Macro Exam 2: Chapter 5

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higher than

A firm that pays an efficiency wage is paying a wage that is __________ the current market wage

overstates

Many economists believe the CPI __________ inflation because it fails to consider quality improvements in products.

-0.3 percent

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?

a discouraged worker

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 __________.

full employment rate of unemployment

The "normal or natural" underlying level of unemployment in the economy is the __

potential GDP and actual GDP

The output gap is the difference between __________.

inflation rate

The percentage rate of change in the price level is the definition of ________________

Those who are employed and those who are unemployed

Which of these are included in the labor force?

three times as high as 1979

If the consumer price index was 73 in 1979 and 225 in 2011, then prices in 2011 were on average

Frictional and structural

When the economy is at full employment, which types of unemployment remain?

$4,348

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?

150

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?

higher than it would be without a minimum wage

If the minimum wage is set above the market-determined equilibrium wage, the natural unemployment rate will be __________

market basket does not include large equipment purchased by firms

In calculating the CPI _____________________

deflation

A sustained decrease in the average level of prices in the economy is called ___________

inflation

A sustained increase in the overall level of prices is known as:

"cyclical" unemployment is zero

At Full unemployment _________________

Increasing the minimum wage

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?

inflation may not be a major problem

IF the inflation rate is low, steady, and anticipated __________________

it costs less to society than if unanticipated

If inflation is anticipated ___________________

Housing, transportation, and food

Of the eight categories in the CPI market basket, which three categories make up more than 70% of the basket

labor force participation rate

The ratio of the labor force to the adult population is known as the:

frictional unemployment

The short-term unemployment that arises from workers, in the process of changing jobs, is called

lower, less

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.

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:

measures the average of prices paid by urban consumers for a fixed basket of consumer goods and services

The consumer price index ______________________

fixed basket of goods and services purchased by the typical consumer

The consumer price index is an index computed using prices of a _____________

recent events. Hyperinflations have occurred in recent times as well as the past

The history of hyperinflations includes __________

unemployment rate an economy will experience when real GDP equals potential GDP

The natural rate of unemployment is the __________.

hurts borrowers

Unanticipated deflation __________.

structural unemployment

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and job requirements is called __________.

Unanticipated inflation creates arbitrary redistributions of income

What is the impact of unanticipated inflation?

Demographic changes

Which of these factors cause the natural rate of unemployment to change?

The unemployed

Which of these groups is included in the labor force?

A non-working individual who has looked for a job in the past week

Which of these persons is officially unemployed?

Wealthy people who hold cash in their wall safes

Which one of these groups is most hurt by unanticipated inflation?


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