Question 1

Full employment means that

Accepted Answer

A)  there is no cyclical unemployment. 
B)  there is no cyclical or frictional unemployment. 
C)  there is no structural or frictional unemployment. 
D)  no one is unemployed. 
A)  there is no cyclical unemployment. 
B)  there is no cyclical or frictional unemployment. 
C)  there is no structural or frictional unemployment. 
D)  no one is unemployed.

Question 2

$$\begin{array} { | c | l | l | l | } 
\hline \begin{array} { l } 
\text { Total } \
\text { population } \
\text { (millions) }
\end{array} & \begin{array} { c } 
\text { Currently } \
\text { employed } \
\text { (millions) }
\end{array} & \begin{array} { c } 
\text { Not working } \
\text { and looking for } \
\text { work (millions) }
\end{array} & \begin{array} { c } 
\text { Want to work but } \
\text { no longer looking } \
\text { for work } \
\text { (millions) }
\end{array} \
\hline 80 & 40 & 2 & 4 \
\hline
\end{array}$$
-The labor force participation rate is percentage of the __________who are in the labor force.

Accepted Answer

A)  population 
B)  working-age population 
C)  people over age 16 
D)  people under age 65 
A)  population 
B)  working-age population 
C)  people over age 16 
D)  people under age 65

Question 3

$$\begin{array} { | l | c | c | } 
\hline { \text { Item } } & \begin{array} { l } 
\text { Quantity } \
( 2010 )
\end{array} & \begin{array} { l } 
\text { Price } \
( 2010 )
\end{array} \
\hline \text { Shampoo } & 25 & \$ 2.35 \
\hline \text { Pizza } & 15 & \$ 7.50 \
\hline
\end{array}$$ 
 $$\begin{array} { | l | c | c | } 
\hline { \text { Item } } & \begin{array} { l } 
\text { Quantity } \
( 2010 )
\end{array} & \begin{array} { l } 
\text { Price } \
( 2011 )
\end{array} \
\hline \text { Shampoo } & 25 & \$ 2.50 \
\hline \text { Pizza } & 15 & \$ 7.75 \
\hline
\end{array}$$
-The tables above give the purchases of an average consumer in a small economy. These consumers purchase only shampoo and pizza.) Suppose 2010 is the reference base period.
a) What is the cost of the CPI basket in 2010 and 2011?
b) What is the CPI in 2010 and in 2011?
c) What is the inflation rate between 2010 and 2011?

Accepted Answer

a) For 2010 the CPI basket costs $171.25

Question 4

During an economic expansion, real GDP__________ and__________ unemployment .

Accepted Answer

A)  increases; increases 
B)  decreases; decreases 
C)  decreases; increases 
D)  increases; decreases 
A)  increases; increases 
B)  decreases; decreases 
C)  decreases; increases 
D)  increases; decreases

Question 5

A typical household in Orangeland consumes only orange juice and shorts. Last year, which was the base year, the household spent $400 on juice and $120 on shorts. In the base year, juice was $2 a bottle and shorts were
$10 a pair. This year, juice is $3 a bottle, shorts are $12 a pair, and a typical household has bought 180 bottles of juice and 14 pairs of shorts.
a) What is the basket used in the CPI?
b) Calculate the CPI in the current year.
c) Calculate the inflation rate in the current year.
d) Is the inflation rate that youʹve calculated likely to be biased? Why or why not?

Accepted Answer

a) The CPI basket is the quantities boug

Question 6

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed persons is
__________and the new unemployment rate is__________ .

Accepted Answer

A)  93.9 million; 6.1 percent 
B)  100 million; 6.1 percent 
C)  100.1 million; 5.8 percent 
D)  94.1 million; 5.9 percent 
A)  93.9 million; 6.1 percent 
B)  100 million; 6.1 percent 
C)  100.1 million; 5.8 percent 
D)  94.1 million; 5.9 percent

Question 7

ʺThe new goods bias puts a downward bias into the CPI and its measure of the inflation rate.ʺ Is the previous sentence correct or not? Explain your answer.

