Ch.9 Quiz

If the CPI was 207 in 2007 and 225 in 2011, what pay raise would someone who earned $50,000 in income in 2007 have to receive in order to keep her purchasing power constant in 2011? $4,000 $4,348 $1,252

$4,348

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 0.3 percent 0.7 percent

-0.3 percent

Which of these persons is officially unemployed? A non-working individual who has looked for a job in the past week A housewife who is considering looking for a job A student who will be graduating soon and looking for a job

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

Which of these demographic groups typically suffers from higher unemployment rates? whites asians african americans

African Americans

When the economy is at full employment, which types of unemployment remain? Frictional and structural Cyclical and structural Full employment means there is zero unemployment

Frictional and structural

Of the eight categories in the CPI market basket, which three categories make up more than 75% of the basket? Medical care, recreation, and education Housing, transportation, and food Food, apparel, and transportation

Housing, transportation, and food

Which of these groups is included in the labor force? People in mental hospitals and prison The unemployed Retirees, homemakers, and full-time students

The Unemployed

Which market basket specifically targets intermediate goods? The basket used by the GDP deflator The basket used by the consumer price index The basket used by the producer price index

The basket used by the producer price index

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 part of the labor force underemployed

a discouraged worker

In general, __________ have much lower unemployment rates than other individuals with other levels of education. high school dropouts college graduates High school Grads

college graduates

At full employment, __________. structural unemployment is zero frictional unemployment is zero cyclical unemployment is zero

cyclical unemployment is zero

Unanticipated deflation __________. hurts net debtors causes no economic problems hurts people who hold cash

hurts net debtors

If the inflation rate is anticipated, __________. net creditors will be hurt net debtors will be hurt inflation may not be a major problem

inflation may not be a major problem

To obtain prices of a representative group of goods and services, the Bureau of Labor Statistics (BLS) conducts a monthly survey of __________ households nationwide on their spending habits. The results of this survey are used to construct a market basket of __________ types of goods and services purchased by the typical urban family of four. 14,000; 211 5,000; 75 30,000; 525

14,000; 211

Which of these statements about interest rates and inflation is true? If there is zero inflation, the nominal interest rate is equal to the real interest rate. The real interest rate is equal to the nominal interest rate plus the inflation rate. The real interest rate is equal to the nominal interest rate divided by the inflation rate.

If there is zero inflation, the nominal interest rate is equal to the real interest rate.

The producer price index tracks the prices firms receive for goods and services at: the final stage of production the retail level all stages of production

all stages of production

The short-term unemployment that arises from workers, in the process of changing jobs, is called __________. frictional unemployment structural unemployment cyclical unemployment

frictional unemployment

The "normal or natural" underlying level of unemployment in the economy is the __________. typically around 10 or 12 percent sum of all cyclical, structural and frictional unemployment full employment rate of unemployment

full employment rate of unemployment

If inflation is anticipated, __________. it costs less to society than if unanticipated debtors gain it is costless to society

it costs less to society than if unanticipated

In calculating the CPI, the __________. largest group of items in the market basket is food and beverages market basket does not include large equipment purchased by firms market basket of goods and services is updated monthly

market basket does not include large equipment purchased by firms

The consumer price index __________. measures the cost of a changing basket of goods and services changes the base period every five years measures the cost of an unchanging basket of goods and services

measures the cost of an unchanging basket of goods and services

Economic variables that are calculated in current year prices are referred to as __________ variables, while variables that have been corrected to account for the effects of inflation are __________ variables. real, nominal nominal, deflated nominal, real

nominal, real

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

structural unemployment

The natural rate of unemployment is the __________. unemployment rate that results when the economy produces the potential level of real GDP prevailing rate of unemployment in the economy in the short run lowest unemployment rate on the short-run Phillips curve

unemployment rate that results when the economy produces the potential level of real GDP