Question 1

Define full employment and its relationship to the natural rate of unemployment.

Accepted Answer

Full employment can be defined as the level of unemployment at which the actual inflation rate is equal to people's inflationary expectations. Full employment is generally perceived to be equivalent to the natural rate of unemployment. The natural rate of unemployment can also be described as the unemployment level where there is only frictional and structural unemployment; that is, cyclical unemployment is zero. Economists often refer to the natural rate of unemployment as the nonaccelerating inflation rate of unemployment, defined as the lowest unemployment rate most consistent with a low rate of inflation.

Question 2

_____ is a reduction in the rate of inflation.

Accepted Answer

A)  Disinflation 
B)  Deflation 
C)  Hyperinflation 
D)  The price level 
A)  Disinflation 
B)  Deflation 
C)  Hyperinflation 
D)  The price level A

Question 3

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is

Accepted Answer

A)  80. 
B)  110. 
C)  125. 
D)  150. 
A)  80. 
B)  110. 
C)  125. 
D)  150. C

Question 4

(Table) The following table shows a hypothetical labor force and employment data for two years.   What are the unemployment rates in both years? Is it possible for the unemployment rate to increase even if the number of employed workers rises? Why or why not?

Accepted Answer

The Unemployment rate = (Labor force - E

Question 5

The nation of Workovia has a population of 15 million people, of whom 10 million are in the labor force and 9 million are working. Workovia's unemployment rate is

Accepted Answer

A)  10%. 
B)  27%. 
C)  33%. 
D)  60%. 
A)  10%. 
B)  27%. 
C)  33%. 
D)  60%.

Question 6

If the structural unemployment rate is 3%, the frictional unemployment rate is 2%, and the cyclical unemployment rate is 4%, then the natural rate of unemployment is 9%.

Accepted Answer

A) True 
 B)False

Question 7

The broadest measure of inflation is the

Accepted Answer

A)  consumer price index. 
B)  GDP deflator. 
C)  personal consumption expenditures index. 
D)  producer price index. 
A)  consumer price index. 
B)  GDP deflator. 
C)  personal consumption expenditures index. 
D)  producer price index.

Question 8

The GDP deflator is a measure of the average change in prices for all goods and services in the economy.

Accepted Answer

A) True 
 B)False

Question 9

Frictional unemployment occurs when job openings

Accepted Answer

A)  exist and people are willing to take them, but the applicants do not have the necessary skill set. 
B)  exist, and people are willing to take them, but it takes some time to bring the two together. 
C)  exist, but people are not willing to take them, so it makes no sense to bring the two together. 
D)  do not exist, although people are willing to work, so it makes no sense to try to bring the two together. 
A)  exist and people are willing to take them, but the applicants do not have the necessary skill set. 
B)  exist, and people are willing to take them, but it takes some time to bring the two together. 
C)  exist, but people are not willing to take them, so it makes no sense to bring the two together. 
D)  do not exist, although people are willing to work, so it makes no sense to try to bring the two together.

Question 10

The goal of deflating a GDP series is to see how much real output has changed.

Accepted Answer

A) True 
 B)False

Question 11

Jennifer received news that she is getting a 5% raise. However, the Bureau of Labor Statistics just reported that prices are rising by 7%. Based on the given information, which of these statements is TRUE?

Accepted Answer

A)  Jennifer's purchasing power will rise by 2%. 
B)  Jennifer's purchasing power will decline by 2%. 
C)  Jennifer's purchasing power will rise by 7%. 
D)  Inflation has no impact on purchasing power. 
A)  Jennifer's purchasing power will rise by 2%. 
B)  Jennifer's purchasing power will decline by 2%. 
C)  Jennifer's purchasing power will rise by 7%. 
D)  Inflation has no impact on purchasing power.

Question 12

Full employment is defined as zero unemployment.

Accepted Answer

A) True 
 B)False

Question 13

Describe the three types of unemployment.

Accepted Answer

The three types of unemployment are fric

Question 14

Which statement about counterfeiting is NOT true?

Accepted Answer

A)  Most banks will replace a fake bill and report it to the nearest U.S. Secret Service office. 
B)  Counterfeiting has the same effect as increasing the money supply and causes inflation. 
C)  Everyone pays for counterfeiting in the form of higher prices. 
D)  Passing a fake bill to another person is punishable by law. 
A)  Most banks will replace a fake bill and report it to the nearest U.S. Secret Service office. 
B)  Counterfeiting has the same effect as increasing the money supply and causes inflation. 
C)  Everyone pays for counterfeiting in the form of higher prices. 
D)  Passing a fake bill to another person is punishable by law.

Question 15

The costs of inflation are greater when it is unanticipated.

