ECON CH6 TEST Q'S

In an economy with a population of 70 million persons, 35 million are employed as civilians and 3 million are not employed but are both actively looking for a job and available for work. The unemployment rate in this economy is approximately a.7.9%. b.8.6%. c.4.3%. d.10.1.

a. 7.9% <3 million ÷ 38 million = 7.9%.>

Ann works 20 hours per week in her family's tire shop, but she is not paid for her work. The Bureau of Labor Statistics (BLS) would count Ann as a.employed. b.unemployed. c.a discouraged worker. d.a member of the armed forces.

a. employed <According to the BLS, any person who works unpaid for at least 15 hours per week in a family-oriented enterprise is counted as employed. Since Ann is working more than 15 hours per week in her family's business, she would be counted as employed, even though she is not paid for her work.>

Persons who are retired or engaged in own-home housework are considered to be in which of the following categories? a.not in the labor force b.in the civilian labor force c.employed d.unemployed e.a and d

a. not in the labor force

Your family purchased a house in 1983 for $60,000 and sold it in 2014 for $280,000. During this period the CPI rose from 100 in 1983 to 250 in 2014. Given this information, the 1983 purchase price of the house in 2014 dollars would be ______________, and thus your family gained ____________________ on the sale of the house (in constant dollar terms). a.$150,000, $130,000 b.$60,000, $220,000 c.$220,000, $60,000 d.$90,000, $190,000 e.$90,000, $30,000

a.$150,000, $130,000 <Past salary in today's (current) $ = 60000 x (250/100) = 150,000

When microwave ovens were first introduced in 1972 they were priced at $400. The CPI in 1972 was 41.8. If the CPI in 2016 was 240.6 then the price of the original microwave in 2016 dollars would be _______________. If the average microwave sold for $250 in 2016, the percentage change between the inflation-adjusted price of a microwave in 1972 and the 2016 price was ___________. a.$2,302, -89% b.$1,902, -87% c.$69, 82% d.$69, 262%

a.$2,302, -89% <Price1972 x (CPI2016/CPI1972) = $400 x (240.6/41.8) = $2,302. The percentage change in the inflation-adjusted price of $2,302 and the 2016 price of $250 would be calculated: (250 - 2,302) ÷ 2,302 = -89 percent.>

Suppose that in 2010 the CPI was 140, and in 2011 the CPI was 154. If Mr. Miller's salary was $36,000 in 2010, what salary in 2011 would have caused him to exactly "keep up with inflation"? a.$39,600 b.$40,400 c.$38,000 d.$44,000

a.$39,600 <salary in today's current dollars formula- 36000 x (154/140) = 39,600

Herman's income was $60,000 in year 1 and $68,600 in year 2. The CPI was 220.3 in year 1 and 225.5 in year 2. What was the approximate percentage change in Herman's real income between the two years? a.11.7% b.14.3% c.-12.2% d.8.4%

a.11.7% <Real income is nominal income adjusted for price changes. Herman's real income in year 1 was (($60,000/220.3) x 100) = $27,236 and his real income was (($68,600/225.5) x 100) = $30,421. The percentage change in his real income between year 1 and year 2 was ((30,421 - 27,236)/27,236) x 100 = 11.7%.>

Suppose that in an economy the frictional unemployment rate is 2.2 percent, the natural unemployment rate is 5.5 percent, and the cyclical unemployment rate is -1 percent. The structural unemployment rate is _________ percent and the actual unemployment rate (in this economy) is ___________ percent. a.3.3, 4.5 b.7.7, 6.7 c.1.2, 6.5 d.3.3, 6.5

a.3.3, 4.5 <uN = uF + uS uN(5.5%) = uF(2.2%) --> uS = 3.3% uC = u - uN -1% = u - uN(5.5%) --> 6.5%>

