econ hw 5
Which of these persons is officially unemployed?
A non-working individual who has looked for a job in the past week
The price level is ______.
A. the average level of prices, and the value of money
An unemployed auto assembly line worker during a sales slump.
Cyclical
Which of these factors can cause the natural rate of unemployment to change?
Demographic changes
Of the eight categories in the CPI market basket, which three categories make up more than 70% of the basket?
Housing, transportation, and food
A parent who quit to care for his or her child at home. This person has removed themself from the labor force
Not unemployed
A person who leaves their job to attend graduate school full time.
Not unemployed
A person whose job has been automated out of existence.
Structural
A record player repairman who has not learned the latest laser disk player repair technology.
Structural
Which of these are included in the labor force?
Those who are employed and those who are unemployed
What is the impact of unanticipated inflation?
Unanticipated inflation creates arbitrary redistributions of income.
At full employment, __________.
cyclical unemployment is zero
Unanticipated deflation __________.
hurts borrowers
Suppose the CPI in 2008 was 215.3 and the CPI in 2009 was 214.6, what was the inflation rate between 2008 and 2009?
-0.3%
If the cost of a market basket of goods in 1992, the base year, is $200, and the cost of the same market basket is $300 in 2008, what is the CPI in 2008?
150
Suppose you are available for work but have not looked for a job for at least the last four weeks because you believe that no jobs are available. You would then be counted as __________.
A discouraged worker
In August 2014, the U.S. unemployment rate 6.1%. In August 2015, the unemployment rate was 5.1%. Assuming that the labor force remained constant between August 2014 and August 2015, then unemployment _______.
C. decreased
If the inflation rate is low, steady, and anticipated, __________.
inflation may not be a major problem
The percentage rate of change in the price level is the definition of the:
inflation rate
Many economists believe the CPI __________ inflation because it fails to consider quality improvements in products.
overstates
The output gap is the difference between __________.
potential GDP and actual GDP
In the United States, the CPI basket consists of items that ______ . ______ has the greatest weight in the CPI basket.
B. an average urban household buys; Housing
If the CPI was 207 in 2007 and 225 in 2011, what pay raise would someone who earned $50,000 in income in 2007 have to receive in order to keep her purchasing power constant in 2011?
$4,348
Choose the statement about the Consumer Price Index that is incorrect. A. The CPI is calculated monthly B. CPI is defined to equal 1.00 for a period called the reference base period C. The CPI is a measure of the average of prices paid by urban consumers for a fixed basket of consumer goods & services D. CPI is measured by Bureau of Labor Statistics CPI = ________.
B. CPI is defined to equal 1.00 for a period called the reference base period A. (Cost of CPI basket at current-period prices) ÷ (Cost of CPI basket at base-period prices) × 100
Choose the correct statement. A. Core inflation rate is always greater than CPI inflation rate B. Inflation rate is annual percentage change in price level C. CPI inflation rate is always greater than the core inflation rate D. By definition, inflation rate is always positive CPI in 2001 was 177.1. CPI in 2002 was 179.9 Inflation rate in 2002 was ________ percent.
B. Inflation rate is annual percentage change in price level 1.6
Choose the correct statements. 1. Students who leave school and look for a job are frictionally unemployed 2. Frictional unemployment increases during a recession and decreases during an expansion 3. The unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs is frictional unemployment 4. A worker who is laid off b/c of the recent recession is cyclically unemployed
B. Statements 1 & 4 are correct
Choose the statement that is incorrect. A. The bias in the CPI increases gov outlays B. The bias in the CPI decreases gov outlays C. The bias in the CPI distorts private contracts D. A wage contract linked to the CPI gives the workers more real income than the firm intended
B. The bias in the CPI decreases gov outlays
Unemployment arises for all of the following reasons except ______. A. firms close, people lose their jobs and search for new jobs B. people leave the labor force C. students enter the labor force to search for a job D. people leave their jobs and spend time searching for another job that better suits their abilities Some unemployment is unavoidable because ______.
B. people leave the labor force B. people are making transitions through the stages of life and businesses are making transitions
A computer programmer who quits his job to look for a job with better benefits
Frictional
A recent business school graduate looking for her first job.
Frictional
A top salesman for a computer company who quit because he did not like his boss.
Frictional
When the economy is at full employment, which types of unemployment remain?
Frictional and structural
A person who has purchased real estate with a bank loan.
Helped
A recent college graduate with many loans to pay back.
Helped
Governments that have sold bonds.
Helped
People who have purchased precious metals.
Helped
People who have purchased stock.
Helped
Banks that have made long-term fixed rate loans.
Hurt
If inflation is anticipated to be 5 percent per year and actual inflation for that year turns out to be 7 percent, identify whether each of the following groups would be helped or hurt by this, or if the effort is indeterminate People who are living on fixed incomes.
Hurt
People who have purchased bonds.
Hurt
Savers with open passbook accounts.
Hurt
Government policies can help to reduce the levels of frictional and structural unemployment, but they can also help to increase them. Which of these policies can cause an increase in the levels of frictional and structural unemployment?
Increasing the minimum wage
Wage earners who are members of a strong union.
Indeterminate
A sustained decrease in the average level of prices in the economy is __________.
called deflation
The consumer price index is an index computed using prices of a __________.
fixed basket of goods and services purchased by the typical consumer
The short-term unemployment that arises from workers, in the process of changing jobs, is called __________.
frictional unemployment
The unemployment that occurs with the normal workings of the economy, such as workers taking time to search for suitable jobs and firms taking time to search for qualified employees, is called:
frictional unemployment
The "normal or natural" underlying level of unemployment in the economy is the __________.
full employment rate of unemployment
A firm that pays an efficiency wage is paying a wage that is __________ the current market wage.
higher than
If the minimum wage is set above the market-determined equilibrium wage, the natural unemployment rate will be __________.
higher than it would be without a minimum wage
A sustained increase in the overall level of prices is known as:
inflation
If inflation is anticipated, __________.
it costs less to society than if unanticipated
The ratio of the labor force to the adult population is known as the:
labor force participation rate
The unemployment rate in the United States is usually __________ than the unemployment rates in most European countries, partly because the United States has __________ generous benefits for the unemployed.
lower; less
In calculating the CPI, the __________.
market basket does not include large equipment purchased by firms
The consumer price index __________.
measures the average of prices paid by urban consumers for a fixed basket of consumer goods and services
The history of hyperinflations includes __________.
recent events. Hyperinflations have occurred in recent times as well as the past
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and job requirements is called __________.
structural unemployment
Which of these groups is included in the labor force?
the unemployed
If the consumer price index was 73 in 1979 and 225 in 2011, then prices in 2011 were on average:
three times as high as 1979
The natural rate of unemployment is the __________.
unemployment rate an economy will experience when real GDP equals potential GDP
A welder who finds that robots have replaced most of the welding jobs on assembly lines.
Structural
A snow plow driver during the summer
Seasonal
A vendor who sells beer at major league baseball games during the winter months.
Seasonal
A high school dropout with few skills who has been looking for a job unsuccessfully for weeks.
Structural
Which one of these groups is most hurt by unanticipated inflation?
Wealthy people who hold cash in their wall safes
