Macroeconomics Chapter 6

A jobless recovery means that

gross domestic product (GDP) increases while there is no increase in employment.

Please match each scenario to the type of unemployment. Beau Tye decides to quit his job as a waiter in Pensacola, Florida, in order to pursue his dream of becoming an actor in Hollywood. Acting jobs exist, but he has not yet found one. Which term describes Beau's type of unemployment?

frictional unemployment

Inflation is a(n):

general rise in prices

After a financial crisis hits the country of Barbaria, 44 million people become unemployed. If 6565 million individuals are lucky enough to keep their jobs, what is the unemployment rate? Please specify your answer to two decimal places.

5.80

Cyclical unemployment occurs when:

demand is insufficient to keep businesses fully operating

Which of the statements is the best description of inflation? a) Real GDP is rising. b) The price of all goods and services have increased proportionately. c) An increase in the overall price level has occurred. d) The prices of only consumer goods are increasing. e) The price of all goods and services in the economy are increasing.

c) an increase in the overall price level has occurred

Which of the choices is most directly related to cyclical unemployment? a) an increase in the number of new college graduates looking for work b) the age distribution of the country c) recessions d) an increased use of the Internet for job searches

c) recessions

Which of these causes inflation? a) Unemployment b) Slow growth in the quantity of money c) The government printing too much money d) Short‑run spending increases

c) the government printing too much money

Which is true if a nation is currently experiencing full employment? a) Every person who wants a job is able to find a job. b) 5% of the population is without a job. c) The rate of cyclical unemployment is 0% . d) Only structural unemployment exists.

c) the rate of cyclical unemployment is 0%

The consumer price index (CPI) can be used to measure inflation. There are potential problems with this process though that can result in inflation being overstated or understated. Place each statement according to whether it would cause inflation to be overstated, understated, or would give an accurate representation of inflation. b. Sam loves bagels, but bagels are becoming more expensive. Sam replaces bagels with muffins in the breakfast routine because muffins remain relatively cheap.

causes inflation to be overstated

The consumer price index (CPI) can be used to measure inflation. There are potential problems with this process though that can result in inflation being overstated or understated. Place each statement according to whether it would cause inflation to be overstated, understated, or would give an accurate representation of inflation. c. Mary and Bob replace their old minivan with a new one. The new van costs 15% more than the old van, but the new model has many updated features like a camera to assist with backing up, GPS, and better fuel economy.

causes inflation to be overstated

True or False: Inflation increases purchasing power because wages typically rise with the prices of goods.

false

The consumer price index (CPI) can be used to measure inflation. There are potential problems with this process though that can result in inflation being overstated or understated. Place each statement according to whether it would cause inflation to be overstated, understated, or would give an accurate representation of inflation. a. Pat, a confirmed chocoholic, notices that a favorite candy bar shrank in size, but its price stayed the same.

causes inflation to be understated

A frequently used measure of inflation is the:

consumer price index

Which type of unemployment do policy makers seek to control?

cyclical

Please match each scenario to the type of unemployment. Brock Lee used to work at Munch n' Munchies Restaurant serving fun family fare. Business at Munch n' Munchies has been slow because the major employer in town has laid off a large number of people. There simply was not enough work to keep Brock Lee on the payroll at Munch n' Munchies. Which term describes Brock's type of unemployment?

cyclical unemployment

Anita Job is the new Treasury Secretary, and she is trying to interpret the inflation measures for two consecutive years. In year one, the aggregate price level increased by 11%11% and, in year two, the aggregate price level increased by 3%3% . Which term describes the change in the price level from year one to year two? a) deflation b) conflation c) hyperinflation d) disinflation

d) disinflation

If an economy experiences deflation, then a) the prices of consumer goods are decreasing while the prices of raw materials are increasing. b) the prices of all goods in the economy are decreasing. c) the aggregate price level is rising, but not as quickly as it did in the previous year. d) the aggregate price level is declining. e) the overall price level is increasing

d) the aggregate price level is declining

Individuals who want to work, but have given up searching for a job because of limited prospects, are known as

discouraged workers

The consumer price index (CPI) can be used to measure inflation. There are potential problems with this process though that can result in inflation being overstated or understated. Place each statement according to whether it would cause inflation to be overstated, understated, or would give an accurate representation of inflation. d. Chris is an avid runner, loyal to one particular brand of running shoe. She buys a new pair of the same shoe every few months. The price of the shoes has doubled in the last 15 years.

does not cause inflation to be overstated or understated

Select the term that best describes the employment status of people in the scenarios. a) Anna Conda is currently on a hiking vacation in the Amazon jungle from her part‑time job as a herpetologist at the San Diego Zoo.

employed

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation. c. Third National, a bank that loaned many people money for home purchases

loser

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation. e. Herb, who keeps his savings in an old coffee can

loser

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation. b. Karen, a retired school teacher who relies upon her fixed pension to pay for her expenses

loser

This group, consisting of individuals who would like to work but have not looked for work during the past four weeks, is included among

marginally attached workers

An example of frictional unemployment is:

new graduates looking for a job but not yet finding work

Select the term that best describes the employment status of people in the scenarios. b) Bill Loney does not have a job nor does he intend to look for one.

out of labor force

Select the term that best describes the employment status of people in the scenarios. c) Brighton Early is a student. He has no job outside of the home but spends five hours each week mowing the lawn and maintaining his yard. He is happy with his situation and is not looking for more work

out of the labor force

Inflation is considered a tax on savings. This is because the:

purchasing power of savings declines as inflation rises

Please match each scenario to the type of unemployment. Anna Prentice has worked for years fixing broken typewriters. She is laid off from her job as fewer and fewer people use typewriters. She is looking for work but cannot find a job in her area of specialty. Which term describes Anna's type of unemployment?

structural unemployment

Who reports the official U.S. unemployment rate? How frequently is the survey that determines unemployment released?

the U.S. Bureau of Labor Statistics monthly

What is the Misery Index?

the unemployment rate plus the inflation rate

True or False: Inflation and unemployment are sometimes called the twin evils of the macroeconomy.

true

True or False: Structural unemployment would result from a furniture manufacturer closing a U.S. plant to make its products in China.

true

To be considered unemployed, one must not be working and must have actively looked for work in the past 4 weeks. This definition _____ the unemployment rate

understates

Select the term that best describes the employment status of people in the scenarios. d) Bonnie Ann Clyde has not had any work at all for six months despite the fact that she has been filling out at least eight job applications each day.

unemployed

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation. a. The United States federal government, which had almost $15 trillion in debt in 2011

winner

Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation. d. Joy, who borrowed $40,000 to pay for her college education

winner