Accepted Answer

The sentence is false because the new go

Question 8

For each of the following values of nominal GDP and real GDP, calculate the GDP price deflator.
a) Nominal GDP = $600; real GDP = $800.
b) Nominal GDP = $900; real GDP = $900.
c) Nominal GDP = $1,200; real GDP = $1,000

Accepted Answer

a) The GDP deflator equals$600

Question 9

Suppose the natural unemployment rate equals 6 percent and the current unemployment rate is 8 percent. We can conclude that

Accepted Answer

A)  there is no cyclical unemployment. 
B)  there is no frictional unemployment. 
C)  full employment is not occurring. 
D)  there is no structural unemployment. 
A)  there is no cyclical unemployment. 
B)  there is no frictional unemployment. 
C)  full employment is not occurring. 
D)  there is no structural unemployment.

Question 10

The type of unemployment created by the normal rate of reentry and entry into the labor force is

Accepted Answer

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

Question 11

Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as

Accepted Answer

A)  naturally unemployed. 
B)  frictionally unemployed. 
C)  structurally unemployed. 
D)  cyclically unemployed. 
A)  naturally unemployed. 
B)  frictionally unemployed. 
C)  structurally unemployed. 
D)  cyclically unemployed.

Question 12

If the CPI was 121.5 at the end of last year and 138.3 at the end of this year, the inflation rate over these two years was

Accepted Answer

A)  12.2 percent. 
B)  13.8 percent. 
C)  16.8 percent. 
D)  10.2 percent. 
A)  12.2 percent. 
B)  13.8 percent. 
C)  16.8 percent. 
D)  10.2 percent.

Question 13

The employment-to-population ratio is

Accepted Answer

A)  67 percent. 
B)  62 percent. 
C)  64 percent. 
D)  50 percent. 
A)  67 percent. 
B)  62 percent. 
C)  64 percent. 
D)  50 percent.

Question 14

Define and give an example of how a spell of structural unemployment can begin.

Accepted Answer

Structural unemployment arises when chan

Question 15

In China, suppose that the price level was 100 in 2007, 110 in 2008, 120 in 2009, and 130 in 2011. Over these three years,

Accepted Answer

A)  the inflation rate was positive. 
B)  prices were stable. 
C)  inflation did not occur. 
D)  the inflation rate accelerated. 
A)  the inflation rate was positive. 
B)  prices were stable. 
C)  inflation did not occur. 
D)  the inflation rate accelerated.

Question 16

The labor force includes

Accepted Answer

A)  discouraged workers. 
B)  both employed and unemployed workers. 
C)  only the number of people unemployed. 
D)  only the number of people employed. 
A)  discouraged workers. 
B)  both employed and unemployed workers. 
C)  only the number of people unemployed. 
D)  only the number of people employed.

Question 17

Full-time students and prisoners are________ .

Accepted Answer

A)  in the labor force 
B)  not in the labor force 
C)  counted as unemployed 
D)  counted as discouraged workers 
A)  in the labor force 
B)  not in the labor force 
C)  counted as unemployed 
D)  counted as discouraged workers

Question 18

$$\begin{array} { | l | c | c | } 
\hline { \text { Item } } & \begin{array} { l } 
\text { Quantity } \
( 2010 )
\end{array} & \begin{array} { l } 
\text { Price } \
( 2010 )
\end{array} \
\hline \text { Loaves of bread } & 20 & \$ 3.00 \
\hline \text { Jugs of soda } & 20 & \$ 2.00 \
\hline
\end{array}$$ 
 $$\begin{array} { | l | c | c | } 
\hline { \text { Item } } & \begin{array} { l } 
\text { Quantity } \
( 2011 )
\end{array} & \begin{array} { l } 
\text { Price } \
( 2011 )
\end{array} \
\hline \text { Loaves of bread } & 22 & \$ 4.00 \
\hline \text { Jugs of soda } & 30 & \$ 1.50 \
\hline
\end{array}$$
-The tables above give the purchases of an average consumer in a small economy. These consumers purchase only loaves of bread and jugs of soda.) Suppose 2006 is the reference base period.
a) What quantities are in the CPI basket?
b) What is the cost of the CPI basket using 2010 prices?
c) What is the cost of the CPI basket using 2011 prices?
d) What is the CPI in 2007?

