ECON 102 EXAM 2
When Cameron began his career with SBC, his starting salary was $32,000. Four years later his salary increased to $35,000. If the CPI was 100.0 when he started and four years later is 107.5, Cameron's real income after four years is A) $32,558. B) $32,000. C) $37,625. D) $35,000. E) $34,400.
A) $32,558.
If the cost of the CPI market basket at current period prices is $275 and the cost of the CPI market basket at base period prices is $350, the CPI is A) 79. B) 100. C) 275. D) 127. E) 350.
A) 79
Assume an economy begins with zero inflation, a 25 percent income tax rate, and a real interest rate of 4 percent. If inflation rises to 4 percent, the nominal interest rate becomes ________ percent and the after-tax real interest becomes ________ percent. A) 8; 2 B) 0; 1 C) 6; 2 D) 8; 6 E) 8; 4
A) 8; 2
Suppose that residents of France have seen their real wage rate increase over time. This means that A) French workers have increased buying power. B) the CPI must have decreased over time. C) French workers' inflation rate has increased over time. D) French workers have increased their average hours of labor over time. E) French workers have received increases in their nominal wage rate over time.
A) French workers have increased buying power.
Suppose that last year, the price of strawberries was $2 and the price of milk was $1. This year, the price of milk is $2 and the price of strawberries is $1. Which of the following statements is TRUE? A) The CPI might increase or decrease depending on the quantities in the CPI market basket. B) The CPI does not change because the change in the two prices is the same. C) The CPI decreases because strawberries are cheaper. D) The CPI increases because milk is more expensive. E) The change in the CPI depends how the market basket changed between the two years.
A) The CPI might increase or decrease depending on the quantities in the CPI market basket.
Which of the following creates job rationing? A) The real wage rate is above the equilibrium level. B) An increase in unemployment benefits. C) Job search decreases. D) The real wage rate is below the equilibrium level. E) The real wage rate is equal to the equilibrium level.
A) The real wage rate is above the equilibrium level.
Economic growth is defined as A) a sustained expansion of production possibilities. B) an increase in employment. C) a decrease in the rate of inflation. D) an increase in the nation's population. E) an increase in the wage rate.
A) a sustained expansion of production possibilities.
A marginally attached worker is A) a worker who does not have a job and is available and wants one but has not made any efforts to find a job within the previous four weeks. B) a worker who is unhappy at his or her job. C) counted as unemployed in the official labor market statistics. D) a person who only works part time but wants full-time work. E) a worker who is looking for a job but can't find one.
A) a worker who does not have a job and is available and wants one but has not made any efforts to find a job within the previous four weeks.
U-4, U-5 and U-6 are A) all broader measures of the unemployment rate. B) broader measures of the labor force participation rate. C) not used by the Bureau of Labor Statistics because they include too much variability. D) narrower measures of the labor force participation rate. E) all narrower measures of the unemployment rate.
A) all broader measures of the unemployment rate.
A newspaper headline reads "A New Wave of Workers Enters the Job Market!" This wave of young, new entrants to the labor market is likely to lead to A) an increase in the natural unemployment rate. B) a decrease in the country's potential GDP. C) a decrease in the unemployment rate. D) a decrease in the natural unemployment rate but an increase in the actual unemployment rate. E) no effect on the unemployment rate.
A) an increase in the natural unemployment rate.
Rick lost his job as a logistics and distribution coordinator nearly three years ago. After a long and failed search, Rick finally gives up and stops looking for a new job. Rick's decision to suspend his job search causes the unemployment rate to ________ and the labor force participation rate to ________. A) decrease; decrease B) increase; decrease C) increase; stay the same D) stay the same; decrease E) increase; increase
A) decrease; decrease
Unemployment benefits in western Europe are more generous than in the United States. As a result, ________ in the United States. A) frictional unemployment is lower B) cyclical unemployment is higher C) structural unemployment is higher D) avoidable unemployment is lower E) frictional unemployment is higher
A) frictional unemployment is lower
As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) avoidable unemployment. E) changes in the business cycle.
A) frictional unemployment.