Suppose that an economy has a civilian noninstitutional population of 50,000 persons. There are 30,000 persons in the civilian labor force, of which 25,000 are employed. How many persons in this economy are unemployed? a.5,000 b.20,000 c.25,000 d.35,000

a.5,000

Suppose that an economy has a civilian noninstitutional population of 50,000 persons. There are 30,000 persons in the civilian labor force, of which 25,000 are employed. What is the labor force participation rate (LFPR) for this economy? a.60 percent b.16.67 percent c.83.33 percent d.50 percent

a.60 percent (30,000/50,000= 60%)

All persons in the civilian labor force fall into one of two categories: a.employed and unemployed. b.reentrants and job leavers. c.new entrants and reentrants. d.discouraged workers and displaced workers.

a.employed and unemployed.

The base year is the year a.that serves a reference point or benchmark. b.the unemployment rate was highest. c.in which prices are lowest. d.in which prices are highest.

a.that serves a reference point or benchmark.

The base year is the year a.that serves a reference point or benchmark. b.the unemployment rate was highest. c.in which prices are lowest. d.in which prices are highest.

a.that serves a reference point or benchmark.

The price of a first class ticket on the Titanic was $3,650 in 1912 and the CPI that year was 9.0. If the CPI in 2014 was 250, what would the approximate price of a first class ticket on the Titanic be equivalent to in 2014 dollars? a.$131 b.$101,389 c.$97,739 d.$30,254

b. $101,389 <salary in today's current US dollars formula>

If real income is $40,000 and the CPI is 120, then what does nominal income equal? a.$52,000 b.$48,000 c.$42,000 d.$100,000

b. $48,000 <Real income = (Nominal income/CPI) x 100. If real income is $40,000, then solving for nominal income we get ($40,000 x 120) ÷ 100 = $48,000.>

Exhibit 6-1 YR 1 --> CPI 107.6 YR 2 --> CPI 106.6 YR 3 --> CPI 113.6 YR 4 --> CPI 118.3 Refer to Exhibit 6-1. Prices changed by _________ percent between year 1 and year 2. a.1.0 b.-0.9 c.-2.1 d.-1.6

b. -0.9 <[(CPIlater year - CPIearlier year) ÷ CPIearlier year] x 100. Based upon the values given in this table, the change in prices between year 1 and year 2 is: [(106.6 - 107.6) ÷ 107.6] x 100 = -0.9 percent.>

Suppose the market basket consists of 12X, 13Y, and 20Z. Current-year prices are $1.10 for each unit of X, $2.33 for each unit of Y, and $3.10 for each unit of Z. Base-year prices are $1.00 for each unit of X, Y, and Z. What is the approximate CPI in the current year? a.134 b.234 c.334 d.221 e.217

b. 234 <u gotta actually calculate the cpi, rip>

Suppose that an economy has a civilian noninstitutional population of 25 million people. Suppose that, of those 25 million who are in the civilian noninstututional population, 10.5 million are employed. Based on this information, the employment rate in this economy is _____________ percent. a.87.5 b.42 c.12.5 d.48

b. 42 <0,500,000- ÷ 25,000,000 = 42 percent>

Smith's nominal income was $120,000 in year 1 and $124,000 in year 2. The CPI in year 1 was 100. The CPI in year 2 was 105. Over the time period, Smith's real income _______________. a.increased b.decreased c.stayed constant d.There is not enough information to answer the question.

b. decreased <do both nominals/cpi x 100>

Suppose that the consumer price index in 2011 was 195 and Jose's salary was $56,000. Suppose further that in 2021 the consumer price index will be 350. What salary will Jose have to earn in 2021 in order to equal his 2011 real income? a.$10,051 b.$100,513 c.$8,205 d.$76,360

b.$100,513 <Real income is income stated in constant dollar terms. The equation used to compute real income is: (nominal income ÷ CPI) x 100. Jose's real income in 2011 is: ($56,000 ÷ 195) x 100 = $28,718. In order to maintain this level of income in 2021 when the CPI is projected to be 350 his income will need to be: ($28,718 x 350) ÷ 100 = $100,513.>

***Suppose that the frictional unemployment rate is 2 percent, the natural unemployment rate is 3.5 percent, and the actual unemployment rate is 7.5 percent. The structural unemployment rate is ____________ and the cyclical unemployment rate is __________. a.5.5 percent, 2 percent b.1.5 percent, 4 percent c.4 percent, 9.5 percent d.1.5 percent, 5.5 percent

b.1.5 percent, 4 percent

Suppose that the frictional unemployment rate is 2 percent, the natural unemployment rate is 3.5 percent, and the actual unemployment rate is 7.5 percent. The structural unemployment rate is ____________ and the cyclical unemployment rate is __________. a.5.5 percent, 2 percent b.1.5 percent, 4 percent c.4 percent, 9.5 percent d.1.5 percent, 5.5 percent

b.1.5 percent, 4 percent

In an economy with a total population of 200 million persons, 130 million hold jobs and 20 million are not working but are looking for jobs. The unemployment rate is approximately a.11.2 percent b.13.3 percent c.9.6 percent d.8.3 percent e.none of the above

b.13.3 percent <130 WITH jobs + 20 WITHOUT jobs =150 total 20/150= 13.3%>

The CPI was 213 at the beginning of year 1 and 234 at the end of year 1. By how much did prices rise during the year? a.10.12 percent b.9.86 percent c.11.34 percent d.8.10 percent e.none of the above

b.9.86 percent <whatever's the closest one ig>

Which of the following statements is false? a.The actual unemployment rate is equal to the number of persons unemployed divided by the civilian labor force. b.The natural unemployment rate is equal to the structural unemployment rate minus the frictional unemployment rate. c.The CPI in the base year is 100. d.A job leaver is a person who was employed in the civilian labor force and quit his or her job and is now looking for a new job. e.Unemployed persons equal job losers plus job leavers plus re-entrants plus new entrants.

b.The natural unemployment rate is equal to the structural unemployment rate minus the frictional unemployment rate.

Robert lost his job in industry XYZ, but his skills can easily be transferred to another industry (which is currently hiring). Jeff lost his job in industry ABC (which is currently not hiring), but his skills cannot be transferred to any other industry. Robert is __________ unemployed and Jeff is __________ unemployed. a.frictionally, cyclically b.frictionally, structurally c.cyclically, structurally d.structurally, frictionally e.cyclically, frictionally

b.frictionally, structurally

When the economy is at its natural unemployment rate, the cyclical unemployment rate is ______________ and the economy is said to be operating at _____________________. a.positive, full employment b.zero, full employment c.negative, its natural cyclical unemployment rate d.zero, its natural cyclical unemployment rate e.zero, a level of unemployment that is unsustainable

b.zero, full employment

Suppose the civilian noninstitutional population equals 12 million persons and there are 8 million persons employed and 2 million persons unemployed. The number of persons in the civilian labor force is ______ million persons and the number of persons not in the labor force is __________ million persons. a.10, 4 b.4, 12 c.10, 2 d.2, 10 e.none of the above

c. 10, 2 <look @ the chart again bruh>

The CPI in the base year is: a.200 b.1 c.100 d.There is not enough information to answer the question.

c. 100

Unemployment that arises as a result of the time it takes for unemployed persons to locate a job utilizing their transferable skills is called ________________ unemployment. a.structural b.cyclical c.frictional d.normal e.annual

c. frictional

Of the various categories of unemployment, which category do most unemployed persons fall into? a.job leaver b.re-entrant c.job loser d.new entrant

c. job loser

To an economist, the term full employment means that the (actual) unemployment rate is equal to a.zero. b.the cyclical unemployment rate. c.the natural unemployment rate. d.The structural unemployment rate.

c. the natural unemployment rate

Suppose a person earned $10,000 in year 1, when the CPI was 213. It is now year 10 and the CPI is 243. The $10,000 in year 1 is equivalent to approximately what dollar amount in year 10? a.$15,322 b.$12,567 c.$11,408 d.$10,567 e.There is not enough information to answer the question.

