Question 1

Inflation

Accepted Answer

A) always reduces real income 
B) never reduces real income 
C) reduces the real income of workers when wages increase more than prices do 
D) reduces the real income of workers when wages increase less than prices do 
E) increases the real income of workers only when wages increase less than prices do 
A) always reduces real income 
B) never reduces real income 
C) reduces the real income of workers when wages increase more than prices do 
D) reduces the real income of workers when wages increase less than prices do 
E) increases the real income of workers only when wages increase less than prices do D

Question 2

If a new Ph.D. in philosophy finds work as a taxi driver, but continues to look for a college teaching position, he is counted as being employed.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following will most likely qualify for unemployment compensation benefits?

Accepted Answer

A) a new college graduate who cannot find work despite a desperate job search 
B) an unemployed coal miner who has been receiving benefits for the past six months 
C) a former retail clerk who quit her job because the boss was too demanding 
D) a spot welder who has just gotten his first "pink slip" in the mail after ten years of continuous employment 
E) an accountant who was fired from his last position for drinking alcohol on the job 
A) a new college graduate who cannot find work despite a desperate job search 
B) an unemployed coal miner who has been receiving benefits for the past six months 
C) a former retail clerk who quit her job because the boss was too demanding 
D) a spot welder who has just gotten his first "pink slip" in the mail after ten years of continuous employment 
E) an accountant who was fired from his last position for drinking alcohol on the job D

Question 4

Exhibit 7-2  
-The inflation illustrated in Exhibit 7-2 would be considered:

Accepted Answer

A) cost-pull inflation 
B) cost-push inflation 
C) demand-push inflation 
D) demand-pull inflation 
E) induced inflation 
A) cost-pull inflation 
B) cost-push inflation 
C) demand-push inflation 
D) demand-pull inflation 
E) induced inflation

Question 5

Underemployment refers to

Accepted Answer

A) seasonal unemployment 
B) people working full-time though they would rather work part-time 
C) the unemployment that occurs when the actual level of employment is less than the full employment level 
D) people working in jobs that do not fully use their skills 
E) people working part-time 
A) seasonal unemployment 
B) people working full-time though they would rather work part-time 
C) the unemployment that occurs when the actual level of employment is less than the full employment level 
D) people working in jobs that do not fully use their skills 
E) people working part-time

Question 6

Which of the following people would be counted as unemployed?

Accepted Answer

A) a retired naval officer 
B) a full-time student in high school 
C) a father of preschool children who does not want to work 
D) an inner-city teenager who has given up looking for work after a year of trying 
E) a downhill ski instructor who looks for work during the summer 
A) a retired naval officer 
B) a full-time student in high school 
C) a father of preschool children who does not want to work 
D) an inner-city teenager who has given up looking for work after a year of trying 
E) a downhill ski instructor who looks for work during the summer

Question 7

A decrease in the interest rate, other things constant, will

Accepted Answer

A) shift the supply of loanable funds curve to the left 
B) shift the supply of loanable funds curve to the right 
C) decrease the quantity of loanable funds demanded 
D) decrease the quantity of loanable funds supplied 
E) shift the demand for loanable funds curve to the right 
A) shift the supply of loanable funds curve to the left 
B) shift the supply of loanable funds curve to the right 
C) decrease the quantity of loanable funds demanded 
D) decrease the quantity of loanable funds supplied 
E) shift the demand for loanable funds curve to the right

Question 8

Which of the following is not a cost of unemployment?

Accepted Answer

A) Unemployed individuals suffer a loss of income. 
B) Unemployed individuals are more likely to have emotional or psychological problems. 
C) Unemployed individuals can lose their job skills over time. 
D) Unemployment causes production to decrease from what it could be. 
E) The opportunity cost of unemployment is a higher inflation rate. 
A) Unemployed individuals suffer a loss of income. 
B) Unemployed individuals are more likely to have emotional or psychological problems. 
C) Unemployed individuals can lose their job skills over time. 
D) Unemployment causes production to decrease from what it could be. 
E) The opportunity cost of unemployment is a higher inflation rate.

Question 9

An example of structural unemployment caused by a change in tastes and preferences is

Accepted Answer

A) newspaper journalists 
B) administrative assistants 
C) lifeguards 
D) steelworkers during recessions 
E) None of the answers is correct 
A) newspaper journalists 
B) administrative assistants 
C) lifeguards 
D) steelworkers during recessions 
E) None of the answers is correct

Question 10

Which of the following people would be classified as unemployed?

Accepted Answer

A) a person who wants a job as a fashion model but cannot find work in that field 
B) someone who quits a part-time job to attend school full-time 
C) someone who gives up looking for a job 
D) a person who works at a job that underemploys his or her skills 
E) a person who works part-time and would rather work full-time 
A) a person who wants a job as a fashion model but cannot find work in that field 
B) someone who quits a part-time job to attend school full-time 
C) someone who gives up looking for a job 
D) a person who works at a job that underemploys his or her skills 
E) a person who works part-time and would rather work full-time

Question 11

Anticipated inflation

Accepted Answer

A) allows us to eliminate the problems associated with unemployment 
B) causes more problems than unanticipated inflation 
C) causes fewer problems than unanticipated inflation 
D) is easy to predict for economists 
E) prevents workers from increasing their purchasing power 
A) allows us to eliminate the problems associated with unemployment 
B) causes more problems than unanticipated inflation 
C) causes fewer problems than unanticipated inflation 
D) is easy to predict for economists 
E) prevents workers from increasing their purchasing power

Question 12

If top government officials claim that "more people are working now than ever before," which of the following must be true?