Which of the following would be considered a marginally attached worker? i. Amy, who is working 20 hours per week at her father's business ii. Carl, who isn't working and has not looked for work in 3 months because he has been turned down for work when he last looked iii. Keke, who quit her job to take care of her daughter A) ii only B) i and ii C) i only D) ii and iii E) i, ii, and iii
A) ii only
For the purpose of measuring the cost of living for consumers, one reason the GDP price index is NOT a good substitute for the CPI is because the GDP price index A) includes the prices of exported goods, which are not consumed in the United States. B) and the CPI move in the same direction over time. C) has a larger bias than does the CPI. D) compares a current year basket of goods with a base year basket of goods. E) compares current year's prices with base year's prices.
A) includes the prices of exported goods, which are not consumed in the United States.
An increase in unemployment benefits ________ and an increase in international competition that changes the location of jobs ________. A) increases frictional unemployment; increases structural unemployment B) decreases structural unemployment; decreases cyclical unemployment C) decreases cyclical unemployment; decreases cyclical unemployment D) decreases cyclical unemployment; increases cyclical unemployment E) increases structural unemployment; decreases frictional unemployment
A) increases frictional unemployment; increases structural unemployment
An efficiency wage A) is set above the equilibrium real wage rate to induce greater work effort. B) reduces frictional unemployment. C) is set below the equilibrium real wage rate to reduce labor costs. D) increases the demand for labor and therefore increases potential GDP. E) increases the supply of labor and therefore increases potential GDP.
A) is set above the equilibrium real wage rate to induce greater work effort.
During 1990, a Hershey candy bar cost $.85. By 2007, the same Hershey candy bar cost $1.25. If the CPI was 130.7 in 1990 and 180.5 in 2007, the price of the 1990 Hershey candy bar in 2007 prices is A) less than the price of the 2007 Hershey candy bar. B) equivalent to the price of the 2007 Hershey candy bar. C) greater than the price of the 2007 Hershey candy bar. D) perhaps greater than, perhaps less, or perhaps the same depending on whether the CPI in2007 has been adjusted to reflect 2007 prices. E) not able to be determined given the information in the question.
A) less than the price of the 2007 Hershey candy bar.
During an inflationary period, a household with savings of $100,000 A) loses because inflation increases the real tax on the interest paid. B) loses because the inflation increases the after-tax real interest rate. C) gains because inflation increases the value of their savings. D) gains because the inflation gives savers more money and so more purchasing power. E) neither gains nor loses because inflation does not affect savers.
A) loses because inflation increases the real tax on the interest paid.
To be considered unemployed, a worker must have had A) no employment during the week before the survey and be actively looking for a job. B) part-time employment while actively looking for a full-time job. C) no employment during the day before the survey and be actively looking for a job. D) no employment during the week before the survey and be actively looking for a job while a student. E) Both answers A and B are correct.
A) no employment during the week before the survey and be actively looking for a job.
If Caterpillar Inc. raises the price of earth-moving equipment that it manufactures in Illinois, then the CPI will ________ and the GDP deflator will ________. A) not change; increase B) increase; increase by less than the CPI C) increase; increase D) not change; not change E) increase; not change
A) not change; increase
The Consumer Price Index (CPI) measures the changes of the A) prices paid by consumers for a fixed market basket of consumer goods and services. B) quantities of a fixed market basket of goods produced by businesses. C) prices paid by consumers and businesses for a fixed market basket of goods and services. D) prices paid by all businesses for a fixed market basket of production resources. E) lowest prices paid by consumers for a fixed market basket of consumer goods and services.
A) prices paid by consumers for a fixed market basket of consumer goods and services
Suppose the CPI for this year is 133.7. This number means that A) prices rose 33.7 percent over the base year. B) prices rose 133.7 percent over the base year. C) prices rose 133.7 percent over the last year. D) prices rose 33.7 percent over the last year. E) on average, goods cost $133.70 each this year.
A) prices rose 33.7 percent over the base year.
A consequence of hyperinflation is that people A) spend time trying to keep their money holdings near zero. B) want to lend funds because interest rates are so high. C) who make fixed-payment loans to others receive higher payments as inflation increases. D) receive higher real wage hikes, which increases their purchasing power for goods and services. E) increase the quantity of money demanded.
A) spend time trying to keep their money holdings near zero.
After 15 years with Ford Motor Corporation, one summer Cameron loses his job. His boss explained that his position has been downsized after the technological advances in automobile production. Cameron is best considered A) structurally unemployed. B) cyclically unemployed. C) avoidably unemployed. D) not in the labor force. E) frictionally unemployed.
A) structurally unemployed.
