Macroeconomics Chapter Nine

In general, unemployment rates are higher for workers in lower-skilled occupations, Hispanics, women, and less-educated workers. African Americans, Hispanics, women, and less-educated workers. less-educated workers, African Americans, workers in lower-skilled occupations, and women. African Americans, Hispanics, workers in lower-skilled occupations, and less-educated workers.

African Americans, Hispanics, workers in lower-skilled occupations, and less-educated workers.

Who gains from inflation? Lenders Those with the most skill. No one benefits from inflation. Borrowers

Borrowers

Even though the United States has an unemployment compensation program that provides income for those out of work, should we still worry about unemployment? Yes, because the unemployment compensation program merely gives the unemployed enough funds for basic needs. No, since the program gives the unemployed only enough funds for basic needs, it will encourage them to find jobs quicker. Yes, because the unemployment compensation program is not available to workers in the service occupations. No, since the unemployment compensation helps keep demand in the economy high, workers will eventually return to their jobs.

Yes, because the unemployment compensation program merely gives the unemployed enough funds for basic needs.

The type of inflation that is more likely to be associated with a positive GDP gap is output inflation. cost-push inflation. international inflation. demand-pull inflation.

demand-pull inflation.

A difficult aspect of measuring the unemployment rate is the survey response rate is low. making sure that all adults are included. each state uses a different process to calculate its unemployment data. determining who is eligible and available to work.

determining who is eligible and available to work.

Hyperinflation might lead to a severe decline in total output if everyone starts spending more to avoid inflation. everyone starts speculating and searching for ways to avoid inflation. taxes go up so that income falls. people save more because interest rates are falling.

everyone starts speculating and searching for ways to avoid inflation.

The losers from inflation are those with incomes rising as fast as the rate of inflation. significant debt. fixed incomes in nominal terms. no savings.

fixed incomes in nominal terms.

A major new invention can lead to an expansion if there are decreases in wealth and increases in consumption and unemployment. decreases in saving and increases in consumption and unemployment. increases in investment, consumption, output, and employment. increases in saving, the money supply, and employment.

increases in investment, consumption, output, and employment.

The nominal interest rate minus nominal income is the inflation rate. plus the inflation rate is the real interest rate. plus the real interest rate is the inflation rate. minus the inflation rate is the real interest rate.

minus the inflation rate is the real interest rate.

Demand-pull inflation occurs when prices rise because of an increase in aggregate spending not fully matched by an increase in aggregate output. there is a negative GDP gap. there is a negative price gap. there are increases in per-unit costs of production.

prices rise because of an increase in aggregate spending not fully matched by an increase in aggregate output.

Inflation lowers interest rates. reduces the purchasing power of the dollar. increases the purchasing power of the dollar. reduces the export power of the dollar.

reduces the purchasing power of the dollar.

Cost-push inflation occurs in the presence of __________. excess inventory excess demand for goods and services a trade deficit rising per-unit production costs

rising per-unit production costs

The consequence of a negative GDP gap is that what is not produced is lost forever and future economic growth will be less. people will not be able to afford to go to college. interest rates will fall and lower national saving. it requires public policy to correct.

what is not produced is lost forever and future economic growth will be less.

A country's current unemployment rate is 11 percent. Economists estimate that its natural rate of unemployment is 6 percent. About how large is this economy's negative GDP gap? 6 percent 10 percent 1 percent 3 percent

10 percent

Suppose that a country has 9 million people working full-time. It also has 1 million people who are actively seeking work but are currently unemployed, along with 2 million discouraged workers who have given up looking for work and are currently unemployed. What is this country's unemployment rate? 10 percent 20 percent 25 percent 15 percent

10 percent

Which of the following illustrates the difficulty of distinguishing among frictional, structural, and cyclical unemployment? A person loses her job during a recession and then starts her own business. A person quits his job in search of a better one, but the former job is in a declining industry and disappears completely. A person quits her job in search of a better one and then finds one after the economy recovers from a recession. A person loses his job during a recession and finds another one in a different industry.

A person quits his job in search of a better one, but the former job is in a declining industry and disappears completely.

Which of the following statements is true? Deflation means that the inflation rate is falling, whereas with inflation the inflation rate is rising. Deflation means that the inflation rate is falling, whereas with inflation overall prices are rising. Deflation means that the price level is falling, whereas with inflation overall prices are rising. Deflation means that the price level is falling, whereas with inflation the inflation rate is rising.

Deflation means that the price level is falling, whereas with inflation overall prices are rising.

The noneconomic effects of unemployment include a sense of failure created in parents and in their children the additional expense of helping unemployed family members. the costs of moving for unemployed persons. the unemployment benefits that are paid.

a sense of failure created in parents and in their children

Unemployment is an economic problem because a unit of labor resource that could be engaged in production is sitting idle. there are additional expenses of helping unemployed family members. unemployment benefits are paid. there are costs of moving for unemployed persons.

a unit of labor resource that could be engaged in production is sitting idle.

The average length of time people are unemployed rises during a recession because unemployment compensation is equal to what people would earn if they were working. businesses continue to lay off workers as a result of the decrease in demand. most workers receive unemployment compensation and don't want to work. worker retraining takes longer during a recession.

businesses continue to lay off workers as a result of the decrease in demand.

The Consumer Price Index (CPI) is determined each month by comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in cities around the country. comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in a base year. estimating the prices of goods and services in the economy at the same rate as the cost of living increases. averaging all the prices of goods and services in the economy.

comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in a base year.

The type of inflation that is more likely to be associated with a negative GDP gap is demand-pull inflation. output inflation. cost-push inflation. international inflation.

cost-push inflation.

The Bureau of Labor Statistics (BLS) calculates the inflation rate from one year to the next by adding the CPI of the previous year to the CPI of the most recent year, and then dividing by 2. adding the CPI of the previous year to the CPI of the most recent year, and then dividing by the average of both years. subtracting the CPI of the previous year from the CPI of the most recent year, and then dividing by the CPI of the previous year. subtracting the CPI of the previous year from the CPI of the most recent year, and then dividing by the CPI of the most recent year.

subtracting the CPI of the previous year from the CPI of the most recent year, and then dividing by the CPI of the previous year.

Most economists agree that the immediate cause of most cyclical changes in real output and employment is an unexpected change in __________. the value of the trade deficit the unemployment rate the value of the stock market the level of total spending

the level of total spending

A financial crisis can lead to a recession because it can cause investment and income to fall, thereby lowering saving and increasing the money supply. wealth and saving to fall, thereby lowering investment and increasing the money supply. wealth and income to fall, thereby reducing spending and ultimately reducing employment. investment and saving to fall, thereby increasing spending and ultimately reducing employment.

wealth and income to fall, thereby reducing spending and ultimately reducing employment.

An increase in your nominal income and a decrease in your real income might occur simultaneously if your nominal income increases less than the cost of living increases. your nominal income increases more than the cost of living increases. your real income increases at the same rate as the cost of living increases. your real income increases more than the cost of living increases.

your nominal income increases less than the cost of living increases.