Question 1

Suppose the working age population in Tiny Town is 100 people. If 25 of these people are NOT in the labor force, the_________ equals________ .

Accepted Answer

A)  unemployment rate; 25/75 × 100 
B)  labor force; 25/100 × 100 
C)  unemployment rate; 25/100 × 100 
D)  labor force; 75 
A)  unemployment rate; 25/75 × 100 
B)  labor force; 25/100 × 100 
C)  unemployment rate; 25/100 × 100 
D)  labor force; 75

Question 2

When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing

Accepted Answer

A)  cyclical unemployment. 
B)  structural unemployment. 
C)  frictional unemployment. 
D)  frictional and cyclical unemployment. 
A)  cyclical unemployment. 
B)  structural unemployment. 
C)  frictional unemployment. 
D)  frictional and cyclical unemployment.

Question 3

$$\begin{array} { | l | l | c | } 
\hline  { \text { Year } } & \text { Price index } & \begin{array} { l } 
\text { Inflation rate } \
\text { (percent) }
\end{array} \
\hline 1 & 100 & \
\hline 2 & 117 & \text { A } \
\hline 3 & 125 & \text { B } \
\hline 4 & 120 & \text { C } \
\hline 5 & \mathrm { D } & 8.3 \
\hline 6 & 150 & \text { E } \
\hline
\end{array}$$
-In the table above, what inflation rate belongs in space E?

Accepted Answer

A)  15.4 percent 
B)  17.0 percent 
C)  6.8 percent 
D)  8.3 percent 
A)  15.4 percent 
B)  17.0 percent 
C)  6.8 percent 
D)  8.3 percent

Question 4

The commodity substitution bias is that consumers substitute high-quality goods for low-quality goods.

Accepted Answer

A) True 
 B)False

Question 5

An observer of the economy notices that over the past 12 months the unemployment rate has fallen from 7.0 percent to 6.5 percent. During the same time, the rate of growth in real GDP has been positive. From this information we might conclude that

Accepted Answer

A)  a trough in the business cycle will soon be reached. 
B)  an expansion is occurring in the economy. 
C)  inflation is not occurring. 
D)  a recession is in progress. 
A)  a trough in the business cycle will soon be reached. 
B)  an expansion is occurring in the economy. 
C)  inflation is not occurring. 
D)  a recession is in progress.

Question 6

If the CPI was 132.5 at the end of last year and 137.5 at the end of this year, the inflation rate over these two years was

Accepted Answer

A)  3.8 percent. 
B)  5.0 percent. 
C)  3.6 percent. 
D)  None of the above answers is correct. 
A)  3.8 percent. 
B)  5.0 percent. 
C)  3.6 percent. 
D)  None of the above answers is correct.

Question 7

The natural unemployment rate

Accepted Answer

A)  is equal to cyclical unemployment. 
B)  fluctuates with the rate of inflation. 
C)  is the unemployment rate that occurs when the economy is at full employment. 
D)  is a constant figure of about 4 percent. 
A)  is equal to cyclical unemployment. 
B)  fluctuates with the rate of inflation. 
C)  is the unemployment rate that occurs when the economy is at full employment. 
D)  is a constant figure of about 4 percent.

Question 8

Full employment exists when

Accepted Answer

A)  the economy is at the natural unemployment rate. 
B)  there is only frictional and structural unemployment. 
C)  there is no cyclical unemployment. 
D)  All of the above answers are correct. 
A)  the economy is at the natural unemployment rate. 
B)  there is only frictional and structural unemployment. 
C)  there is no cyclical unemployment. 
D)  All of the above answers are correct.

Question 9

The employment-to-population ratio equals

Accepted Answer

A)  labor force)/working-age population) × 100. 
B)  number of people employed)/labor force) × 100. 
C)  number of people employed)/working-age population) × 100. 
D)  number of people with full-time jobs)/labor force) × 100. 
A)  labor force)/working-age population) × 100. 
B)  number of people employed)/labor force) × 100. 
C)  number of people employed)/working-age population) × 100. 
D)  number of people with full-time jobs)/labor force) × 100.

