Chapter 7 Exam 2
d
A discouraged worker is one who: a. dislikes his current job but is afraid to quit. b. quits his job because the possibility of advancement was very low. c. is underqualified for his current job. d. drops out of the labor force because he cannot find a job. e. is overqualified for his current job.
disinflation
A reduction in the rate of inflation
deflation
A sustained decrease in the price level
cost-push inflation
A sustained rise in the price level caused by a leftward shift of the aggregate supply curve
demand-pull inflation
A sustained rise in the price level caused by a rightward shift of the aggregate demand curve
hyperinflation
A very high rate of inflation
unemployment benefits
Cash transfers to those who lose their jobs and actively seek employment
e
Consider an economy made up of 100 people sixteen years of age and older, 60 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The number of people in the labor force is _____. a. 60 b. 85 c. 30 d. 90 e. 70
COLA
Cost-of-living adjustment; an increase in wage or transfer payments tied to increases in the price level
a
During periods when the inflation rate fluctuates widely, _____. a. uncertainty about changes in relative prices causes a decrease in economic efficiency b. the nominal interest rate and the real interest rate are identical c. all money prices rise at the same rate, causing relative prices to increase d. all money prices increase at the same rate, leaving relative prices constant e. suppliers link the selling prices of their goods to the overall inflation rate
full employment
Employment level when there is no cyclical unemployment
b
Frictional unemployment refers to unemployment that is a result of: a. being out of work 27 weeks or longer. b. job search. c. seasonal decreases in demand for labor. d. a mismatch of skills. e. a recession in the economy.
d
Full employment is considered a major economic goal because: a. economic growth can only occur when there is full employment. b. inflation will be lower when full employment is achieved. c. specialization is not possible without full employment. d. the opportunity cost of unemployment is lost production. e. profit maximization of firms can only occur when there is full employment.
e
In an economy, U = the number of adults who are unemployed, E = the number of adults who are employed, and NLF = the number of adults not in the labor force. The unemployment rate of the economy is equal to: a.U/(U + E − NLF). b. U/E. c. U/(E + NLF). d. U/(E + NLF). e. U/(U + E).
interest rate
Interest per year as a percentage of the amount loaned
c
Suppose an economy had an inflation rate of 7 percent last year. This has decreased to 6 percent this year. This means that the economy is: a. experiencing deflation. b. suffering from hyperinflation. c. experiencing disinflation. d. experiencing a wage-price spiral. e. experiencing a decrease in real wage.
a
Suppose the nominal wages of workers in an economy increase by 7 percent while the price level rises by 5 percent. The real wages: a. would increase by about 2 percent. b. would increase by about 50 percent. c. would decrease by about 25 percent. d. would decrease by about 5 percent. e. would increase by about 10 percent.
interest
The dollar amount paid by borrowers to lenders
e
The impact of _____ unemployment is removed from official monthly unemployment figures. a. structural b. involuntary c. frictional d. cyclical e. seasonal
real interest rate
The interest rate expressed in dollars of constant purchasing power as a percentage of the amount loaned; the nominal interest rate minus the inflation rate
nominal interest rate
The interest rate expressed in dollars of current value (that is, not adjusted for inflation) as a percentage of the amount loaned; the interest rate specified on the loan agreement
labor force participation rate
The labor force as a percentage of the adult population
e
The labor force participation rate for women in the United States has _____. a. fluctuated substantially both upward and downward since the 1950s b. increased only very slightly since the 1950s c. decreased significantly since the 1950s d. stayed the same over the last 30 years e. increased significantly since the 1950s
unemployment rate
The number unemployed as a percentage of the labor force
labor force
Those 16 years of age and older who are either working or looking for work
long-term unemployed
Those looking for work for 27 weeks or longer
discouraged workers
Those who drop out of the labor force in frustration because they can't find work
true
True or False: A sustained decrease in an economy's price level is known as deflation.
true
True or False: Inflation is defined as a sustained increase in an economy's price level.
d
Unemployment arising from a mismatch of skills is called: a. frictional unemployment. b. seasonal unemployment. c. underemployment. d. structural unemployment. e. cyclical unemployment.
structural unemployment
Unemployment because (1) the skills demanded by employers do not match those of the unemployed, or (2) the unemployed do not live where the jobs are
seasonal unemployment
Unemployment caused by seasonal changes in the demand for certain kinds of labor
cyclical unemployment
Unemployment that fluctuates with the business cycle, increasing during recessions and decreasing during expansions
frictional unemployment
Unemployment that occurs because job seekers and employers need time to find each other
a
Which type of unemployment is likely to increase the most during an economy's recession? a. Cyclical unemployment b. Structural unemployment c. Seasonal unemployment d. Frictional unemployment e. Underemployment
underemployment
Workers are overqualified for their jobs or work fewer hours than they would prefer
