Macro Exam 2: Chapter 5
higher than
A firm that pays an efficiency wage is paying a wage that is __________ the current market wage
overstates
Many economists believe the CPI __________ inflation because it fails to consider quality improvements in products.
-0.3 percent
Suppose the CPI in 2008 was 215.3 and the CPI in 2009 was 214.6, what was the inflation rate between 2008 and 2009?
a discouraged worker
Suppose you are available for work but have not looked for a job for at least the last four weeks because you believe that no jobs are available. You would then be counted as __________.
full employment rate of unemployment
The "normal or natural" underlying level of unemployment in the economy is the __
potential GDP and actual GDP
The output gap is the difference between __________.
inflation rate
The percentage rate of change in the price level is the definition of ________________
Those who are employed and those who are unemployed
Which of these are included in the labor force?
three times as high as 1979
If the consumer price index was 73 in 1979 and 225 in 2011, then prices in 2011 were on average
Frictional and structural
When the economy is at full employment, which types of unemployment remain?
$4,348
If the CPI was 207 in 2007 and 225 in 2011, what pay raise would someone who earned $50,000 in income in 2007 have to receive in order to keep her purchasing power constant in 2011?
150
If the cost of a market basket of goods in 1992, the base year, is $200, and the cost of the same market basket is $300 in 2008, what is the CPI in 2008?
higher than it would be without a minimum wage
If the minimum wage is set above the market-determined equilibrium wage, the natural unemployment rate will be __________
market basket does not include large equipment purchased by firms
In calculating the CPI _____________________
deflation
A sustained decrease in the average level of prices in the economy is called ___________
inflation
A sustained increase in the overall level of prices is known as:
"cyclical" unemployment is zero
At Full unemployment _________________
Increasing the minimum wage
Government policies can help to reduce the levels of frictional and structural unemployment, but they can also help to increase them. Which of these policies can cause an increase in the levels of frictional and structural unemployment?
inflation may not be a major problem
IF the inflation rate is low, steady, and anticipated __________________
it costs less to society than if unanticipated
If inflation is anticipated ___________________
Housing, transportation, and food
Of the eight categories in the CPI market basket, which three categories make up more than 70% of the basket
labor force participation rate
The ratio of the labor force to the adult population is known as the:
frictional unemployment
The short-term unemployment that arises from workers, in the process of changing jobs, is called
lower, less
The unemployment rate in the United States is usually __________ than the unemployment rates in most European countries, partly because the United States has __________ generous benefits for the unemployed.
frictional unemployment
The unemployment that occurs with the normal workings of the economy, such as workers taking time to search for suitable jobs and firms taking time to search for qualified employees, is called:
measures the average of prices paid by urban consumers for a fixed basket of consumer goods and services
The consumer price index ______________________
fixed basket of goods and services purchased by the typical consumer
The consumer price index is an index computed using prices of a _____________
recent events. Hyperinflations have occurred in recent times as well as the past
The history of hyperinflations includes __________
unemployment rate an economy will experience when real GDP equals potential GDP
The natural rate of unemployment is the __________.
hurts borrowers
Unanticipated deflation __________.
structural unemployment
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and job requirements is called __________.
Unanticipated inflation creates arbitrary redistributions of income
What is the impact of unanticipated inflation?
Demographic changes
Which of these factors cause the natural rate of unemployment to change?
The unemployed
Which of these groups is included in the labor force?
A non-working individual who has looked for a job in the past week
Which of these persons is officially unemployed?
Wealthy people who hold cash in their wall safes
Which one of these groups is most hurt by unanticipated inflation?