Question 1

Suppose the price levels in an economy in four successive years are 100,120,133,and 140.Which of the following is true in such a case?

Accepted Answer

A) The economy is experiencing hyperinflation. 
B) The economy is experiencing deflation. 
C) The economy is experiencing inflation. 
D) The economy is experiencing increasing inflation. 
E) The economy is experiencing disinflation. 
A) The economy is experiencing hyperinflation. 
B) The economy is experiencing deflation. 
C) The economy is experiencing inflation. 
D) The economy is experiencing increasing inflation. 
E) The economy is experiencing disinflation.

Question 2

The labor force in an economy consists of all:

Accepted Answer

A) the people in the economy who are not retired. 
B) the people in the economy over 16 years of age. 
C) the adults in the economy between 18 and 65 years old who are able to work. 
D) the civilian noninstitutional adult population that is either working or looking for work. 
E) the noninstitutional adult population who are graduates of high school. 
A) the people in the economy who are not retired. 
B) the people in the economy over 16 years of age. 
C) the adults in the economy between 18 and 65 years old who are able to work. 
D) the civilian noninstitutional adult population that is either working or looking for work. 
E) the noninstitutional adult population who are graduates of high school.

Question 3

Cost-push inflation:

Accepted Answer

A) occurs when the aggregate demand curve shifts rightward. 
B) occurs when the aggregate supply curve shifts rightward. 
C) results in a decrease in the unemployment rate. 
D) results in a movement along the aggregate demand curve. 
E) is caused by the same factors that lead to demand-pull inflation. 
A) occurs when the aggregate demand curve shifts rightward. 
B) occurs when the aggregate supply curve shifts rightward. 
C) results in a decrease in the unemployment rate. 
D) results in a movement along the aggregate demand curve. 
E) is caused by the same factors that lead to demand-pull inflation.

Question 4

Which of the following is not a cost of unemployment?

Accepted Answer

A) A loss of income 
B) Emotional or psychological problems 
C) Loss of job skills 
D) A decrease in production 
E) Higher annual inflation rates 
A) A loss of income 
B) Emotional or psychological problems 
C) Loss of job skills 
D) A decrease in production 
E) Higher annual inflation rates

Question 5

Unanticipated inflation generally hurts borrowers and benefits lenders.

Accepted Answer

A) True 
 B)False

Question 6

Structural unemployment refers to unemployment that results from:

Accepted Answer

A) inefficiencies in the market for labor that prolong the job search. 
B) being in the wrong geographical location. 
C) the specialization and division of labor. 
D) seasonal decreases in demand for labor. 
E) a recession in the economy. 
A) inefficiencies in the market for labor that prolong the job search. 
B) being in the wrong geographical location. 
C) the specialization and division of labor. 
D) seasonal decreases in demand for labor. 
E) a recession in the economy.

Question 7

In an economy,U = the number of adults who are unemployed,E = the number of adults who are employed,and NLF = the number of adults not in the labor force.The labor force participation rate in the economy is equal to:

Accepted Answer

A) U/(U + 
E) . 
B) E/(U + 
E) . 
C) U/(U + E + NLF). 
D) E/(U + E + NLF). 
E) (U + 
E) /(U + E + NLF). 
A) U/(U + 
E) . 
B) E/(U + 
E) . 
C) U/(U + E + NLF). 
D) E/(U + E + NLF). 
E) (U + 
E) /(U + E + NLF).

Question 8

A major cost of unemployment is lost production.

Accepted Answer

A) True 
 B)False

Question 9

In recent times,there has been a decline in the sale of newspapers in the U.S.as people prefer to read the news on the internet.This has caused many newspaper journalists to lose their jobs.This is an example of:

Accepted Answer

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

Question 10

The unemployment rate does not reflect the true extent of the unemployment problem.Which of the following groups is not counted as unemployed in the official unemployment statistics?

Accepted Answer

A) The underemployed and the cyclically unemployed 
B) The underemployed and discouraged workers 
C) Discouraged workers and the frictionally unemployed 
D) The frictionally unemployed and the structurally unemployed 
E) The cyclically unemployed and the frictionally unemployed 
A) The underemployed and the cyclically unemployed 
B) The underemployed and discouraged workers 
C) Discouraged workers and the frictionally unemployed 
D) The frictionally unemployed and the structurally unemployed 
E) The cyclically unemployed and the frictionally unemployed

Question 11

If future price changes were perfectly anticipated by both borrowers and lenders,then _____.