At full employment there still exists some unemployment because A) the U.S. economy is constantly creating and destroying jobs. B) there are always people too old or young to be in the labor force. C) it is unnatural to have all people work 40 hours per week. D) some portion of our population will always be too lazy to work. E) real GDP can never exceed potential GDP.
A) the U.S. economy is constantly creating and destroying jobs.
When the cost of the CPI market basket increases from one year to the next, we know that A) the prices of the goods and services contained in the CPI market basket have increased on the average. B) the quantities of the goods and services contained in the CPI market basket have increased on the average. C) on the average, current prices are below base year prices. D) on the average, current prices are less than past year prices. E) either the quantities of the goods and services contained in the CPI market basket have increased on the average and/or the prices of the goods and services contained in the CPI market basket have increased on the average.
A) the prices of the goods and services contained in the CPI market basket have increased on the average.
At the peak of a business cycle, the A) unemployment rate is below the natural unemployment rate. B) cyclical unemployment rate is positive. C) unemployment rate is above the natural unemployment rate. D) natural unemployment rate is negative. E) frictional unemployment rate is zero.
A) unemployment rate is below the natural unemployment rate.
The Consumer Price Index measures the average prices paid by A) businesses and consumers for a market basket of goods and services. B) urban consumers for a fixed market basket of goods and services. C) businesses for a fixed market basket of resources. D) urban consumers for the goods and services that most frequently change in price. E) businesses for the most frequently used basket of resources.
B) urban consumers for a fixed market basket of goods and services.
The CPI was 170 last year and is 190 this year. What is the inflation rate between these two years? A) 18 percent B) 11.8 percent C) 10.5 percent D) 20 percent E) 15.0 percent
B) 11.8 percent
Which of the following persons is NOT considered a part of the labor force? A) Mary, who has a part-time job as a day care specialist B) Desire, a wealthy hedge fund manager who just took early retirement C) Lucy, who works 20 hours a week in her father's restaurant for no pay D) Lones, an unemployed mechanic looking for a new job E) Jameson, an accountant who has been temporarily laid off during the holiday season
B) Desire, a wealthy hedge fund manager who just took early retirement
The highest unemployment rate in U.S. history was about A) 10.2 percent in 2009. B) 5.9 percent in 1972. C) 52 percent in 1939. D) 10 percent in 1982. E) 25 percent in 1933.
E) 25 percent in 1933.
Which of the following statements about the nominal and the real wage rates is correct? A) The nominal wage rate equals the real wage rate divided by the CPI and then multiplied by100. B) The real wage rate indicates how many goods and services can be purchased with an hour's labor. C) The real wage rate equals the nominal wage rate multiplied by the CPI then divided by 100. D) The real wage rate is measured in current year dollars. E) The nominal wage rate is measured in the dollars of a base year.
B) The real wage rate indicates how many goods and services can be purchased with an hour's labor.
Which of the following countries experienced situations close to hyperinflation in the recent past? A) Great Britain in 2016 B) Venezuela in 2016 C) Japan throughout most of the first decade of the 2000s D) China between 2013 and 2014 E) none of the above
B) Venezuela in 2016
The working-age population consists of all the people in the population A) aged 16 to 65. B) aged 16 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces. C) who are employed plus the unemployed people. D) aged 16 and over. E) aged 21 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces.
B) aged 16 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces.
Cyclical unemployment includes people who become unemployed from A) technological changes. B) changes in the business cycle. C) normal labor market turnover. D) changes in international competition. E) changes in the seasons.
B) changes in the business cycle.
Jane is a 25 year old, full-time student. She works part time in her school library and is paid $10 an hour. She is considered to be A) in labor force but not working. B) employed. C) unemployed. D) not in the working-age population because she is in college. E) not in labor force.
B) employed.
Which of the following is TRUE? One way to be classified as employed is by i. working 1 hour per week at a paid job. ii. working 15 or more hours as an unpaid worker in family business. iii. making specific efforts to find a job within the last four weeks. A) ii only. B) i and ii only. C) If you are not working and turn down a job offer in the previous week, you are no longer classified i, ii, and iii. D) i only. E) iii only.
B) i and ii only.
Suppose that in 2020, real GDP is larger than nominal GDP. The GDP price index in 2020 is definitely A) greater than 100. B) less than 100. C) negative. D) less than the GDP price index in 2019. E) larger than the GDP price index in 2019.