Accepted Answer

A) True 
 B)False

Question 16

Danielle worked as a cashier in a restaurant but lost her job when the restaurant installed machines at the tables where customers can now pay for their meals. Danielle is cyclically unemployed.

Accepted Answer

A) True 
 B)False

Question 17

Wages set high to discourage employee turnover are called _____ wages.

Accepted Answer

A)  turnover minimization 
B)  efficiency 
C)  productivity 
D)  labor utilization 
A)  turnover minimization 
B)  efficiency 
C)  productivity 
D)  labor utilization

Question 18

Wages that are higher than equilibrium can lead to

Accepted Answer

A)  unemployment. 
B)  overemployment. 
C)  a labor shortage. 
D)  a downward wage-price spiral. 
A)  unemployment. 
B)  overemployment. 
C)  a labor shortage. 
D)  a downward wage-price spiral.

Question 19

Johnny is 17 and works in his father's bubble gum store 10 hours a week after school. His father pays him no money but buys video games for him. However, Johnny earns a spot on the high school football team and no longer works in his father's store. How is Johnny categorized in the unemployment figures?

Accepted Answer

A)  Johnny is considered unemployed. 
B)  Johnny is considered employed because he works hard at his football career. 
C)  Johnny is not part of the labor force. 
D)  Johnny is considered underemployed. 
A)  Johnny is considered unemployed. 
B)  Johnny is considered employed because he works hard at his football career. 
C)  Johnny is not part of the labor force. 
D)  Johnny is considered underemployed.

Question 20

The price of field corn would be included in the _____ price index.

Accepted Answer

A)  consumer 
B)  personal consumption expenditures 
C)  producer 
D)  core consumer 
A)  consumer 
B)  personal consumption expenditures 
C)  producer 
D)  core consumer

Define full employment and its relationship to the natural rate of unemployment.

_____ is a reduction in the rate of inflation.

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is

(Table) The following table shows a hypothetical labor force and employment data for two years. What are the unemployment rates in both years? Is it possible for the unemployment rate to increase even if the number of employed workers rises? Why or why not?

The nation of Workovia has a population of 15 million people, of whom 10 million are in the labor force and 9 million are working. Workovia's unemployment rate is

If the structural unemployment rate is 3%, the frictional unemployment rate is 2%, and the cyclical unemployment rate is 4%, then the natural rate of unemployment is 9%.

The broadest measure of inflation is the

The GDP deflator is a measure of the average change in prices for all goods and services in the economy.

Frictional unemployment occurs when job openings

The goal of deflating a GDP series is to see how much real output has changed.

Jennifer received news that she is getting a 5% raise. However, the Bureau of Labor Statistics just reported that prices are rising by 7%. Based on the given information, which of these statements is TRUE?

Full employment is defined as zero unemployment.

Describe the three types of unemployment.

Which statement about counterfeiting is NOT true?

The costs of inflation are greater when it is unanticipated.

Danielle worked as a cashier in a restaurant but lost her job when the restaurant installed machines at the tables where customers can now pay for their meals. Danielle is cyclically unemployed.

Wages set high to discourage employee turnover are called _____ wages.

Wages that are higher than equilibrium can lead to

The price of field corn would be included in the _____ price index.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

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Exam 6: Measuring Inflation and Unemployment

Define full employment and its relationship to the natural rate of unemployment.

_____ is a reduction in the rate of inflation.

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is

(Table) The following table shows a hypothetical labor force and employment data for two years. What are the unemployment rates in both years? Is it possible for the unemployment rate to increase even if the number of employed workers rises? Why or why not?

The nation of Workovia has a population of 15 million people, of whom 10 million are in the labor force and 9 million are working. Workovia's unemployment rate is

If the structural unemployment rate is 3%, the frictional unemployment rate is 2%, and the cyclical unemployment rate is 4%, then the natural rate of unemployment is 9%.

The broadest measure of inflation is the

The GDP deflator is a measure of the average change in prices for all goods and services in the economy.

Frictional unemployment occurs when job openings

The goal of deflating a GDP series is to see how much real output has changed.

Jennifer received news that she is getting a 5% raise. However, the Bureau of Labor Statistics just reported that prices are rising by 7%. Based on the given information, which of these statements is TRUE?

Full employment is defined as zero unemployment.

Describe the three types of unemployment.

Which statement about counterfeiting is NOT true?

The costs of inflation are greater when it is unanticipated.

Danielle worked as a cashier in a restaurant but lost her job when the restaurant installed machines at the tables where customers can now pay for their meals. Danielle is cyclically unemployed.

Wages set high to discourage employee turnover are called _____ wages.

Wages that are higher than equilibrium can lead to

The price of field corn would be included in the _____ price index.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters