ECON Quiz 2

Which of the following is the correct formula for calculating the unemployment​ rate?

#of unemployed/labor force x 100

When the economy was expanding in early​ 2007, fewer than​ _______ percent of the unemployed had been jobless for more than 6 months.

20

If the CPI was 207 in 2009 and 225 in​ 2013, what wage would someone who earned a​ $50,000 income in 2009 have to earn in 2013 in order to keep her purchasing power​ constant?

54,348

The​ "normal" underlying level of unemployment in the economy is

All of the above.

When a firm pays a wage that is higher than the market wage in order to increase worker​ productivity, the wage is called?

Efficiency Wage

If income rises more slowly than the rate of​ inflation, purchasing power will rise.

False

Most economists agree that the​ above-market wage paid in unionized industries significantly increases the unemployment rate in the United States.

False

To avoid the cost of the purchasing power of paper money decreasing with​ inflation, workers and firms will try to hold as much paper money as possible.

False

How would it affect the unemployment rate if the Bureau of Labor Statistics counted as unemployed both​ (1) discouraged workers and​ (2) people who work​ part-time but would prefer to work​ full-time?

The unemployment rate would increase.

The producer price index​ (PPI) tracks the prices firms receive for goods and services at all stages of production.

True

Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there​ aren't any jobs available.

a discouraged worker.

Workers who lose their jobs because of a recession are experiencing

cyclical unemployment.

When the economy is at full​ employment, which types of unemployment​ remain?

frictional and structural

The​ short-term unemployment that arises from the process of matching workers with jobs is called

frictional unemployment.

In April​ 2017, which of the following demographic groups had a higher rate of unemployment than the unemployment rate for the total​ population?

high school dropouts

Increases in the minimum wage will

increase unemployment among teenagers.

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called

structural unemployment.

The real interest rate equals

the nominal interest rate minus the inflation rate.

The BLS collects price statistics from traditional​ full-price retail​ stores, which do not reflect the prices some consumers pay by shopping at discount stores or on the Internet.

the outlet bias

Computation of the CPI assumes that households buy the same market basket of products each month. For this​ reason, which one of the following factors is not relevant in calculating the​ CPI?

the quantities of the products households purchase in the current year

Changes in the CPI overstate the true inflation rate due to four​ "biases." If apple prices rise rapidly during the month while orange prices​ fall, consumers will reduce their apple purchases and increase their orange purchases.

the substitution bias

In​ 2017, the Bureau of Labor Statistics​ (BLS) analyzed and revised its employment data for the period December 2007-December 2010. According to that​ revision, the recession of 2007-2009.

was more severe than economists and policymakers realized at the time.

If the inflation rate is 6 percent and the nominal interest rate is 4​ percent, then the real interest rate is

​-2 percent, which is the nominal interest rate minus the inflation rate.

Of the eight categories in the CPI market​ basket, which three categories make up more than 75 percent of the​ basket?

​housing, transportation, and food

The unemployment rate in the United States is usually​ ________ than the unemployment rates in most other​ high-income countries, partly because the United States has​ _________ requirements for the unemployed to receive government payments.

​lower; more stringent

Two important trends in the labor force participation rates of adults aged 20 and over in the United States since 1948 are the​ _________ labor force participation rate of adult women and the​ __________ labor force participation rate of adult men.

​rising; falling