B) less than 100.
When the unemployment rate is greater than the natural unemployment rate, real GDP is A) unrelated to potential GDP. B) less than potential GDP. C) greater than full employment GDP. D) equal to potential GDP. E) greater than potential GDP.
B) less than potential GDP.
Uncertainty costs arise from inflation because inflation makes long-term planning ________ so people respond by ________ investment. A) more difficult; increasing B) more difficult; decreasing C) less difficult; increasing D) less difficult; not changing E) more difficult; not changing
B) more difficult; decreasing
If the price of rocket fuel imported from Russia and used by NASA suddenly increases, then the U.S. CPI will ________ and the U.S. GDP deflator will ________. A) increase; not change B) not change; not change C) increase; increase D) not change; increase E) increase; increase by more than the CPI
B) not change; not change
The fact the consumers substitute one good for another when prices change is A) a reason why the CPI understates the actual change in the cost of living. B) not taken into account by the fixed market basket used in calculating the CPI. C) not important to economists. D) taken into account by the fixed market basket used in calculating the CPI. E) a reason why the CPI is used to calculate inflation rates.
B) not taken into account by the fixed market basket used in calculating the CPI.
Economic growth is a sustained expansion of production possibilities, as measured by the increase in ________ over time. A) employment B) real GDP C) the price level D) inflation E) population
B) real GDP
If the price of a soda was 15 cents in 1970, when the CPI was 50, and 50 cents in 2007 when the CPI was 172, then the real price of A) the soda was 15 cents in 1970 and 50 cents in 2007. B) the 1970 soda in 2007 dollars is 52 cents. C) the 2007 soda in 1970 dollars is $3.44. D) a soda has risen 567 percent. E) a soda has risen 350 percent.
B) the 1970 soda in 2007 dollars is 52 cents.
Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli. If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch, then A) the CPI decreases. B) the CPI increases. C) the CPI does not change. D) the CPI might increase or decrease depending how the quantities are affected by the price changes. E) There is not enough information to answer this question.
B) the CPI increases.
Mark has a two-year wage contract with his employer. Mark's wage contract specifies a $50,000 salary for the first year, and specifies a salary increase equal to the percentage increase in the CPI during the second year. The percentage increase in the CPI during the year was 4.0 percentage points. If the CPI overstates inflation by 1.0 percentage point, at the end of the first year Mark's salary increased by ________ more than it would have without the upward bias. A) $50 B) $2,000 C) $500 D) $1,500 E) $3,000
C) $500
Suppose the working-age population is 500 million, the labor force is 200 million, and the unemployment rate is 15 percent. The number of unemployed people is A) 75 million. B) 15 million. C) 30 million. D) 45 million. E) 105 million.
C) 30 million.
If the cost of the CPI market basket at current period prices is $1,000 and the cost of the CPI market basket at base period prices is $250, the CPI is A) 100. B) 4.0. C) 400. D) 2.50. E) 250.
C) 400.
The quality change bias is most likely to put ________ into the CPI and so ________ the inflation rate A) a downward bias; overstate B) an upward bias; understate C) an upward bias; overstate D) a random bias; randomly overstate or understate E) a downward bias; understate
C) an upward bias; overstate
The natural unemployment rate occurs A) when the sum of frictional and structural unemployment equals zero. B) when the frictional unemployment rate equals zero. C) at the full employment level of unemployment. D) when the structural unemployment rate equals zero. E) when the unemployment rate equals zero.
C) at the full employment level of unemployment.
During the Great Depression of the 1930s when the unemployment rate was exceptionally high due to the Great Depression, the government had employment programs, such as the Civilian Conservation Corps, which built campsites and planted trees. These programs were aimed at reducing which type of unemployment? A) avoidable B) discouraged C) cyclical D) frictional E) structural
C) cyclical
Each month the CPI is calculated by A) recording the new prices and making no other calculation. B) subtracting the current period cost of the CPI market basket from the base period cost and then multiplying by 100. C) dividing the current cost of the CPI market basket by the base period cost and then multiplying by 100. D) multiplying the current cost of the CPI market basket by the base period cost and then dividing by 100. E) subtracting the base period cost of the CPI market basket from the current cost and then dividing by 100.
C) dividing the current cost of the CPI market basket by the base period cost and then multiplying by 100.
