Ch. 9 Unemployment and inflation

Which of the following formulas does the Bureau of Labor Statistics use to calculate the labor force participation​ rate? A. (Labor force/Working age population) x 100 B. (Working age population/Labor force) x 100 C. (Working age population/Labor force - working age population) x 100 D. (Labor force/Working age population - labor force) x 100

A. (Labor force/Working age population) x 100

Which of the following statements about prices and inflation is not​ correct? A. Prices generally increase at the same rate across most periods of time. B. The inflation rate shows the percentage change in prices across periods of time. C. Inflation represents a general rise in prices over periods of time. D. The price level measures the average prices of goods and services across the economy.

A. Prices generally increase at the same rate across most periods of time.

if apple prices rise rapidly during a particular month while orange prices fall, consumers will reduce their apple purchases and increase their orange purchases. This is an example of A. Substitution bias B. Increase in quality bias C. New product bias D. Outlet bias

A. Substitution bias

Currently, the Bureau of Labor Statistics does not include homemakers in its employment and labor force totals. What would happen to the unemployment rate and the labor force participation rate if homemakers were included in these​ numbers? A. The unemployment rate would decrease and the labor force participation rate would increase. B. Both the unemployment rate and the labor force participation rate would decrease. C. The unemployment rate would increase and the labor force participation rate would decrease. D. Both the unemployment rate and the labor force participation rate would increase.

A. The unemployment rate would decrease and the labor force participation rate would increase.

This short-term unemployment arises from the process of matching workers with jobs A. frictional unemployment B. structural unemployment C. cyclical unemployment D. seasonal unemployment

A. frictional unemployment

The unemployment rate that includes discouraged workers and people working part time would prefer full time jobs A. is higher than the official unemployment rate and the difference between the two grows larger in recessions B. is higher than the official unemployment rate and the difference between the two grows smaller in recessions C. is lower than the official unemployment rate and the difference between the two grows smaller in recessions D. is lower than the official unemployment rate and the difference between the two grows larger in recessions

A. is higher than the official unemployment rate and the difference between the two grows larger in recessions

The unemployment rate in the United States is usually _______ than the unemployment rate in most high income countries, partly because the United States has _______ requirements for the unemployment rate to receive government payments A. lower, more strict B. higher, more strict C. higher, less strict D. lower, less strict

A. lower, more strict

For a given positive inflation rate A. the nominal interest rate is always higher than the real interest rate, and the real interest rate may be positive or negative B. the real interest rate is always higher than the real interest rate, and the real interest rate may be positive or negative C. the nominal interest rate can be lower than the real interest rate, and the real interest rate may be positive or negative D. the nominal interest rate can be lower than the real interest rate, and the nominal interest rate cannot be negative

A. the nominal interest rate is always higher than the real interest rate, and the real interest rate may be positive or negative

What is the formula for CPI A. Expenditures in base year/Expenditures in current year B. Expenditures in current year/Expenditures in base year

B. Expenditures in current year/Expenditures in base year

smartphones have better processors and more memory. this is an example of A. Substitution bias B. Increase in quality bias C. New product bias D. Outlet bias

B. Increase in quality bias

Since​ 1948, which of the following best describes the trend in the labor force participation rate? A. It is increasing for men and decreasing for women. B. It is decreasing for men and increasing for women. C. It is decreasing for both men and women. D. It is increasing for both men and women.

B. It is decreasing for men and increasing for women.

Inflation can affect the distribution of income because A. when inflation is fully​ anticipated, mortgage lenders face very high default risk. B. people with incomes rising faster than the rate of inflation enjoy an increasing purchasing​ power, while people with incomes rising more slowly than the rate of inflation are hurt by a decreasing purchasing power. C. people with incomes rising slower than the rate of inflation enjoy an increasing purchasing​ power, while people with incomes rising more quickly than the rate of inflation are hurt by a decreasing purchasing power. D. people with fixed​ incomes, such as retired persons who may be receiving a pension of a fixed number of dollars each​ year, are not affected by the inflation​ rate, but people with varying incomes are.

