ECO 155 UNIT 3

If v of= 4%, P of= 3%, and Yr = 2%, M must equal: - 1% - 2% - 7% - 6%

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? - 2,700 - 1,800 - 700 - 1,100

1,800

(Figure: Labor Markets) Refer to the figure. What is the unemployment rate in this market as a result of the implementation of a $10 minimum wage? - 25% - 100% - 50% - 20%

50%

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% - 83.3% - 50% - 66.7%

66.7%

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: - 7.69% - 10% - 9.23% - 8.33%

8.33%

Unemployment correlated with the ups and downs of the business cycle is called: - temporary unemployment - cyclical unemployment - frictional unemployment - structural unemployment

cyclical unemployment

If spending growth is 6% and inflation is also 6%, this means that: - more money is chasing an increased number of goods - economic growth was 12% - a positive supply shock occurred - real GDP did not increase

real GDP did not increase

Oil shocks, the shift from manufacturing to service jobs, and the use of new technologies are reasons for _______ unemployment. - frictional - cyclical - permanent - structural

structural

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

structurally unemployed

The presence of discouraged workers causes the measured unemployment rate to be: - either overstated, understated, or correctly stated. - overstated - understated - correctly

understated

Which of the following does NOT contribute directly to the persistence of structural unemployment? - unions - employment protection laws - work tests - unemployment benefits

work tests

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: - 125 - 80 - 100 - 20

20

(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? - neither 2007 nor 2009 - 2007 only - 2009 only - both 2007 and 2009

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% - 10% - 40% - 16.7%

25%

If the growth rate of the money supply in an economy is 5%, the growth rate of output is 2%, and the velocity of money is constant, what will the inflation rate in this economy be? - 7% - 3% - 2% - 5%

3%

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% - 5% - 2% - 7%

3%

For an aggregate demand curve M of= 10% and v of= 0%, if inflation is 6%, then real growth is: - 4% - -4% - -6% - 16%

4%

Which of the following correctly represents unexpected disinflation? - Eπ = π - Eπ > V - Eπ < π - Eπ > i

Eπ> π

Which of the following would be considered unemployed? - Sarah, a stay-at-home mom who earned nearly $80,000 per year in her previous job - Mark, laid off from his job as a bricklayer, returned to school full-time. - Tim, a 13-year old high school student, is looking for a part-time job. - 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.

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.

Which of the following individuals can be counted as unemployed? - Jason and Jill, who have not looked for work for the last 2 years. - Jean, who left her job to search for a higher-paying position - Hannah and Harold, who are serving time for armed robbery - Stewart and Susan, who are currently housed in a mental institution.

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

The consumer price index measures the prices of: - intermediate as well as final goods - introductory, intermediate, and final goods - all final goods brought by American consumers. - a basket of goods bought by a typical American consumer

a basket of goods bought by a typical American consumer

According to the quantity theory of money, if both the growth rate of the money supply and the velocity of money are fixed, then a higher inflation rate means: - a higher or lower real growth rate, depending on the specific growth of the money supply. - a lower real growth rate. - no change in the real growth rate. - a higher real growth rate.

a lower real growth rate

During the Internet revolution in the late 1990s, a positive real shock shifted the long-run aggregate supply curve to the right, which led to: - an increase in both real growth rate and the inflation rate. - an increase real growth rate and decrease in the inflation rate. - a decrease in real growth rate and increase in the inflation rate. - a decrease in both real growth rate and the inflation rate.

an increase in real growth rate and decrease in the inflation rate

Consider the three aggregate demand curves shown in the graph. Movement from Point A to Point D represents: - an increase in real GDP growth, but not spending growth. - an increase in inflation, but not spending growth. - an increase in spending growth from 4% to 6%. - an increase in spending growth from 2% to 3%.

an increase in spending growth from 4% to 6%.

(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? - 2009 only - both 2007 and 2009 - 2007 only - neither 2007 nor 2009

both 2007 and 2009

The primary purpose of the AD-AS model is to explain: - long-term economic growth - business fluctuations - trends in output - the steady-state output

business fluctuations

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 - increased 20% - remained the same - increased 10%

decreased

(Figure: Long-Run Aggregate Supply Curves) Which of the following can explain the shift of the long-run aggregate supply curve from A to B in the figure? - war - development of new technology - negative supply shock - oil crisis

development of new technology

The primary reason we think of inflation as bad even when wage rises with it is that it: - distorts the information delivered by prices - increases the velocity of money - leads to lower real wages - makes things more expensive for consumers

distorts the information delivered by prices

Active labor market policies: - state that an employee may quit and an employer may fire an employee at any time and for any reason. - enforce collective bargaining over wages, benefits, and working conditions - cause riots in France - focus on getting unemployed workers back to work

focus on getting unemployed workers back to work

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

frictional unemployment

Discouraged workers are workers who have: - given up looking for work and are not available for work - given up looking for work but still like a job - not given up looking for work and still would like a job - not given up looking for work but are not available for work

given up looking for work but still like a job

If a national government improves its unemployment benefits, its unemployment rate will most likely: - follow the global trend, regardless of national policy - decrease - remain the same - increase

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 - increase at a higher rate than the growth in the money supply - increase at a lower rate than the growth in the money supply - be unrelated to the growth in the money supply

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

In the basic model with an AD and LRAS curve only, if spending growth is 10% and the Solow growth rate falls from 5% to 3%, then inflation will: - decrease from 13% to 8% - increase from 8% to 13% - decrease form 7% to 5% - increase from 5% to 7%

increase from 5% to 7%

Debt monetization means that a government pays off its debt by: - lowering inflation - borrowing from foreigners - raising tax revenues - increasing the money supply

increasing the money supply

If spending in an economy increases by 3% and real GDP increases by 1%, the result will be: - a positive supply shock - a recession - inflation - war

inflation

Which of the following combinations would be on an aggregate demand curve with a spending growth rate of 6%? - inflation rate of 6%, real growth rate of 3%. - inflation rate of 2%, real growth rate of 8%. - inflation rate of 3%, real growth rate of 6%. - inflation rate of 8%, real growth rate of -2%.

inflation rate of 8%, real growth rate of -2%.

Nobel Prize- winning economist Milton Friedman says, "Inflation is always and everywhere a ________" - velocity phenomenon - risky phenomenon - monetary phenomenon - growth phenomenon

monetary phenomenon

The term "business fluctuations" refers to: - the different stages of a product cycle - changes in the prices of goods and services over time - movement in real GDP around its long-term trend. - the trend in real GDP over a long period of time

movement in real GDP around its long-term trend

(Figure: Long-Run Aggregate Supply Curves) Which of the following can explain the shift of the long-run aggregate supply curve from A to C in the figure? - increase in oil supply - an increase in the nation's factors of production - development of new technology - negative supply shock

negative supply shock

With respect to real output, in the long run, money is: - expansionary - neutral - temporary - velocity

neutral

An increase in inflation will cause the long-run aggregate supply curve to: - shift randomly - shift outward - shift inward - not shift at all

not shift at all