chapter 9 homework

which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment rate?

(Number of unemployed/ number of labor force )x100

If a 3- month Treasure bill pays 5.5 % and the change in the consumer price index (CPI) is 4.7% what is the real interest rate ( the true return to lending)?

0.8 %

your father earned 34,000 per year in 1984. to the nearest dollar, what is that equivalent to in 2008 if the CPI in 2008 is 215 and the cPI in 1984 is 104?

70,288

According to Costco' CEO Jim sinegal: "paying good wages and keeping your people woking for you is good business... Imagine that you have 120,000 loyal ambassadors out there who are constantly saying good things Costco. It has to be a significant advantage for you." What is Costco's CEO referring to ?

Efficiency wages

Suppose JohnQ. Worker is currently unemployed. Each day, John spends the entire day searching available job openings for an appropriate position given his set of skills, abilities, and interests. If someone asks John what he does for work, he tells them that he is currently " in-between jobs". Which of the following best classifies John .

Frictionally unemployed

which of the following can give an early warning of the future increases in the price level ?

Producer price index

indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling"

True. If wages are increasing slower than the average price of goods and services , purchasing power falls.

When the economy is at full employment

all remaining unemployment is either frictional or structural the unemployment rate is greater than zero the natural rate of unemployment prevails

how does the U.S economy create and destroy millions of jobs each year?

in the market system, new firms are constantly entering and exiting various industries some businesses are expanding, while others are contracting.

The BLS uses the establishment survey to collect information on employed in the economy. indicate one drawback of the establishment survey compared to the current population survey AND indicate one advantage

it does not include information about self-employd people

Which of the following makes changes in the CPI overstate the true inflation rate?

new product bias increase in quality bias substitution bias

Even perfectly anticipated inflation imposes costs. why?

paper money loses its purchasing power by the rate of inflation some wages will fail to keep up with anticipated inflation menu costs

during the 1990s, Japan experienced periods of deflation and low nominal interest rates of almost zero percent? ( hint: were real interest rates in Japan also how low during this period?)

real interest rate= nominal interest rate + inflation rate ; thus the real interest rate will be higher than the nominal interest rate.

suppose that Sally J society recently lost her job as an underwater welder. In looking for a new job, she discovers that the only available jobs are for economists and the there are no openings for underwater welders because the trade is now obsolete. If sally society decides to return to school to earn an economics degree, what is the best classification of her unemployment status?

structurally unemployed

why is unemployment rate, as measured by the Bureau of Labor Statistics, an imperfect measure of the extent of joblessness in the economy

underemployed people are considered employed discouraged workers are not considered unemployed it fails to account for illegal activities it does not account for inaccurate responses to the Population Survey

Suppose the fixed interest rate on a loan is 5.75% and the rate of inflation is expected to be 4.25%. The real interest rate is 1.5% Suppose now that instead of 4.25% the inflation rate unexpectedly reaches 5.5%. Who gains and who loses from this unanticipated inflation?

lender lose from a lower real interest rate borrowers gain from a lower real interest rate.

How do unemployment insurance payments in the United States and social insurance programs in other countries increase the unemployment rate?

they decrease the opportunity cost of job search