Chapter 13

Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment​ rate?

( Numbers of unemployed / number in labor force ) * 100

If a​ 3-month Treasury bill pays​ 5.5% and the change in the consumer price index​ (CPI) is​ 4.7%, what is the real interest rate​ (the true return to​ lending)?

0.8%

The CPI in 2014 equals : The CPI in 2016 equals :

145.45 140.9

Your father earned​ $34,000 per year in 1984. To the nearest​ dollar, what is that equivalent to in 2014 if the CPI in 2014 is 215 and the CPI in 1984 is​ 104?

70,288

Consider the table : What is the real average hourly wage in 2009? What can be said about real average hourly earnings and nominal average hourly earnings between 2008 and​ 2010?

8.21 Both real and nominal average hourly earnings increased.

In April​ 2017, the​ working-age population of the United States was 254.6 million. The​ working-age population is divided into those in the labor force​ (160.2 million) and those not in the labor force​ (94.4 million). The labor force is divided into the employed​ (153.2 million) and the unemployed​ (7.1 million). Those not in the labor force are divided into those not available for work​ (88.7 million) and those available for work​ (5.7 million).​ Finally, those available for work but not in the labor force are divided into discouraged workers​ (0.5 million) and those currently not working for other reasons​ (5.2 million).

A. the unemployment rate is ( 7.1 mil / 160.2 mil ) * 100 B. The labor force participation rate is ( 160.2 mil / 254.6 mil ) * 100 BOTH A AND B

Paying good wages and keeping your people working for you is good business...Imagine that you have​ 120,000 loyal ambassadors out there who are constantly saying good things about Costco. It has to be a significant advantage for​ you." What is​ Costco's CEO referring​ to?

Efficiency Wages

Suppose John Q. Worker is currently unemployed. Each​ day, John Q. Worker spends the entire day searching available job openings for an appropriate position given his set of​ skills, abilities, and interests. If someone asks John Q. what he does for​ work, he tells them that he is currently​ "in-between jobs." Which of the following best classifies John​ Q.'s unemployment​ status?

Frictionally unemployed

Which of the following can give an early warning of future increases in the price​ level?

Product Price Index

When compared to the Great​ Depression, the typical length of unemployment in the modern​ (post-Great Depression-era) U.S. economy is

Relatively brief

What effect do labor unions have on the unemployment​ rate?

Since few​ non-government workers are​ unionized, there is no significant effect on the unemployment rate.

Suppose that Sally J. Society recently lost her job as an underwater welder. In looking for a new​ job, she discovers that the only available jobs are for economists and that there are no openings for underwater welders because the trade is now obsolete. If Sally J. Society decides to return to school to earn an Economics​ degree, what is the best classification of her unemployment​ status?

Structural Unemployment

How do unemployment insurance payments in the United States and social insurance programs in other countries increase the unemployment​ rate?

They decrease the opportunity cost of job search.

A wage rising slower than the rate of inflation is actually​ falling

True. If wages are increasing slower than the average price of goods and​ services, purchasing power falls.

Why is the unemployment​ rate, as measured by the Bureau of Labor​ Statistics, an imperfect measure of the extent of joblessness in the​ economy?

~ discouraged workers ~ underemployed ~ fails to account for illegal ~doesnt account for Current Population Survey ( All the above )

How does the U.S. Economy create and destroy millions of jobs each year?

~ some businesses are expanding, while others are contracting ~ In the market system, new firms are consistently entering and exiting various industries

When the economy is at full​ employment,

~ the natural rate of unemployment prevails ~ all remaining unemployed is either frictional or structural ~ the unemployment rate is greater than zero

Suppose the fixed interest rate on a loan is​ 5.75% and the rate of inflation is expected to be​ 4.25%. The real interest rate is​ 1.5%. Suppose now that instead of​ 4.25%, the inflation rate unexpectedly reaches​ 5.5%. Who gains and who loses from this unanticipated​ inflation?

~ Lenders lose from a lower real interest rate ~ Borrowers gain from a lower interest rate

The BLS uses the establishment survey to collect information on employment in the economy. Indicate one drawback of the establishment survey compared to the current population survey and indicate one advantage.

~ it is based on company payroll and not on unverifiable answers ~ it does not include information about self-employed people

Which of the following causes changes in the CPI to overstate the true inflation​ rate?

~ new product bias ~ increase quantity bias ~ substitution bias

Even perfectly anticipated inflation imposes costs.​ Why?

~Paper money loses its purchasing power by the rate of inflation ~some wages will fail to keep up with anticipated inflation ~menu costs