c.$11,408 <formula of- salary in today's current US dollars>

Suppose that an economy has a civilian labor force of 12 million people. Suppose that, of those 12 million who are in the civilian labor force, 10.5 million are employed. Based on this information, the unemployment rate in this economy is _____________ percent. a.42 b.1.25 c.12.5 d.10.5

c.12.5 <(12,000,000-10,500,000) ÷ 12,000,000 = 12.5 %>

Suppose the market basket consists of 500X, 220Y, and 370Z. Current-year prices are $2.50 for each unit of X, $5.75 for each unit of Y, and $9.10 for each unit of Z. Base-year prices are $2.00 for each unit of X, Y, and Z. Approximately what is the value of the CPI in the current year? a.538 b.247 c.269 d.405

c.269 <you actually gotta calculate the whole cpi, rip>

The frictional unemployment rate is 3 percent, the structural unemployment rate is 3.3 percent, and the (actual) unemployment rate is 6 percent. It follows that the natural unemployment rate is ___________ percent and the cyclical unemployment rate is ____________ percent. a.-0.3 percent, 6.3 percent b.9 percent, -0.3 percent c.6.3 percent, -0.3 percent d.0.3 percent, 6.3 percent e.none of the above

c.6.3 percent, -0.3 percent

Suppose that 1996 is the base year for the Consumer Price Index (CPI) and in 2016 the CPI was 154. What does this "154" mean? a.What cost $100 in 1996 would on average cost 154 times as much in 2016. b.What cost $100 in 1996 would on average cost $154 more in 2016. c.What cost $100 in 1996 would on average cost $154 in 2016. d.What cost $100 in 1996 would on average cost 15.4 times as much in 2016.

c.What cost $100 in 1996 would on average cost $154 in 2016. <. The value of the CPI in the base year is always equal to 100. A CPI of 154 in 2016 indicates that what cost $100 in the base year would on average cost $154 in 2016. This also indicates that inflation during this twenty year period was 54%.>

Suppose that your nominal income increased by 10% last year while the consumer price index (CPI) increased by 2%. From this information you would be correct in concluding that the purchasing power of your income ______________ this year by ___________. a.decreased, 8 percent b.increased, 12 percent c.increased, 8 percent d.decreased, 12 percent

c.increased, 8 percent

The civilian noninstitutional population consists of everyone in the population who is a.not in the labor force. b.employed and unemployed. c.not in the labor force plus those persons in the civilian labor force. d.under the age of 16 years old. e.serving in the armed forces.

c.not in the labor force plus those persons in the civilian labor force. <refer to the map bro>

Betty lost her job when a computer began doing the tasks that she used to do for her employer. Her skills and training are not transferable to any job market that is currently hiring workers. Under which category of unemployment would Betty be categorized? a.frictional unemployment b.cyclical unemployment c.structural unemployment d.unnatural unemployment

c.structural unemployment

The cyclical unemployment rate is equal to the a.unemployment rate minus the structural unemployment rate. b.structural unemployment rate plus the frictional unemployment rate. c.unemployment rate minus the natural unemployment rate. d.natural unemployment rate plus the frictional unemployment rate.

c.unemployment rate minus the natural unemployment rate. <cyclical unemployment rate is equal to the unemployment rate minus the natural unemployment rate>

If the CPI was 245 in 2013 and 200 in 2000, by what percentage did prices rise during the period 2000-2013? a.45 percent b.81.6 percent c.36.8 percent d.22.5 percent e.10.25 percent

d. 22.5 percent

Exhibit 6-1 YR 1 --> CPI 107.6 YR 2 --> CPI 106.6 YR 3 --> CPI 113.6 YR 4 --> CPI 118.3 Refer to Exhibit 6-1. Prices changed by _________ percent between year 3 and year 4. a.3.8 b.9.9 c.6.7 d.4.1

d. 4.1 <(CPIlater year - CPIearlier year) ÷ CPIearlier year] x 100. Based upon the values given in this table, the change in prices between year 3 and year 4 is: [(118.3 - 113.6) ÷ 113.6] x 100 = 4.1 percent.>

