Chapter 9 Pearson Quiz

Which of the following do not suffer the costs of​ inflation?

Persons whose incomes rise more rapidly than inflation.

Counting part−time workers who are looking for full−time work as employed overstates the degree of joblessness in the economy (T/F).

False.

If inflation is​ unanticipated, no redistribution of income can occur (T/F).

False.

The natural rate of unemployment consists of frictional unemployment plus cyclical unemployment (T/F).

False.

Between 2015 and​ 2016, the CPI of a small nation rose from 182 to 185. If household incomes rose by​ 3% during that period of​ time, which of the following is​ true?

The purchasing power of household income rose between 2015 and 2016.

You lend​ $5,000 to a friend for one year at a nominal interest rate of​ 10%. Inflation during that year is​ 5%. As a​ result, you will receive​ __________ at the end of the​ year, but that money has a purchasing power of​ __________.

​$5,500; $5,250

Suppose that the data in the table to the right reflect price levels in the economy. What is the inflation rate between 2015 and​ 2016? ​

​2.9%

Minimum wage laws cause unemployment because the legal minimum wage is set

above the market​ wage, causing labor demand to be less than labor supply.

Upon your graduation from​ college, you find that the economy is in recession and the unemployment rate is relatively high.​ Nonetheless, you continue along your career path looking for a new job because

high unemployment rates do not usually last for very long.

Suppose that homemakers are included as employed in the labor force​ statistics, rather than being counted as out of the labor force. This would

increase the measured labor force participation rate.

The percent increase in the CPI from one year to the next is a measure of the

inflation rate.

An efficiency wage

is higher than the market wage and tends to increase productivity.

Using a broader measure of the unemployment rate where discouraged workers and​ part-time workers who wished to work full time were counted as​ unemployed, the BLS estimates the unemployment rate in August 2015 would have​ __________ compared to the measured unemployment rate.

more than doubled

Jack just received a promotion at work and now works 50 hours per week instead of 35. As a​ result,

neither the unemployment rate nor the labor force participation rate changed.

The base period for CPI calculations is generally 1982−84. In​ 2005, 50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s. This potential for bias in the CPI is referred to as​ __________ bias and results in​ __________.

new​ product; the CPI overestimating the true change in the cost of living

The​ "new product​ bias" in the consumer price index refers to the idea that

new​ products' prices often decrease after their initial​ introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers.

Emma is a road construction worker. During the winter​ months, Emma finds it more difficult to get work. The unemployment Emma experiences in the winter is

seasonal.

Which of the following describes situations in which the person is hurt by​ inflation?

A person paid a fixed income during an inflationary period.

The producer price index tracks the prices firms receive for goods and services at all stages of production (T/F).

True.

If you have trouble finding a job because of a slowdown in the overall​ economy, we would say that you are

cyclically unemployed.