Accepted Answer

a) The quantities in the CPI basket are

Question 19

The labor force is defined as the

Accepted Answer

A)  number of employed people plus the number of unemployed people. 
B)  number of people who are working in labor-type jobs. 
C)  number of people who are working. 
D)  number of union members who are working. 
A)  number of employed people plus the number of unemployed people. 
B)  number of people who are working in labor-type jobs. 
C)  number of people who are working. 
D)  number of union members who are working.

Question 20

Can frictional unemployment ever be totally eliminated? Explain your answer.

Accepted Answer

Frictional unemployment arises from norm

Full employment means that

Total population (millions) Currently employed (millions) Not working and looking for work (millions) Want to work but no longer looking for work (millions) 80 40 2 4 -The labor force participation rate is percentage of the __________who are in the labor force.

During an economic expansion, real GDP and unemployment .

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed persons is and the new unemployment rate is .

ʺThe new goods bias puts a downward bias into the CPI and its measure of the inflation rate.ʺ Is the previous sentence correct or not? Explain your answer.

For each of the following values of nominal GDP and real GDP, calculate the GDP price deflator. a) Nominal GDP = $600; real GDP = $800. b) Nominal GDP = $900; real GDP = $900. c) Nominal GDP = $1,200; real GDP = $1,000

Suppose the natural unemployment rate equals 6 percent and the current unemployment rate is 8 percent. We can conclude that

The type of unemployment created by the normal rate of reentry and entry into the labor force is

Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as

If the CPI was 121.5 at the end of last year and 138.3 at the end of this year, the inflation rate over these two years was

The employment-to-population ratio is

Define and give an example of how a spell of structural unemployment can begin.

In China, suppose that the price level was 100 in 2007, 110 in 2008, 120 in 2009, and 130 in 2011. Over these three years,

The labor force includes

Full-time students and prisoners are________ .

The labor force is defined as the

Can frictional unemployment ever be totally eliminated? Explain your answer.

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

Full employment means that

Total population (millions) Currently employed (millions) Not working and looking for work (millions) Want to work but no longer looking for work (millions) 80 40 2 4 -The labor force participation rate is percentage of the __________who are in the labor force.

During an economic expansion, real GDP__________ and__________ unemployment .

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed persons is __________and the new unemployment rate is__________ .

ʺThe new goods bias puts a downward bias into the CPI and its measure of the inflation rate.ʺ Is the previous sentence correct or not? Explain your answer.

For each of the following values of nominal GDP and real GDP, calculate the GDP price deflator. a) Nominal GDP = $600; real GDP = $800. b) Nominal GDP = $900; real GDP = $900. c) Nominal GDP = $1,200; real GDP = $1,000

Suppose the natural unemployment rate equals 6 percent and the current unemployment rate is 8 percent. We can conclude that

The type of unemployment created by the normal rate of reentry and entry into the labor force is

Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as

If the CPI was 121.5 at the end of last year and 138.3 at the end of this year, the inflation rate over these two years was

The employment-to-population ratio is

Define and give an example of how a spell of structural unemployment can begin.

In China, suppose that the price level was 100 in 2007, 110 in 2008, 120 in 2009, and 130 in 2011. Over these three years,

The labor force includes

Full-time students and prisoners are________ .

The labor force is defined as the

Can frictional unemployment ever be totally eliminated? Explain your answer.

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

During an economic expansion, real GDP and unemployment .

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed persons is and the new unemployment rate is .