B. people with incomes rising faster than the rate of inflation enjoy an increasing purchasing​ power, while people with incomes rising more slowly than the rate of inflation are hurt by a decreasing purchasing power.

This arises from a persistent mismatch between the job skills or attributes of workers and the requirements of jobs and can last for longer periods because workers need time to learn new skills A. frictional unemployment B. structural unemployment C. cyclical unemployment D. seasonal unemployment

B. structural unemployment

The extent of job creation and job destruction is A. an ideal feature of our​ economy, because very few jobs are ever destroyed yet many new jobs are created. B. what we would expect in a vibrant market system. C. the main reason why the U.S. unemployment rate is persistently high. D. a serious shortcoming of our economic system.

B. what we would expect in a vibrant market system

Which of the following formulas does the Bureau of Labor Statistics use to calculate the employment---population ratio? A. (Working age population/Employed - Working age population) x 100 B. (Employed/Working age population - Employed) x 100 C. (Employed/Working age population) x 100 D. (Working age population/Employed) x 100

C. (Employed/Working age population) x 100

The president of a manufacturing firm that makes precision tools in​ California's Silicon Valley was quoted in an article in the Wall Street Journal as saying that​ "production workers...are​ scarce," and that​ "many applicants lack even the most rudimentary​ skills." He added​ that: "I would say in this​ valley, people looking for jobs are unemployed for a​ reason." Are these applicants likely to be​ cyclically, frictionally, or structurally​ unemployed, and explain A. Cyclically​ unemployed, because business cycle recessions can lead to scarcity in certain occupations. B. Frictionally​ unemployed, because of the additional time that these applicants spend in job search. C. Structurally​ unemployed, because these applicants lack the skills required for the available jobs. D. None of the​ above: These applicants would be considered discouraged workers because they​ can't find jobs t

C. Structurally​ unemployed, because these applicants lack the skills required for the available jobs.

What is the difference between the consumer price index and producer price​ index? A. The consumer price index is an average of the prices of the goods and services purchased by any urban​ family, whereas the producer price index is an average of the prices received by the retail sector. B. The producer price index is an average of the prices of the goods and services purchased by the typical urban family of​ four, whereas the consumer price index is an average of the prices received by producers of goods and services at all stages of the production process. C. The consumer price index is an average of the prices of the goods and services purchased by the typical urban family of​ four, whereas the producer price index is an average of the prices received by producers of goods and services at all stages of the production process.

C. The consumer price index is an average of the prices of the goods and services purchased by the typical urban family of​ four, whereas the producer price index is an average of the prices received by producers of goods and services at all stages of the production process.

Suppose that the inflation rate turns out to be much higher than most people expected. In that​ case, A. both borrower and lender will gain from the situation. B. both borrower and lender will lose in this situation. C. a borrower will gain from the situation while a lender will lose. D. a lender will gain from the situation while a borrower will lose.

C. a borrower will gain from the situation while a lender will lose.

Workers who lose their jobs because of a recession are experiencing and unemployment caused by a business cycle recession A. frictional unemployment B. structural unemployment C. cyclical unemployment D. seasonal unemployment

C. cyclical unemployment

Unemployment rates are A. lower for college graduates than for people without a high school​ degree, and vary little among ethnic groups. B. lower for people without a high school degree than for college​ graduates, and vary greatly among ethnic groups. C. lower for college graduates than for people without a high school​ degree, and vary greatly among ethnic groups. D. lower for people without a high school degree than for college​ graduates, and vary little among ethnic groups

C. lower for college graduates than for people without a high school​ degree, and vary greatly among ethnic groups.

The unemployment rate A. falls during​ recessions, rises during​ expansions, and is always above zero. B. rises during​ recessions, falls during​ expansions, and can fall below zero. C. rises during​ recessions, falls during​ expansions, and is always above zero. D. falls during​ recessions, rises during​ expansions, and can fall below zero.