Accepted Answer

A) the expected real interest rate would be higher than the actual rate 
B) the expected real interest rate would lower than the actual rate 
C) the real interest rate in the future would decrease by the amount of the price increase 
D) the real interest rate in the future would increase by the amount of the price increase 
E) the real interest rate in the future would remain unchanged 
A) the expected real interest rate would be higher than the actual rate 
B) the expected real interest rate would lower than the actual rate 
C) the real interest rate in the future would decrease by the amount of the price increase 
D) the real interest rate in the future would increase by the amount of the price increase 
E) the real interest rate in the future would remain unchanged

Question 12

If the inflation rate in an economy is 5 percent and the income earned by workers increases by 5 percent,then _____.

Accepted Answer

A) nominal income declines and real income increases 
B) both nominal income and real income increase by 5 percent 
C) nominal income increases and real income declines 
D) both nominal income and real income decrease by 5 percent 
E) nominal income increases by 5 percent and real income is unchanged 
A) nominal income declines and real income increases 
B) both nominal income and real income increase by 5 percent 
C) nominal income increases and real income declines 
D) both nominal income and real income decrease by 5 percent 
E) nominal income increases by 5 percent and real income is unchanged

Question 13

Which type of unemployment is likely to increase the most during an economy's recession?

Accepted Answer

A) Frictional unemployment 
B) Seasonal unemployment 
C) Structural unemployment 
D) Cyclical unemployment 
E) Underemployment 
A) Frictional unemployment 
B) Seasonal unemployment 
C) Structural unemployment 
D) Cyclical unemployment 
E) Underemployment

Question 14

A discouraged worker is one who:

Accepted Answer

A) is underqualified for his current job. 
B) dislikes his current job but is afraid to quit. 
C) drops out of the labor force because he cannot find a job. 
D) quits his job because the possibility of advancement was very low. 
E) is overqualified for his current job. 
A) is underqualified for his current job. 
B) dislikes his current job but is afraid to quit. 
C) drops out of the labor force because he cannot find a job. 
D) quits his job because the possibility of advancement was very low. 
E) is overqualified for his current job.

Question 15

Relative prices describe the terms at which individual goods are exchanged for one another.

Accepted Answer

A) True 
 B)False

Question 16

The inflation experienced in the United States during the 1970s as a result of OPEC oil price increases is an example of:

Accepted Answer

A) demand-pull inflation. 
B) hyperinflation. 
C) cost-push inflation. 
D) cyclical inflation. 
E) disinflation. 
A) demand-pull inflation. 
B) hyperinflation. 
C) cost-push inflation. 
D) cyclical inflation. 
E) disinflation.

Question 17

The higher the expected inflation,_____.

Accepted Answer

A) the higher the nominal rate of interest that lenders require and that borrowers are willing to pay 
B) the lower the nominal rate of interest that lenders require and that borrowers are willing to pay 
C) the higher the nominal rate of interest that lenders require and the lower the nominal rate of interest that borrowers are willing to pay 
D) the higher the real interest rate that lenders require 
E) the higher the real interest rate that borrowers are willing to pay 
A) the higher the nominal rate of interest that lenders require and that borrowers are willing to pay 
B) the lower the nominal rate of interest that lenders require and that borrowers are willing to pay 
C) the higher the nominal rate of interest that lenders require and the lower the nominal rate of interest that borrowers are willing to pay 
D) the higher the real interest rate that lenders require 
E) the higher the real interest rate that borrowers are willing to pay

Question 18

Tony lent Dave $1,000 for one year with the understanding that Dave would repay $1,070.If the actual inflation rate was 7 percent,then the real rate of interest Tony received is _____.

