and spend time searching for another job that better suits their abilities; A
The working-age population is the total number of _____ aged _____ years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces A. workers; 18 B. people; 16 C. people; 15 D. graduates; 20
people; 16
The factors that might make the natural unemployment rate change include _______. A. the age distribution of the population, the output gap, the actual unemployment rate, and the real wage rate B. the actual unemployment rate, the scale of structural change, the nominal wage rate, and unemployment benefits C. the age distribution of the population, the scale of structural change, the real wage rate, and unemployment benefits D. the scale of structural change, the Z-Pop ratio, the output gap, and unemployment benefits
the age distribution of the population, the scale of structural change, the real wage rate, and unemployment benefits; C
The price level is ______. A. the average level of prices B. the average level of prices paid by urban consumers C. the average level of prices paid by urban consumers for all goods excluding food and energy D. equal to the inflation rate
the average level of prices; A
Cyclical unemployment is _______. An example of cyclical unemployment is _______. A. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a restaurant worker who loses her job because of a downturn in the economy B. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a ski instructor who loses his job during the summer C. a combination of structural unemployment and frictional unemployment; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible D. the unemployment that arises at full employment; an artist who paints but has no success selling her paintings
the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a restaurant worker who loses her job because of a downturn in the economy; A
The four main ways in which the CPI is an upward-biased measure of the price level are through _______. A. the new goods bias, the quality change bias, the commodity substitution bias, and the outlet substitution bias B. differences in wholesale and retail prices, differences in domestic and international prices, differences among various supply chain costs, and differences among wage rates in different states C. the intermediate goods bias, the bricks-and-mortar bias, the online bias, and the quality change bias D. sales taxes, subsidies, quotas, and vouchers
the new goods bias, the quality change bias, the commodity substitution bias, and the outlet substitution bias; A
The natural unemployment rate is _______. A. zero percent when an economy is experiencing a business cycle peak B. the unemployment rate when all unemployment is cyclical C. the unemployment rate when the economy is at full employment D. the unemployment rate when the economy is in an expansion
the unemployment rate when the economy is at full employment; C
Frictional unemployment is _______. An example of frictional unemployment is _______. A. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a ski instructor who loses his job during the summer B. the unemployment that arises from normal labor turnover—from people entering and leaving the labor force and from the ongoing creation and destruction of jobs; an autoworker who loses his job because the automaker moved production to Mexico C. the unemployment that arises from normal labor turnover—from people entering and leaving the labor force and from the ongoing creation and destruction of jobs; new college graduates looking for work D. the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible
the unemployment that arises from normal labor turnover—from people entering and leaving the labor force and from the ongoing creation and destruction of jobs; new college graduates looking for work; C
Structural unemployment is _______. An example of structural unemployment is _______. A. the higher than normal unemployment at a business cycle trough and the lower the normal unemployment at a business cycle peak; a ski instructor who loses his job during the summer B. the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible C. the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs; older workers who leave the labor force rather than learn new skills Your answer is not correct. D. the unemployment that arises from normal labor turnover—from people entering and leaving the labor force and from the ongoing creation and destruction of jobs; an autoworker who loses his job because the automaker moved production to Mexico
the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs; coal miners who are unemployed because new technology has made other types of energy cheaper and more accessible; B
The core inflation rate is the annual percentage change in the _____ price index _____ the prices of food and energy. A. GDP; including B. PCE; excluding C. GDP; excluding D. PCE; including
PCE; excluding; B
The inflation rate is calculated as _________. A. [(CPI this year−CPI in the base year)÷CPI in the base year]×100 B. [(CPI in the base year−CPI last year)÷CPI this year]×100 C. [(CPI this year−CPI last year)÷CPI this year]×100 D. [(CPI this year−CPI last year)÷CPI last year]×100
[(CPI this year−CPI last year)÷CPI last year]×100; D
The Consumer Price Index is a measure of the _____ of the prices paid by _____ consumers for a fixed market basket of consumption goods and services. A. sum; urban B. average; urban C. sum; rural D. average; rich
average; urban; B