C. rises during​ recessions, falls during​ expansions, and is always above zero

Many economists rely more on the number of employed persons from the Bureau of Labor​ Statistics' establishment survey than from its household survey because A. the establishment survey provides a higher number of employed persons than does the household survey. B. the establishment survey provides information on the number of​ self-employed persons, while the household survey does not. C. the establishment survey uses actual company payrolls rather than by unverified​ answers, as is the case with the household survey. D. the much larger sample size for the establishment survey provides greater accuracy in estimating the number of employed persons than does the household survey.

C. the establishment survey uses actual company payrolls rather than by unverified​ answers, as is the case with the household survey.

The difference between the nominal interest rate and the real interest rate is A. the real interest rate is the stated interest rate whereas the nominal interest rate is the real interest rate minus the inflation rate. B. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate divided by the inflation rate. C. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate. D. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate plus the inflation rate.

C. the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.

Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment​ rate? A. (Number in labor force/Number of unemployed) x 100 B. (Number of unemployed/Number of employed) x 100 C. (Number of unemployed/Working - age population) x 100 D. (Number of unemployed/Labor force) x 100

D. (Number of unemployed/Labor force) x 100

Which of the following demographic groups has the highest unemployment​ rate? A. Hispanics B. Asians C. Whites D. African Americans

D. African Americans

The normal underlying level of an economy is A. the sum of structural unemployment and frictional unemployment B. The full employment rate of unemployment C. The natural rate of unemployment D. All of the above

D. All of the above

When the economy is at full​ employment, A. the unemployment rate is greater than zero. B. the natural rate of unemployment prevails. C. all remaining unemployment is either frictional or structural. D. All of the above.

D. All of the above.

The price index which is used to measure changes in the cost of living is the A. Retail Price Index. B. Producer Price Index​ (PPI). C. GDP Deflator. D. Consumer Price Index​ (CPI)

D. Consumer Price Index​ (CPI)

the BLS continued to collect price statistics from traditional full-price retail stores, the CPI did not reflect the prices some consumers actually paid. this is an example of A. Substitution bias B. Increase in quality bias C. New product bias D. Outlet bias

D. Outlet bias

How would unemployment rate be affected if BLS counted discouraged workers and people who work part time but would prefer to work full time A. The unemployment rate would decrease B. The annual unemployment rate would have been close to 50% in the last decade C. The unemployment rate would remain the same because those people are counted as unemployed D. The unemployment rate would increase

D. The unemployment rate would increase

Suppose that you are available to go to work but have not looked for a job for at least the last 4 weeks because you believe that there aren't any jobs available. You would be counted as A. part of the labor force B. unemployed C. underemployed D. discouraged worker

D. discouraged worker

When a firm pays a wage that is higher than the market wage in order to increase worker productivity, the wage is called A. ideal wage B. a compensating differential C. minimum wage D. efficiency wage

D. efficiency wage

The difference between a nominal variable and a real variable is that A. nominal variables are economic variables that are adjusted for​ inflation, whereas real variables are valued in​ today's dollars. B. real variables are calculated in​ current-year prices and the nominal variables are measured in dollars of the base year to adjust for the effects of inflation. C. real variables are divided by the price index and multiplied by 100 to obtain nominal variables. D. nominal variables are calculated in​ current-year prices and the real variables are measured in dollars of the base year for the price index to correct the effects of inflation.

D. nominal variables are calculated in​ current-year prices and the real variables are measured in dollars of the base year for the price index to correct the effects of inflation.

An article in the Wall Street Journal asks the​ question, "How can inflation be low when everything is so​ expensive?" The article also notes that​ "the CPI shows that prices are the highest​ they've ever​ been." Is there a contradiction between a low inflation rate as measured by the CPI and the observations that prices are​ "the highest​ they've ever​ been" and everything is​ "so expensive"? ​A. No, because the CPI and inflation measure only changes in the price​ level, not the absolute level of prices. ​B. Yes, because inflation is supposed to measure changes in the cost of living. ​C. No, because​ inflation, even if it is​ low, indicates that goods and services are expensive. ​D. Yes, because goods and services are more​ expensive, the higher is the CPI.

​A. No, because the CPI and inflation measure only changes in the price​ level, not the absolute level of prices.