Macro economics Chapter 13 Exam

Which of the following would cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?

Discouraged workers

Which of the following statements is true about the U.S. economy?

Each year, many new jobs are created, and many existing jobs are destroyed.

The labor force equals the number of people

Employed plus unemployed

Suppose your grandfather earned a salary of $12,000 in 1964. If the CPI is 31 in 1964 and 219 in 2013, then the value of your grandfather's salary in 2013 dollars is approximately

$84,775

Suppose the working - age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 do not have employment, but are actively looking for employment. The official unemployment rate as calculated by the U.S. Bureau of Labor would equal

(20/100)X100

Consider the following values of the consumer price index for 1996, 1997, and 1998:

2.5 percent

Imagine that you borrow $1,000 for one year and at the end of the year you repay that $1,000 plus $100 of interest. If the inflation rate was 7%, what was the real interest rate you paid?

3 percent

If the nominal rate of interest is 6.5% and the inflation rate 3.0%, what is the real rate of interest?

3.5%

Assume the average annual CPI values for 2012 and 2013 were 207.3 and 215.3, respectively. What was the percent increase in the CPI between these two years?

3.86

If the number employed is 190 million, the working-age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is

5%

Which of the following policies would reduce structural unemployment?

A job retraining program

Which of the following describes situations in which the person is hurt by inflation?

A person paid a fixed income during an inflationary period.

Minimum wage laws cause unemployment because the legal minimum wage is set

Above the market wage, causing labor demand to be less than labor supply.

Which of the following would be the best measure of the cost of living?

Consumer price index

The advice to "keep searching, there are plenty of jobs around here for which you are qualified", would be most appropriate for which of the following types of unemployment?

Frictional unemployment

Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would

Increase the measured labor force participating rate

An increase in unemployment insurance payments would, in effect, _____ the amount of time spent searching for a job, which would increase _____ unemployment.

Increase; frictional

The real interest equals the nominal interest rate _____ the inflation rate

Minus

The state interest rate on a loan is the

Nominal interest rate

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

Not in the labor force

The bureau of Labor Statistics would categorize a retiree who is not working as _____.

Out of the labor force

If your nominal wage rises faster than the price level, we can say your real wage has _____ and the purchasing power of your income has _____.

Risen; risen

Sarah is a full-time student who is not looking for work. What kind of unemployment is Sarah experiencing

Sarah is not experiencing unemployment of any kind, because she is not currently part of the labor force.

The advice to "retrain" would be most appropriate for which of the following types of unemployment?

Structural unemployment

In 2013, Caterpillar laid off employees who produced mining machinery at its South Milwaukee plant. The laid - off employees who were not able to find jobs at another factory due to a permanent decline in demand in the mining industry would be considered

Structurally unemployed

When the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called

Substitution bias

The unemployment rate is

The percentage of the labor force that is unemployed

The average price of goods and services in the economy is generally also known as

The price level

You earned $30,000 in 2000, and your salary rose to $80,000 in 2013. If the CPI rose from 82 to 202 between 2000 and 2013, which of the following is true?

The purchasing power of your salary increased between 2000 and 2013.

The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect

The stock prices are more likey to fall

According to the text, economics consider full employment to occur when

The unemployment rate consists of only frictional and structural unemployment

The equilibrium wage in a local labor market is $6 per hour. If a minimum wage of $8 per hour is imposed, which of the following will occur?

There will be an increase in unemployment.

Why might firms pay wages that are above the equilibrium wage in a market?

To increase the productivity of their workers

The percent increase in the CPI from one year to the next is a measure of the

inflation rate

If cyclical unemployment is eliminated on the economy, then

the economy is considered to be at full employment