Suppose there is an economy with a civilian noninstitutaional population of 25,250,000 people. Suppose that of the 25,250,000 people, 11,750,000 are considered to be in the labor force. Given this information, the labor force participation rate in this economy is approximately _____________ percent. a.36.2 b.55.6 c.77.9 d.46.5

d. 46.5 <11,750,000 ÷ 25,250,000)*100 = 46.5%.>

Suppose that 1982 is the base year for the Consumer Price Index (CPI) and in 2014 the CPI is 345. What does this "345" mean? a.What cost $100 in 1982 will on average cost 345 times as much in 2014. b.What cost $100 in 1982 will on average cost $345 more in 2014. c.What cost $100 in 1982 will on average cost 100/345 (or 0.29) times as much in 2014. d.What cost $100 in 1982 will on average cost $245 more in 2014.

d. What cost $100 in 1982 will on average cost $245 more in 2014.

Marissa was temporarily absent from her regular job because of bad weather during the period of the Bureau of Labor Statistics (BLS) survey reference week. According to the BLS, Marissa is a.not part of the labor force. b.unemployed. c.a discouraged worker. d.part of the labor force.

d. part of the labor force.

Unemployment due to changes in the types of skills employers require is called __________ unemployment. a.frictional b.cyclical c.natural d.structural

d. structural

The employment rate equals a.the number of employed persons divided by the civilian labor force. b.the number of unemployed persons divided by the civilian labor force. c.the civilian labor force divided the number of unemployed persons. d.the number of employed persons divided by the civilian noninstitutional population. e.none of the above Feedback: Correct.

d. the umber of employed persons divided by the civilian noninstitutional population

If persons not in the labor force total 4 million and persons in the civilian labor force total 60 million, then how many persons are unemployed? a.57 million b.64 million c.20 million d.There is not enough information to answer the question.

d.There is not enough information to answer the question. <The civilian labor force is equal to the number of persons employed plus the number of persons unemployed. We would need the number of people employed to figure out the number of people unemployed, given that the civilian labor force is 60 million.>

Suppose that 1982 is the base year for the Consumer Price Index (CPI) and in 2014 the CPI is 345. What does this "345" mean? a.What cost $100 in 1982 will on average cost 345 times as much in 2014. b.What cost $100 in 1982 will on average cost $345 more in 2014. c.What cost $100 in 1982 will on average cost 100/345 (or 0.29) times as much in 2014. d.What cost $100 in 1982 will on average cost $245 more in 2014.

d.What cost $100 in 1982 will on average cost $245 more in 2014

Margaret is currently categorized by the Bureau of Labor Statistics as a discouraged worker. Margaret would therefore _________________ counted as unemployed because discouraged workers are________________. a.be, actively looking for work b.not be, employed c.be, not working d.not be, not actively looking for work

d.not be, not actively looking for work

To compute the CPI in the current year, you would: a.divide the total dollar expenditure on the market basket in the base year by the total dollar expenditure on the market basket in the current year and then multiply by 100. b.divide the total dollar expenditure on the market basket in the current year by the total dollar expenditure on the market basket in the base year and then multiply by 100. c.multiply the total dollar expenditure on the market basket in the current year by the total dollar expenditure on the market basket in the base year. d.divide the total dollar expenditure on the market basket in the current year by 100.

divide the total dollar expenditure on the market basket in the current year by the total dollar expenditure on the market basket in the base year and then multiply by 100.

If nominal income is $50,000 and the CPI is 120, it follows that real income is equal to a.$42,000 b.$41,000 c.$50,000 d.$60,000 e.none of the above

e. none of the above <50,000/120 = 416.6666667 x 100 = 41666.66667>