Accepted Answer

A) 14 percent 
B) 7 percent 
C) 4 percent 
D) 0 percent 
E) −7 percent 
A) 14 percent 
B) 7 percent 
C) 4 percent 
D) 0 percent 
E) −7 percent

Question 19

A worker would be hurt least by inflation when the:

Accepted Answer

A) worker anticipates inflation and increases savings at the bank. 
B) worker is protected by a cost-of-living adjustment clause in an employment contract. 
C) the price level increases but at a decreasing rate. 
D) worker is protected by fixed annual increases in wages and benefits in an employment contract. 
E) government increases the level of social security retirement benefits to correct for the effects of unanticipated inflation. 
A) worker anticipates inflation and increases savings at the bank. 
B) worker is protected by a cost-of-living adjustment clause in an employment contract. 
C) the price level increases but at a decreasing rate. 
D) worker is protected by fixed annual increases in wages and benefits in an employment contract. 
E) government increases the level of social security retirement benefits to correct for the effects of unanticipated inflation.

Question 20

Which of the following decades was characterized by the highest inflation rate in the U.S.?

Accepted Answer

A) 1920s 
B) 1930s 
C) 1950s 
D) 1970s 
E) 1960s 
A) 1920s 
B) 1930s 
C) 1950s 
D) 1970s 
E) 1960s

Suppose the price levels in an economy in four successive years are 100,120,133,and 140.Which of the following is true in such a case?

The labor force in an economy consists of all:

Cost-push inflation:

Which of the following is not a cost of unemployment?

Unanticipated inflation generally hurts borrowers and benefits lenders.

Structural unemployment refers to unemployment that results from:

In an economy,U = the number of adults who are unemployed,E = the number of adults who are employed,and NLF = the number of adults not in the labor force.The labor force participation rate in the economy is equal to:

A major cost of unemployment is lost production.

In recent times,there has been a decline in the sale of newspapers in the U.S.as people prefer to read the news on the internet.This has caused many newspaper journalists to lose their jobs.This is an example of:

The unemployment rate does not reflect the true extent of the unemployment problem.Which of the following groups is not counted as unemployed in the official unemployment statistics?

If future price changes were perfectly anticipated by both borrowers and lenders,then _____.

If the inflation rate in an economy is 5 percent and the income earned by workers increases by 5 percent,then _____.

Which type of unemployment is likely to increase the most during an economy's recession?

A discouraged worker is one who:

Relative prices describe the terms at which individual goods are exchanged for one another.

The inflation experienced in the United States during the 1970s as a result of OPEC oil price increases is an example of:

The higher the expected inflation,_____.

Tony lent Dave $1,000 for one year with the understanding that Dave would repay $1,070.If the actual inflation rate was 7 percent,then the real rate of interest Tony received is _____.

A worker would be hurt least by inflation when the:

Which of the following decades was characterized by the highest inflation rate in the U.S.?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 7: Unemployment and Inflation

Suppose the price levels in an economy in four successive years are 100,120,133,and 140.Which of the following is true in such a case?

The labor force in an economy consists of all:

Cost-push inflation:

Which of the following is not a cost of unemployment?

Unanticipated inflation generally hurts borrowers and benefits lenders.

Structural unemployment refers to unemployment that results from:

In an economy,U = the number of adults who are unemployed,E = the number of adults who are employed,and NLF = the number of adults not in the labor force.The labor force participation rate in the economy is equal to:

A major cost of unemployment is lost production.

In recent times,there has been a decline in the sale of newspapers in the U.S.as people prefer to read the news on the internet.This has caused many newspaper journalists to lose their jobs.This is an example of:

The unemployment rate does not reflect the true extent of the unemployment problem.Which of the following groups is not counted as unemployed in the official unemployment statistics?

If future price changes were perfectly anticipated by both borrowers and lenders,then _____.

If the inflation rate in an economy is 5 percent and the income earned by workers increases by 5 percent,then _____.

Which type of unemployment is likely to increase the most during an economy's recession?

A discouraged worker is one who:

Relative prices describe the terms at which individual goods are exchanged for one another.

The inflation experienced in the United States during the 1970s as a result of OPEC oil price increases is an example of:

The higher the expected inflation,_____.

Tony lent Dave $1,000 for one year with the understanding that Dave would repay $1,070.If the actual inflation rate was 7 percent,then the real rate of interest Tony received is _____.

A worker would be hurt least by inflation when the:

Which of the following decades was characterized by the highest inflation rate in the U.S.?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters