macroeconomics test 3 chap 11-13

Suppose the money supply equals $100 million, the average price level equals 40, and real GDP equals $50 million. Given this information, the velocity of money equals:

20

(refer to the table) 0. In which of the following years did this country experience deflation?

2002 only

An unexpected increase in export growth is a:

positive AD shock

The presence of discouraged workers causes the measured unemployment rate to be:

understated.

In a small economy, the money supply is $600,000, and the velocity of money is 2. The current average price level in the economy is 3. What is the level of nominal GDP in this economy?

$1.2 million

Which of the following correctly represents unexpected disinflation?

Eπ > π

Which of the following would be considered unemployed?

Janice, a senior in college, started job hunting early in the hope that she would have secured a job by the time she graduates in May.

Inflation is:

an increase in the average level of prices

Unemployment correlated with the ups and downs of the business cycle is called:

cyclical unemployment.

If you earned $10-an-hour in 2005 when the CPI was 100, and you earn $11-an-hour today when the CPI is 120, then your real wage rate has _____ since 2005.

decreased

If π > π^e:

firms' profits will increase

Active labor market policies:

focus on getting unemployed workers back to work.

Holding everything else constant, an increase in the growth rate of the money supply will cause the aggregate demand curve to:

shift outward

Which of the following individuals can be counted as part of the labor force?

someone who is collecting unemployment benefits

When workers lose their jobs and become officially unemployed, the unemployment rate:

increases

Debt monetization means that a government pays off its debt by:

increasing the money supply.

Suppose the nominal interest rate is 4% and the inflation rate is 5%. The real interest rate is:

-1%

(Figure: Labor Supply and Demand) Refer to the figure. What is the quantity of labor that is unemployed as a result of the labor union's action to increase its wage demands to $11 an hour?

1,800

(refer to the figure) What is the unemployment rate in this market as a result of the implementation of a $10 minimum wage?

50%

(Refer to the figure ) What is the number of people who are employed at the market wage? How many people end up unemployed due to the implementation of a $10 minimum wage?

60;40

A country has 50 million people, 30 million of whom are adults. Of the adults, 5 million are not interested in working, another 5 million are interested in working but have given up looking for work, and 5 million are still looking for work. Of those who do have jobs, 5 million are working part time but would like to work full time, and the remaining 10 million are working full time. What is this country's labor force participation rate?

66.7%

(Refer to the table) What is the labor force participation rate of this country?

76%

If the average price level rises from 120 in year 1 to 130 in year 2, the inflation rate between years 1 and 2 will be:

8.33%

A worker repairing VHS cassette-tape players was laid off because most of his customers have started using DVD players. This worker is now:

Structurally unemployed

The position of the long-run aggregate supply curve shows the economy's:

potential growth rate given by the real factors of production

The shift toward more of a service economy and less of a manufacturing economy in the United States has caused an increase in:

structural unemployment

What is the Fisher effect?

the tendency of nominal interest rates to rise with higher expected inflation rates

Which of the following does NOT contribute directly to the persistence of structural unemployment?

work tests

(Table: Consumer Price Index) Refer to the CPI values in the table for the years 2005 to 2010. In which year(s) did the country experience deflation?

2009 only

A country has 50 million people, 30 million of whom are adults. Of the adults, 5 million are not interested in working, another 5 million are interested in working but have given up looking for work, and 5 million are still looking for work. Of those who do have jobs, 5 million are working part time but would like to work full time, and the remaining 10 million are working full time. What is this country's unemployment rate?

25%

Jordan loaned Taylor $1,200 on March 15, 2009. Taylor returned $1,260 on March 14, 2010. Inflation was 2% over the 1-year period. What is the real interest rate that Taylor paid?

3%

(refer to the figure) Point B on this aggregate demand curve represents an inflation rate of:

4%

For an aggregate demand curve with −→M = 10% and −→v = 0%, if inflation is 6%, then real growth is:

4%

(Refer to the table) What is the unemployment rate of the country?

5%

(Figure: Labor Market) Refer to the figure. What is the unemployment rate in this market as a result of the implementation of a $10 minimum wage?

50%

Which of the following individuals can be counted as unemployed?

Jean, who left her job to search for a higher-paying position

. As a result of an increase in expected inflation, the:

SRAS curve shifts up and to the left

Oil shocks, the shift from manufacturing to service jobs, and the use of new technologies are reasons for _____ unemployment.

Structural

The consumer price index measures the prices of:

a basket of goods bought by a typical American consumer.

Which of the following is part of the labor force?

a person who was laid off and is now looking for work

(refer to the table) In which of the following years did this country experience disinflation?

both 2001 and 2002

(Table: Consumer Price Index) Refer to the CPI values in the table for the years 2005 to 2010. In which year(s) did the country experience disinflation?

both 2007 and 2009

How can people who are laid off from work due to a recession eventually turn into structurally unemployed people?

by staying unemployed for so long that their skills become outdates

What is the term for workers who have given up looking for a job but would still like one?

discouraged workers

The primary reason we think of inflation as bad even when wages rise with it is that it:

distorts the information delivered by prices.

The long-run aggregate supply curve shows that long-run economic growth:

does not depend on the rate of inflation

An unemployed person is one who:

does not have a job but is actively looking for one

What allows an employee to quit at any time and an employer to fire at any time for any reason?

employment-at-will

The short-term unemployment caused by the ordinary difficulties of matching employee to employer is called:

frictional unemployment

The short-term unemployment caused by the ordinary difficulties of matching employee to employer is called:

frictional unemployment.

Discouraged workers are workers who have:

given up looking for work but would still like a job.

Business fluctuations are fluctuations in the:

growth rate of real GDP around its trend growth rate

If a national government improves its unemployment benefits, its unemployment rate will most likely:

increase

If the velocity of money and real GDP are fixed, then the quantity theory of money implies that the price level will:

increase at the same rate as the growth in the money supply.

Long-lasting unemployment benefits tend to:

increase the rate of structural unemployment.

The invention of birth control in pill form substantially __________ labor force participation.

increased female

During recessions the unemployment rate:

increases

The aggregate demand curve shows all the combinations of _______and _______ that are consistent with a specified rate of ________.

inflation; real DGP growth; spending growth

Suppose that Congress decided to exempt seniors from paying income tax on labor income. What would happen to the labor force participation rate for seniors?

it would increase.

Current forecasts say that mild inflation is expected next year. If, however, deflation occurs instead

lenders on existing fixed rate loans will gain while borrowers will lose

Nobel Prize-winning economist Milton Friedman says, "Inflation is always and everywhere a _____."

monetary phenomenon

With respect to real output, in the long run, money is:

neutral.