Accepted Answer

A) The unemployment rate is lower now than ever before. 
B) The number of people unemployed is lower now than ever before. 
C) The employment rate is higher now than ever before. 
D) The number of people in the labor force is higher now than ever before. 
E) The number of people employed is higher now than ever before. 
A) The unemployment rate is lower now than ever before. 
B) The number of people unemployed is lower now than ever before. 
C) The employment rate is higher now than ever before. 
D) The number of people in the labor force is higher now than ever before. 
E) The number of people employed is higher now than ever before.

Question 13

Workers who are temporarily unemployed but who normally find jobs quickly are called

Accepted Answer

A) frictionally unemployed 
B) cyclically unemployed 
C) seasonally unemployed 
D) structurally unemployed 
E) discouraged workers 
A) frictionally unemployed 
B) cyclically unemployed 
C) seasonally unemployed 
D) structurally unemployed 
E) discouraged workers

Question 14

When workers are over-qualified for their current jobs or can find only part-time work, we say they are

Accepted Answer

A) unemployed 
B) discouraged workers 
C) not in the labor force 
D) overemployed 
E) underemployed 
A) unemployed 
B) discouraged workers 
C) not in the labor force 
D) overemployed 
E) underemployed

Question 15

Suppose you received a 4 percent increase in your nominal wage. Over the year, inflation runs about 7 percent. Which of the following is true?

Accepted Answer

A) Your real wage increased. 
B) Both the nominal and real wages increased. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell, your real wage increased. 
E) Although your nominal wage rose, your real wage decreased. 
A) Your real wage increased. 
B) Both the nominal and real wages increased. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell, your real wage increased. 
E) Although your nominal wage rose, your real wage decreased.

Question 16

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, what was the real rate of interest Tony received?

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 17

Suppose the official unemployment rate is 10 percent. We can conclude without question that

Accepted Answer

A) the same 10 percent of the people in the economy were out of work for the entire year 
B) one of every ten people in the labor force is currently unemployed 
C) the same 10 percent of the people in the labor force were out of work for the entire year 
D) every person in the labor force was out of work for 10 percent of the year 
E) 10 percent of the people in the economy were each out of work for 10 percent of the year 
A) the same 10 percent of the people in the economy were out of work for the entire year 
B) one of every ten people in the labor force is currently unemployed 
C) the same 10 percent of the people in the labor force were out of work for the entire year 
D) every person in the labor force was out of work for 10 percent of the year 
E) 10 percent of the people in the economy were each out of work for 10 percent of the year

Question 18

Which period in U.S. economic history was not characterized by inflation?

Accepted Answer

A) 1917-1920 
B) 1929-1933 
C) 1947 
D) 1978-1980 
E) 1980-1989 
A) 1917-1920 
B) 1929-1933 
C) 1947 
D) 1978-1980 
E) 1980-1989

Question 19

Which of the following is most likely to reduce structural unemployment?

Accepted Answer

A) a reduction in wage rates 
B) increasing efficiency of the job search through better information on local job openings 
C) retraining workers in marketable skills 
D) promotion of full employment through government stabilization policies 
E) reducing the cost of job loss through enhanced unemployment compensation 
A) a reduction in wage rates 
B) increasing efficiency of the job search through better information on local job openings 
C) retraining workers in marketable skills 
D) promotion of full employment through government stabilization policies 
E) reducing the cost of job loss through enhanced unemployment compensation

Question 20

Which of the following is true about U.S. history prior to 1945?

Accepted Answer

A) The inflation rate remained constant during this period. 
B) Cost-push inflation led to depressions, followed by slowly-rising price levels. 
C) The price level remained constant during this period. 
D) Major wars resulted in high inflation rates, after which the inflation rate tapered off. 
E) Major wars resulted in high inflation rates that were usually followed by deflation. 
A) The inflation rate remained constant during this period. 
B) Cost-push inflation led to depressions, followed by slowly-rising price levels. 
C) The price level remained constant during this period. 
D) Major wars resulted in high inflation rates, after which the inflation rate tapered off. 
E) Major wars resulted in high inflation rates that were usually followed by deflation.

Exam 7: Unemployment and Inflation

Inflation

If a new Ph.D. in philosophy finds work as a taxi driver, but continues to look for a college teaching position, he is counted as being employed.

Which of the following will most likely qualify for unemployment compensation benefits?

Exhibit 7-2 -The inflation illustrated in Exhibit 7-2 would be considered:

Underemployment refers to

Which of the following people would be counted as unemployed?

A decrease in the interest rate, other things constant, will

Which of the following is not a cost of unemployment?

An example of structural unemployment caused by a change in tastes and preferences is

Which of the following people would be classified as unemployed?

Anticipated inflation

If top government officials claim that "more people are working now than ever before," which of the following must be true?

Workers who are temporarily unemployed but who normally find jobs quickly are called

When workers are over-qualified for their current jobs or can find only part-time work, we say they are

Suppose you received a 4 percent increase in your nominal wage. Over the year, inflation runs about 7 percent. Which of the following is true?

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, what was the real rate of interest Tony received?

Suppose the official unemployment rate is 10 percent. We can conclude without question that

Which period in U.S. economic history was not characterized by inflation?

Which of the following is most likely to reduce structural unemployment?

Which of the following is true about U.S. history prior to 1945?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Productivity and Growth

Aggregate Expenditure

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Algebra of Income and Expenditure

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

The Algebra of Demand-Side Equilibrium

International Trade

International Finance

Economic Development

National Income Accounts

Understanding Graphs

Variable Net Exports

Variable Net Exports Revisited

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