Principles of Econ - PREPARE Ch. 13 Questions

How would it affect the unemployment rate if the Bureau of Labor Statistics counted as unemployed both​ (1) discouraged workers and​ (2) people who work​ part-time but would prefer to work​ full-time? A. The unemployment rate would increase. B. The unemployment rate would remain the same because those people are already counted as unemployed. C. The unemployment rate would decrease. D. The annual unemployment rate would have been close to 50 percent in the last decade.

A. The unemployment rate would increase.

When the economy is at full​ employment, which types of unemployment​ remain? A. frictional and structural B. frictional and cyclical C. cyclical and structural D. None of the above. Full employment means that there is no​ unemployment, so the unemployment rate would be zero.

A. frictional and structural

The​ short-term unemployment that arises from the process of matching workers with jobs is called A. frictional unemployment. B. cyclical unemployment. C. seasonal unemployment. D. structural unemployment.

A. frictional unemployment.

The BLS collects price statistics from traditional​ full-price retail​ stores, which do not reflect the prices some consumers pay by shopping at discount stores or on the Internet. This is a description of which​ bias? A. the outlet bias B. the new product bias C. the substitution bias D. the increase in quality bias

A. the outlet bias

In​ 2017, the Bureau of Labor Statistics​ (BLS) analyzed and revised its employment data for the period December 2007dash-December 2010. According to that​ revision, the recession of 2007dash-2009 A. was more severe than economists and policymakers realized at the time. B. was less severe than economists and policymakers realized at the time. C. was just about as severe as economists and policymakers realized at the time. D. was not actually a recession at all.

A. was more severe than economists and policymakers realized at the time.

If the CPI was 207 in 2009 and 225 in​ 2013, what wage would someone who earned a​ $50,000 income in 2009 have to earn in 2013 in order to keep her purchasing power​ constant? A. ​$54,348 B. ​$51,252 C. ​$54,000 D. None of the above.

A. ​$54,348

Of the eight categories in the CPI market​ basket, which three categories make up more than 75 percent of the​ basket? A. ​housing, transportation, and food B. food and​ beverages, apparel, and other goods and services C. medical​ care, recreation, and education D. None of the above. Each category in the basket comprises the same percentage of the basket as the others.

A. ​housing, transportation, and food

The unemployment rate in the United States is usually​ ________ than the unemployment rates in most other​ high-income countries, partly because the United States has​ _________ requirements for the unemployed to receive government payments. A. ​lower; more stringent B. ​higher; less stringent C. ​lower; less stringent D. ​higher; more stringent

A. ​lower; more stringent

Which of the following is the correct formula for calculating the unemployment​ rate? A. (Labor force ÷ (Working - age population) ) × 100 B. (Number of unemployed ÷ Labor force ) × 100 C. Both of the formulas are used to calculate the unemployment rate. D. Neither formula is used to calculate the unemployment rate.

B. (Number of unemployed ÷ Labor force ) × 100

Relative to the household​ survey, which of the following is a strength of the establishment​ survey? A. The establishment survey provides information on​ unemployment, which the household survey does not provide. B. The establishment survey is determined by actual​ payrolls, rather than by the unverified answers of the household survey. C. The establishment survey provides better information on the number of persons​ self-employed than the household survey. D. All of the above.

B. The establishment survey is determined by actual​ payrolls, rather than by the unverified answers of the household survey.

Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there​ aren't any jobs available. You would be counted as A. unemployed. B. a discouraged worker. C. underemployed. D. part of the labor force.

B. a discouraged worker.

Workers who lose their jobs because of a recession are experiencing A. structural unemployment. B. cyclical unemployment. C. seasonal unemployment. D. frictional unemployment.

B. cyclical unemployment.

Computation of the CPI assumes that households buy the same market basket of products each month. For this​ reason, which one of the following factors is not relevant in calculating the​ CPI? A. the prices of the products households purchase in the current year B. the quantities of the products households purchase in the current year C. the prices of the products households purchase in the base year D. the quantities of the products households purchase in the base year

B. the quantities of the products households purchase in the current year

The extent of job creation and job destruction is A. an ideal feature of our​ economy, because very few jobs are ever destroyed yet many new jobs are created. B. what we would expect in a vibrant market system. C. a serious shortcoming of our economic system. D. the main reason why the U.S. unemployment rate is persistently high.

B. what we would expect in a vibrant market system.

Two important trends in the labor force participation rates of adults aged 20 and over in the United States since 1948 are the​ _________ labor force participation rate of adult women and the​ __________ labor force participation rate of adult men. A. ​falling; rising B. ​rising; falling C. ​falling; falling D. ​rising; rising

B. ​rising; falling

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called A. cyclical unemployment. B. seasonal unemployment. C. structural unemployment. D. frictional unemployment.

C. structural unemployment.

The real interest rate equals A. the inflation rate minus the nominal interest rate. B. the nominal interest rate plus the inflation rate. C. the nominal interest rate minus the inflation rate. D. the nominal interest rate divided by the CPI for a given year.

C. the nominal interest rate minus the inflation rate.

Changes in the CPI overstate the true inflation rate due to four​ "biases." If apple prices rise rapidly during the month while orange prices​ fall, consumers will reduce their apple purchases and increase their orange purchases. Which of the four biases is concerned with this consumer​ behavior? A. the outlet bias B. the new product bias C. the substitution bias D. the increase in quality bias

C. the substitution bias

If the inflation rate is 6 percent and the nominal interest rate is 4​ percent, then the real interest rate is A. 2​ percent, which is the inflation rate minus the nominal interest rate. B. 10​ percent, which is the sum of the nominal interest rate and the inflation rate. C. ​-2 percent, which is the nominal interest rate minus the inflation rate. D. 1.5​ percent, which is the ratio of the nominal interest rate to the inflation rate.

C. ​-2 percent, which is the nominal interest rate minus the inflation rate.

When the economy was expanding in early​ 2007, fewer than​ _______ percent of the unemployed had been jobless for more than 6 months. A. 5 B. 10 C. 15 D. 20

D. 20

The​ "normal" underlying level of unemployment in the economy is A. the​ full-employment rate of unemployment. B. the natural rate of unemployment. C. the sum of structural unemployment and frictional unemployment. D. All of the above.

D. All of the above.

When a firm pays a wage that is higher than the market wage in order to increase worker​ productivity, the wage is called A. a compensating differential. B. an ideal wage. C. a minimum wage. D. an efficiency wage.

D. an efficiency wage.

In April​ 2017, which of the following demographic groups had a higher rate of unemployment than the unemployment rate for the total​ population? A. asians B. college graduates C. whites D. high school dropouts

D. high school dropouts

Increases in the minimum wage will A. increase the level of unemployment for all groups of workers. B. have a large effect on the unemployment rate in the United States. C. increase unemployment among workers whose market wage is higher than the new minimum wage. D. increase unemployment among teenagers.

D. increase unemployment among teenagers.

(T/F) If income rises more slowly than the rate of​ inflation, purchasing power will rise.

False

(T/F) Most economists agree that the​ above-market wage paid in unionized industries significantly increases the unemployment rate in the United States.

False

(T/F) To avoid the cost of the purchasing power of paper money decreasing with​ inflation, workers and firms will try to hold as much paper money as possible.

False

(T/F) If inflation is unexpectedly​ high, borrowers will benefit and lenders will be harmed.

True

(T/F) The producer price index​ (PPI) tracks the prices firms receive for goods and services at all stages of production.

True