Mary has decided that the she does not like Iowa and has decided to quit her job as a medical technician and move to Arizona. Mary's unemployment as she searches for a new job is best classified as A) traveling. B) structural. C) frictional. D) cyclical. E) distance.
C) frictional.
When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing i. seasonal unemployment. ii. structural unemployment. iii. cyclical unemployment. A) i and ii B) i only C) ii only D) ii and iii E) i and iii
C) ii only
A country will likely experience an increase in poverty if A) its population decreases over time. B) it does not receive foreign aid. C) its real GDP growth rate decreases or slows over time. D) its real GDP per person growth rate increases over time. E) its inflation rate decreases or slows over time.
C) its real GDP growth rate decreases or slows over time.
The ________ is the average hourly wage rate measured in current dollars, while the ________ is the average hourly rate measured in the dollars of a given reference base year. A) real interest rate; nominal interest rate B) inflation rate; real wage rate C) nominal wage rate; real wage rate D) nominal interest rate; real interest rate E) real wage rate; nominal wage rate
C) nominal wage rate; real wage rate
Frictional unemployment is the result of A) a slowdown in the rate of economic expansion. B) technological change or foreign competition. C) normal labor market turnover. D) changes in the weather. E) the economy entering a strong expansion.
C) normal labor market turnover
The inflation rate is the A) difference between the base period CPI and the current period CPI. B) difference in the price level from one year to the next multiplied by 100. C) percentage change in the CPI from one year to the next year. D) percentage change in the composition of the CPI market basket from the base year to the next year. E) difference between the current period CPI and the base period CPI.
C) percentage change in the CPI from one year to the next year.
France is considering implementing policies that will reduce the duration of job search. A possible option is for France to A) require all residents between the ages of 19 and 26 to obtain a part-time or full-time job. B) help negotiate higher union benefits for employed workers. C) reduce unemployment benefits. D) increase the minimum wage. E) Both answers A and B are correct.
C) reduce unemployment benefits.
The ________ cost of inflation is the result of a(n) ________ in velocity and is so-named because of ________. A) shoe leather; decrease; the shoe leather that is wasted in people running around trying to spend money quickly B) tax; decrease; the government collecting more tax revenue on all goods and services including basic items like shoes C) shoe leather; increase; the shoe leather that is wasted by people running around trying to spend money quickly D) confusion; increase; the shoe leather that is wasted by people running around trying to spend money quickly E) shoe leather; increase; the higher prices for all goods and services including basic items like shoes
C) shoe leather; increase; the shoe leather that is wasted by people running around trying to spend money quickly
After the passage of the North American Free Trade Agreement, which made it less expensive to import goods from Mexico, workers in some industries found their factories being relocated to Mexico to take advantage of lower labor costs. These workers experienced what type of unemployment? A) cyclical B) foreign C) structural D) frictional E) trade
C) structural
Deflation is a situation in which A) inflation is accompanied by unemployment. B) the output growth rate is negative. C) the CPI is falling. D) all of the above E) none of the above
C) the CPI is falling.
The unemployment rate at full employment is A) equal the amount of unemployment caused by job search. B) equal to the rationed rate of unemployment. C) undefined because the economy is never at full employment. D) zero. E) the natural unemployment rate.
E) the natural unemployment rate.
Suppose that the cost of the CPI basket of goods and services rises from $137 in 2010, which is the base year, to $159 in 2011. The CPI in 2011 is ________ and the inflation rate from 2010 to 2011 is ________. A) 116; 22 percent B) 86; 14 percent C) 86; 22 percent D) 116; 16 percent E) There is not enough information to answer this question.
D) 116; 16 percent
If your nominal income is $75,000 and your real income in base year prices is $60,000, what is the CPI? A) 80 B) 100 C) 200 D) 125 E) 250
D) 125
Assume the U.S. population is 300 million. If the working age population is 240 million, 150 million are employed, and 6 million are unemployed, what is the labor force? A) 240 million B) 150 million C) 300 million D) 156 million E) 144 million
D) 156 million
If the bank returns $1,060 on the $1,000 deposited for a year during which inflation was 4 percent, the real interest rate is A) 10 percent. B) 16 percent. C) 6 percent. D) 2 percent. E) -2 percent.
D) 2 percent.
If half of all unemployed individuals suddenly gave up looking for work, the unemployment rate would ________ and the labor force participation rate would ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease E) There is not enough information to answer this question.
