macro test section 3

the unemployment which exists in any economy due to people being in the process of moving from one job to another.

frictional unemployment

C

A worker classified as frictionally unemployed is one who is: A. let go during a recession. B. discouraged and drops out of the labor force. C. voluntarily looking for work, somewhere a job exists that demands his or her skills. D. works part-time but would prefer to work full-time. E. let go because her employer has decided to move the factory to another country.

D

An example of frictional unemployment is a(n): A. autoworker who is temporarily laid off from an automobile company due to a decline in sales. B. geologist who is permanently laid off from an oil company due to a new technological advance. C. worker at a fast-food restaurant who quits work and attends college full time. D. real estate agent who leaves a job in Texas and searches for a similar, higher paying job in California. E. autoworker who not working because he is currently on strike from his job at the production factory.

E

Anna recently moved to Boston in order for her husband Joe to begin a new job as an economics professor at Harvard. Anna is an experienced surgeon who is currently interviewing with several different hospitals in Boston. Anna is currently: A. seasonally unemployed. B. structurally unemployed. C. cyclically unemployed. D. counted as employed since she is likely to receive a job offer soon. E. frictionally unemployed.

B

Consider an economy that only produces two goods: DVDs and DVD players. If 10 DVDs are sold at $20 each and 5 DVD players are sold at $100 each, then nominal GDP is: A. $100. B. $700. C. $1,100. D. $900. E. $7,000

D

If a country has a working-age population of 200 million, 120 million people with jobs, and 30 million people unemployed and seeking employment, then its unemployment rate is: A. 5%. B. 7.5%. C. 15%. D. 20%. E. 30%

D

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is: A. 335 million. B. 200 million. C. 155 million. D. 150 million. E. 135 million.

C

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is: A. 4%. B. 7.5%. C. 10%. D. 67.5%. E. 30%

C

If the CPI is 120 in Year 1 and 150 in Year 2, then the rate of inflation from Year 1 to Year 2 is _____. A. 10% B. 20% C. 25% D. 50% E. 100%

A

If the cost of a market basket is $150 in Year 1 and $200 in Year 2, the price index for Year 1 with a Year 2 base is: A. 75. B. 100. C. 133. D. 150. E. 95.

E

If the cost of a market basket is $200 in Year 1 and $230 in Year 2, the price index for Year 2 with a Year 1 base is: A. 100. B. 90. C. 130. D. 200. E. 115.

E

Suppose that nominal GDP is $1000 in 2006 and nominal GDP is $1500 in 2007. If the overall price level ____ between 2006 and 2007, we could say that real GDP _____. A. increased by more than 50%; stayed constant. B. increased by less than 50%; decreased. C. increased by more than 50%; increased. D. increased by 50%; increased. E. increased by 50%; stayed constant.

A

The circular-flow diagram illustrates how households ________ goods and services and ________ factors of production. A. buy; sell B. buy; buy C. own; buy D. own; sell E. sell; buy

A

The inflation or deflation rate is: A. the change in a price index divided by the initial value of the index. B. the change in a price index divided by the new index number. C. the difference between the initial price index number and the new price index number. D. computed by dividing the old price index number by the new price index number. E. the rate of change in real GDP from year to year.

A

The unemployment rate is defined as: A. the percent of the labor force that is unemployed. B. the number of people unemployed. C. the ratio of the labor force to the number of people unemployed. D. the average length of time someone is unemployed. E. the percent of the population that is unemployed.

A

Unit-of-account costs of inflation are the: A. costs associated with money being a less reliable unit of measurement. B. costs of transactions associated with avoiding the inflation tax. C. costs associated with businesses changing prices. D. revenue the government gets from printing money. E. costs associated with searching for lower prices.

D

When a recent college graduate with a major in Economics attends a job fair, it is an example of : A. structural unemployment. B. seasonal unemployment. C. cyclical unemployment. D. frictional unemployment. E. operational underemployment.

E

When hyperinflation forces Emily to visit her bank very frequently to keep her cash holdings to a minimum, economists say that Emily is experiencing a: A. search cost. B. menu cost. C. unit-of-account cost. D. Fisher effect. E. shoe-leather cost.

A

When hyperinflation forces Pedro to change the price stickers on the books in his bookstore very frequently to keep up with the aggregate price level, economists say that Pedro is experiencing a: A. shoe-leather cost. B. Fisher effect. C. unit-of-account cost. D. debt deflation. E. menu cost.

C

Which of the following is false about the circular-flow diagram? A. Households are the primary demanders of goods and services. B. Firms are the primary suppliers of goods and services. C. Money flows from households to firms as households offer factors of production for sale. D. Money flows in the opposite direction as goods and services and factors of production. E. Household savings is considered an injection of money into the circular flow.

B

borrowers will be hurt and lenders will benefit. B. lenders will be hurt and borrowers will benefit. C. both borrowers and lenders will be hurt. D. both borrowers and lenders will benefit. E. lenders will be hurt and those on fixed incomes will benefit.

more people seeking jobs in a labor market than there are jobs available

structural unemployment