Question 10

The unemployment rate measures the percentage of the working-age population who canʹt find a job.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following pieces of information do you need to calculate the labor force participation rate?
I. the number of employed persons
II. the number of unemployed persons
III. the population
IV. the working age population

Accepted Answer

A)  I and III 
B)  I and II 
C)  I, II and IV 
D)  I, II and III 
A)  I and III 
B)  I and II 
C)  I, II and IV 
D)  I, II and III

Question 12

Which statement correctly describes ʺstructural unemployment?ʺ

Accepted Answer

A)  The amount of structural unemployment depends on normal labor turnover. 
B)  Structural unemployment occurs even when the economy is at the natural unemployment rate. 
C)  Structural unemployment is also called ʺfrictional unemployment.ʺ 
D)  Structural unemployment occurs mainly during recessions. 
A)  The amount of structural unemployment depends on normal labor turnover. 
B)  Structural unemployment occurs even when the economy is at the natural unemployment rate. 
C)  Structural unemployment is also called ʺfrictional unemployment.ʺ 
D)  Structural unemployment occurs mainly during recessions.

Question 13

If a new and better good replaced an older and less expensive good, then the price level measured by the CPI .

Accepted Answer

A)  is higher than the actual price level 
B)  is the same as the actual price level because it measures the prices of the actual goods. 
C)  might be either higher or lower than the actual price 
D)  is lower than the actual price level 
A)  is higher than the actual price level 
B)  is the same as the actual price level because it measures the prices of the actual goods. 
C)  might be either higher or lower than the actual price 
D)  is lower than the actual price level

Question 14

During a recession, people drop out of the labor force because they are unable to find a job. All else the same, this

Accepted Answer

A)  increases the official U-3 unemployment rate. 
B)  increases the official U-3 unemployment rate and the labor force participation rate. 
C)  does not change the official U-3 unemployment rate. 
D)  decreases the official U-3 unemployment rate. 
A)  increases the official U-3 unemployment rate. 
B)  increases the official U-3 unemployment rate and the labor force participation rate. 
C)  does not change the official U-3 unemployment rate. 
D)  decreases the official U-3 unemployment rate.

Question 15

When an individual who has not been working but has been looking for work decides to terminate the search process, the official unemployment rate

Accepted Answer

A)  will rise. 
B)  will fall. 
C)  will remain unchanged. 
D)  may fall or rise depending on whether or not the individual resumes his education. 
A)  will rise. 
B)  will fall. 
C)  will remain unchanged. 
D)  may fall or rise depending on whether or not the individual resumes his education.

Question 16

One way to be considered unemployed is to be without a job and looking for work.)

Accepted Answer

A) True 
 B)False

Question 17

Which of the following correctly describes ʺfrictional unemploymentʺ?

Accepted Answer

A)  Frictional unemployment occurs mainly during recessions. 
B)  Frictional unemployment is due mainly to job leavers. 
C)  Frictional unemployment is a normal occurrence in a growing economy. 
D)  Frictional unemployment is due mainly to job losers. 
A)  Frictional unemployment occurs mainly during recessions. 
B)  Frictional unemployment is due mainly to job leavers. 
C)  Frictional unemployment is a normal occurrence in a growing economy. 
D)  Frictional unemployment is due mainly to job losers.

Question 18

Using the notation Pt to designate this periodʹs price level and Pt-1 to designate last periodʹs price level, the formula for measuring the inflation rate from last period to this period is

Accepted Answer

A)  [Pt-1 - Pt) / Pt] × 100. 
B)  [Pt - Pt-1) / Pt] × 100. 
C)  [Pt - Pt-1) / Pt-1] × 100. 
D)  [Pt-1 - Pt) / Pt-1] × 100. 
A)  [Pt-1 - Pt) / Pt] × 100. 
B)  [Pt - Pt-1) / Pt] × 100. 
C)  [Pt - Pt-1) / Pt-1] × 100. 
D)  [Pt-1 - Pt) / Pt-1] × 100.

Question 19

The table below shows the price index for Zimbabwe starting in 2000.
$$\begin{array} { | l | l | } 
\hline \text { Year } & \text { Price Index } \
\hline 2000 & 100.0 \
\hline 2001 & 173.4 \
\hline 2002 & 404.37 \
\hline 2003 & 1880.5 \
\hline 2004 & 8462.2 \
\hline 2005 & 28,586.6 \
\hline 2006 & 319,222.5 \
\hline
\end{array}$$
The data show that

Accepted Answer

A)  the inflation rate between 2005 and 2006 was 319.2 percent. 
B)  while Zimbabwe experienced a high price level, it did not experience high inflation. 
C)  the inflation rate between the base year and 2001 is 73.4 percent. 
D)  new goods bias and quality change bias are responsible for most of Zimbabwe?s inflation. 
A)  the inflation rate between 2005 and 2006 was 319.2 percent. 
B)  while Zimbabwe experienced a high price level, it did not experience high inflation. 
C)  the inflation rate between the base year and 2001 is 73.4 percent. 
D)  new goods bias and quality change bias are responsible for most of Zimbabwe?s inflation.