D) decrease; decrease
The working-age population includes A) youngsters between the ages of 14 and 16 if they are working at least part time. B) only employed people over the age of 16. C) people over the age of 16 who are in the Army. D) employed and unemployed people over the age of 16. E) those in jails and hospitals.
D) employed and unemployed people over the age of 16.
Potential GDP is the level of output produced when the unemployment rate is A) less than the natural unemployment rate. B) greater than the natural unemployment rate. C) made up of only cyclical unemployment. D) equal to the natural unemployment rate. E) zero.
D) equal to the natural unemployment rate.
High inflation makes money ________ because ________. A) function better as a store of value; the money gains value and therefore has greater purchasing power B) function less well as a store of value; it decreases the price level and increases the buying power of money C) function better as a unit of account; money never loses value but it does gain purchasing power in some regions D) function less well as a store of value; the money loses value and therefore has less purchasing power E) function better as a store of value; it leads to a more accurate allocation of resources
D) function less well as a store of value; the money loses value and therefore has less purchasing power
Which of the following can result in job rationing? i. minimum wage ii. union wage iii. diminishing returns A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
D) i and ii
Which of the following help explain the increase in the U.S. labor force participation rate for women? i. There was a significant fall in the number of children women were choosing to have. ii. There was an increase in the educational level of women. iii. Technological change in the home increased the time available for work outside the home. A) i only B) ii only C) i and ii D) ii and iii E) i, ii, and iii
D) ii and iii
Discouraged workers are included in the calculation of the i. unemployment rate. ii. labor force participation rate. iii. working-age population. A) i only B) ii only C) i and ii D) iii only E) ii and iii
D) iii only
The natural unemployment rate A) is very stable in value across time. B) includes some frictional, structural, and cyclical unemployment. C) is equal to zero when there are no economic fluctuations. D) includes only frictional and structural unemployment. E) is easy to measure.
D) includes only frictional and structural unemployment.
Producing an amount of GDP equal to potential GDP is most consistent with the economy producing A) either on or beyond the production possibilities frontier. B) within the production possibilities frontier. C) beyond the production possibilities frontier. D) on the production possibilities frontier. E) either on or within the production possibilities frontier.
D) on the production possibilities frontier.
To find the cost of the CPI market basket in the base period prices we have to multiply the A) current period quantities in the CPI market basket by the base period prices. B) current period quantities in the CPI market basket by the current period prices. C) quantities in the CPI market basket by the base period prices and then multiply by 100. D) quantities in the CPI market basket by the base period prices. E) quantities in the CPI market basket by the current period prices.
D) quantities in the CPI market basket by the base period prices.
Juan recently lost his job as a travel agent, which he has had for 20 years, because the demand for his services has fallen over time as more and more people book their vacations online. Unfortunately, Juan has not been able to find a new job because he lacks the skills needed to get hired in other industries where job growth is occurring. Juan is considered to be A) cyclically unemployed. B) frictionally unemployed. C) a marginally attached worker. D) structurally unemployed. E) not in the labor force.
D) structurally unemployed.
Inflation is known as a ________ because it ________. A) bad thing; allows people to obtain the wrong kind of wealth B) revenue; is the only source of business income for the government C) tax; redistributes goods and services from the government to households and businesses D) tax; redistributes goods and services from households and businesses to the government E) good thing; keeps the value of goods and services increasing
D) tax; redistributes goods and services from households and businesses to the government
Full employment occurs when A) the sum of frictional and structural unemployment is zero. B) the unemployment rate is zero. C) the frictional unemployment rate is zero. D) the cyclical unemployment rate is zero. E) the structural unemployment rate is zero.
D) the cyclical unemployment rate is zero.
The total U.S. labor force participation rate increased over the past 50 years because A) more men are retiring early. B) fewer women are attending college. C) many blue-collar jobs with rigid work hours have been created in the last decade. D) the female labor force participation rate increased. E) the male labor force participation rate increased.
D) the female labor force participation rate increased.
February 2010, the price of gasoline in the Florida was $2.629 per gallon and the CPI was 202.4 with a base period of 1982 to 1984. What was the real price of gasoline per gallon in base period dollars? A) $1.00 per gallon B) $1.809 per gallon C) $2.629 per gallon D) $5.32 per gallon E) $1.29 per gallon
E) $1.29 per gallon
Real GDP is $1,400 billion and nominal GDP is $1,800. The GDP price index equals A) 77.0. B) 222.2 C) 2.86. D) 100.0. E) 128.6.
