Prin. of Macroeconomics Ch. 7

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

A price index is computed as

(cost of market basket today / cost of market basket in base year)×100.

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 percent

Suppose that in​ 2020, a typical U.S. student attending a​ state-supported college bought 9 textbooks at a price of ​$90 per book and enrolled in 25 credit hours of coursework at a price of ​$350 per credit hour. In​ 2021, the typical student continued to purchase 9 textbooks and enroll in 25 credit​ hours, but the price of a textbook rose to ​$110 per​ book, and the tuition price increased to ​$390 per credit hour. The base year for computing a​ "student price​ index" using this information is 2020. The value of the student price index in 2020 is ___. The value of the student price index in 2021 is ___.

100; 112.3 Price Index = current price/base price

Suppose in 2019, the cost of a market basket of goods was $1,968. In 2021, the cost of the same market basket of goods was $2,073. Calculate the price index for 2021, using the price index formula, assume 2019 is the base year.

105.3 Price Index = current price/past price X 100

Jim's favorite breakfast is two​ eggs, 1/5 lb. of​ bacon, 1/7 lb. of white​ toast, 1/6 can​ (16 ounce​ can) of frozen concentrate orange​ juice, and 1 lb. of grapefruit. The following table contains 1991 and 2001 prices for these five items. Using 1991 as the base​ year, compute the price index for​ Jim's breakfast for 2001. Item 1991 Price 2001 Price One dozen eggs ​$1.08 ​$1.02 One pound bacon ​$2.15 ​$2.75 One pound bread ​$0.63 ​$0.98 One can orange juice ​$1.98 ​$1.86 One pound grapefruit ​$0.57 ​$0.55

107.5

Commodity Market Basket Quantity 2001 price 2002 price Corn 30lbs. $3.00 ​$3.60 Cherries 25lbs. $3.50 $3.75 Assuming that 2001 is the base​ year, calculate the price index for 2002. In​ 2002, the price index is ___. The inflation rate between 2001 and 2002 is ___.

113.66; 13.66 Inflation rate = (PI 2002 - PI 2001) / PI (2001) X 100

Suppose you are given the following information about a​ country: Frictional unemployment rate 1.05​% Seasonal unemployment rate 0​% Cyclical unemployment rate 3.96​% Structural unemployment rate 3.69​% Part 2 What is the total unemployment rate for this​ country?

8.7%

Which of the following is most likely to gain from unanticipated inflation?

A consumer with a five year auto loan

Internet job sites, like Monster.com, have led potential employees to find jobs via the internet almost instantly. This has caused

A fall in frictional unemployment

Which of these persons is officially unemployed?

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

The fundamental difference between those who are unemployed and those classified as not being in the labor force is that the latter are not ___.

Actively searching for work

Which of these is true about the history of U.S. inflation rates?

After remaining relatively flat for 60 years, the price level began to increase steadily after World War II.

The type of unemployment that rises as the economy goes into a recession is called

Cyclical

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

Frictional and structural

Consider an economy with only two groups of people: Wage earners and Goods sellers. If the price level increases by 20% while the nominal wages remains the same,

Income will be redistributed from wage earners to goods sellers

All of the following are key price indexes EXCEPT the A) CPI B) KLB C) GDP deflator D) PPI

KLB

Sean is a lobsterman, but lobster fishing is done only in the summer months, so he doesn't have a job in the winter. which type of unemployment is this ?

Seasonal unemployment

Which market basket specifically targets intermediate goods?

The basket used by the producer price index

Which of these groups is included in the labor force?

The unemployed

The following table contains information for the U.S. for 2001. U.S.​ Economy: 2001 Thousands of Persons Civilian labor force 143,772 Civilian employment 136,940 Civilian​ working-age population 215,227 Compute the unemployment rate and the labor force participation rate.

Unemployment rate= 4.75%, Labor force participation rate = 66.8%

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

Wealthy people who hold cash in their wall safes

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

The producer price index tracks the prices firms receive for goods and services at:

all stages of production

A sustained decrease in the average level of prices and wages in the economy is __________.

called deflation

At full employment, __________.

cyclical unemployment is zero

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

Typically during a recession

incomes fall and unemployment rises.

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

inflation rate

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

In calculating the CPI, the __________.

market basket does not include large equipment purchased by firms

The consumer price index __________.

measures the cost of an unchanging basket of goods and services

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

structural unemployment

The cycle of short-term ups and downs in the economy is called:

the business cycle

Business fluctuations refer to

the ups and downs in overall business activity measured by changes in national income, employment and the price level

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

In 2002, the price index was 162. In 2003, the price index was 182. The inflation rate between 2002 and 2003 is ___%.

12.35% Inflation rate = (182-162) / 162 X 100

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

According to the graph, at what point does the economy begin a period of recession?

After the peak