Question 20

If the CPI was 132.5 at the end of last year and 140.2 at the end of this year, the inflation rate over these two years was

Accepted Answer

A)  5.4 percent. 
B)  5.8 percent. 
C)  4.4 percent. 
D)  7.7 percent. 
A)  5.4 percent. 
B)  5.8 percent. 
C)  4.4 percent. 
D)  7.7 percent.

Suppose the working age population in Tiny Town is 100 people. If 25 of these people are NOT in the labor force, the_ equals .

When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing

Year Price index Inflation rate (percent) 1 100 2 117 A 3 125 B 4 120 C 5 8.3 6 150 E -In the table above, what inflation rate belongs in space E?

The commodity substitution bias is that consumers substitute high-quality goods for low-quality goods.

An observer of the economy notices that over the past 12 months the unemployment rate has fallen from 7.0 percent to 6.5 percent. During the same time, the rate of growth in real GDP has been positive. From this information we might conclude that

If the CPI was 132.5 at the end of last year and 137.5 at the end of this year, the inflation rate over these two years was

The natural unemployment rate

Full employment exists when

The employment-to-population ratio equals

The unemployment rate measures the percentage of the working-age population who canʹt find a job.

Which of the following pieces of information do you need to calculate the labor force participation rate? I. the number of employed persons II. the number of unemployed persons III. the population IV. the working age population

Which statement correctly describes ʺstructural unemployment?ʺ

If a new and better good replaced an older and less expensive good, then the price level measured by the CPI .

During a recession, people drop out of the labor force because they are unable to find a job. All else the same, this

When an individual who has not been working but has been looking for work decides to terminate the search process, the official unemployment rate

One way to be considered unemployed is to be without a job and looking for work.)

Which of the following correctly describes ʺfrictional unemploymentʺ?

Using the notation P_tto designate this periodʹs price level and P_t_-₁to designate last periodʹs price level, the formula for measuring the inflation rate from last period to this period is

The table below shows the price index for Zimbabwe starting in 2000. Year Price Index 2000 100.0 2001 173.4 2002 404.37 2003 1880.5 2004 8462.2 2005 28,586.6 2006 319,222.5 The data show that

If the CPI was 132.5 at the end of last year and 140.2 at the end of this year, the inflation rate over these two years was

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 5: Monitoring Jobs and Inflation

Suppose the working age population in Tiny Town is 100 people. If 25 of these people are NOT in the labor force, the_________ equals________ .

When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing

Year Price index Inflation rate (percent) 1 100 2 117 A 3 125 B 4 120 C 5 8.3 6 150 E -In the table above, what inflation rate belongs in space E?

The commodity substitution bias is that consumers substitute high-quality goods for low-quality goods.

An observer of the economy notices that over the past 12 months the unemployment rate has fallen from 7.0 percent to 6.5 percent. During the same time, the rate of growth in real GDP has been positive. From this information we might conclude that

If the CPI was 132.5 at the end of last year and 137.5 at the end of this year, the inflation rate over these two years was

The natural unemployment rate

Full employment exists when

The employment-to-population ratio equals

The unemployment rate measures the percentage of the working-age population who canʹt find a job.

Which of the following pieces of information do you need to calculate the labor force participation rate? I. the number of employed persons II. the number of unemployed persons III. the population IV. the working age population

Which statement correctly describes ʺstructural unemployment?ʺ

If a new and better good replaced an older and less expensive good, then the price level measured by the CPI .

During a recession, people drop out of the labor force because they are unable to find a job. All else the same, this

When an individual who has not been working but has been looking for work decides to terminate the search process, the official unemployment rate

One way to be considered unemployed is to be without a job and looking for work.)

Which of the following correctly describes ʺfrictional unemploymentʺ?

Using the notation Pt to designate this periodʹs price level and Pt-1 to designate last periodʹs price level, the formula for measuring the inflation rate from last period to this period is

The table below shows the price index for Zimbabwe starting in 2000. Year Price Index 2000 100.0 2001 173.4 2002 404.37 2003 1880.5 2004 8462.2 2005 28,586.6 2006 319,222.5 The data show that

If the CPI was 132.5 at the end of last year and 140.2 at the end of this year, the inflation rate over these two years was

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Suppose the working age population in Tiny Town is 100 people. If 25 of these people are NOT in the labor force, the_ equals .

Using the notation P_tto designate this periodʹs price level and P_t_-₁to designate last periodʹs price level, the formula for measuring the inflation rate from last period to this period is