E) 128.6.
Suppose the population of Timmy Town is 1,000 people and the working-age population is 800. If 200 of these people are unemployed, the unemployment rate in Timmy Town is A) 1/8 × 100. B) 2 percent. C) 1/5 × 100. D) 1/4 × 100. E) There is not enough information provided to calculate the unemployment rate.
E) There is not enough information provided to calculate the unemployment rate.
Structural unemployment usually lasts ________ period of time ________ unemployment A) the same; as cyclical B) a shorter; than seasonal C) a shorter; than frictional D) a shorter; than cyclical E) a longer; than frictional
E) a longer; than frictional
The unemployment that fluctuates over the business cycle is called A) natural unemployment. B) full unemployment. C) frictional unemployment. D) structural unemployment. E) cyclical unemployment.
E) cyclical unemployment.
Bill just graduated with his degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered A) structurally unemployed. B) employed because he is visiting firms. C) not in the labor force. D) cyclically unemployed. E) frictionally unemployed.
E) frictionally unemployed.
Which of the following increases frictional and/or structural unemployment? i. more young workers entering the labor force ii. more generous unemployment benefits iii. a structural slump with some industries dying A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
E) i, ii, and iii
Inflation ________ the cost of holding money and ________ the after-tax real interest rate A) increases; increases B) increases; does not change C) decreases; decreases D) decreases; increases E) increases; decreases
E) increases; decreases
The unemployment rate generally ________ during recessions and generally ________ during expansions. A) decreases; decreases B) increases; does not change C) increases; increases D) decreases; increases E) increases; decreases
E) increases; decreases
If Jose is 22-years old, is available to work but does not have a job and made no specific efforts to find a job for the previous month, Jose is classified in the Current Population Survey as A) not in the working-age population. B) employed. C) in the labor force but not in the working-age population. D) unemployed. E) not in the labor force.
E) not in the labor force.
Phillip is a 22-year old who has no job and is available for work, but has not actively looked for a job in the last month. The Current Population Survey identifies Phillip as ________, ________ the labor force, and ________ the working-age population. A) unemployed; part of; not part of B) not unemployed; part of; part of C) not unemployed; not part of; not part of D) unemployed; part of; part of E) not unemployed; not part of; part of
E) not unemployed; not part of; part of
To measure the change in the standard of living, it is best to use the growth rate A) from the Rule of 70. B) of real GDP. C) of the price level. D) of the population. E) of real GDP per person.
E) of real GDP per person.
After graduating from college, Yunis, age 22, started working for his parents' real estate business as an unpaid assistant. He works 25 hours a week helping manage rental units. In the Current Population Survey, Yunis is considered A) part of the labor force and unemployed. B) part of the labor force but not part of the working-age population. C) a discouraged worker. D) not part of the labor force. E) part of the labor force and employed.
E) part of the labor force and employed.
The percentage return on a loan expressed in terms of goods and services is the A) real wage rate. B) nominal wage rate. C) nominal interest rate. D) CPI interest rate. E) real interest rate.
E) real interest rate.
Which type of unemployment arises when changes in technology or international competition change the skills needed to perform jobs or change the location of jobs? A) cyclical B) skill-set C) frictional D) fluctuating E) structural
E) structural
When economists speak of the CPI bias, they are referring to A) errors in measuring the prices used in the CPI. B) the tendency for the CPI to understate inflation. C) the tendency for the CPI to understate price changes. D) the tendency for government officials to impose their values on the data. E) the tendency for the CPI to overstate price changes.
E) the tendency for the CPI to overstate price changes.
In 2020, real GDP in the United States was below potential GDP. This fact definitely means that A) the economy was in an expansion. B) cyclical unemployment had been decreasing. C) the unemployment rate was near 10 percent. D) frictional unemployment was negative. E) the unemployment rate was above the natural unemployment rate.
E) the unemployment rate was above the natural unemployment rate.
When the unemployment rate is ________ the natural unemployment rate, real GDP is ________. A) below; increasing B) below ; above potential GDP C) equal to; either equal to potential GDP or above potential GDP D) above; increasing E) above; above potential GDP
below; above potential GDP
