Question 1

Most economists believe that labour unions significantly increase the overall unemployment rate in Canada.

Accepted Answer

A) True 
 B)False  False

Question 2

The natural rate of unemployment is the amount of unemployment

Accepted Answer

A) equal to frictional and cyclical unemployment. 
B) equal to frictional plus structural unemployment. 
C) that exists when the economy goes into recession. 
D) that exists when the economy is in an expansion. 
E) equal to seasonal and cyclical unemployment. 
A) equal to frictional and cyclical unemployment. 
B) equal to frictional plus structural unemployment. 
C) that exists when the economy goes into recession. 
D) that exists when the economy is in an expansion. 
E) equal to seasonal and cyclical unemployment. B

Question 3

The labour force is the sum of

Accepted Answer

A) employed workers and discouraged workers. 
B) employed workers and unemployed workers. 
C) employed workers and individuals not looking for work. 
D) employed workers and the working age population. 
E) unemployed workers and the working age population. 
A) employed workers and discouraged workers. 
B) employed workers and unemployed workers. 
C) employed workers and individuals not looking for work. 
D) employed workers and the working age population. 
E) unemployed workers and the working age population. B

Question 4

Minimum wage laws cause unemployment because the legal minimum wage is set

Accepted Answer

A) below the market wage, causing labour demand to be greater than labour supply. 
B) below the market wage, causing labour demand to be less than labour supply. 
C) above the market wage, causing labour demand to be greater than labour supply. 
D) above the market wage, causing labour demand to be less than labour supply. 
E) too low. 
A) below the market wage, causing labour demand to be greater than labour supply. 
B) below the market wage, causing labour demand to be less than labour supply. 
C) above the market wage, causing labour demand to be greater than labour supply. 
D) above the market wage, causing labour demand to be less than labour supply. 
E) too low.

Question 5

Which of the following policies would reduce frictional unemployment?

Accepted Answer

A) a decrease in the minimum wage 
B) a job retraining program 
C) implementing an unemployment insurance policy 
D) building an online job database that helps workers find jobs 
E) an increase in the generousity of Employment Insurance payments 
A) a decrease in the minimum wage 
B) a job retraining program 
C) implementing an unemployment insurance policy 
D) building an online job database that helps workers find jobs 
E) an increase in the generousity of Employment Insurance payments

Question 6

A student who just graduated from college but has not found a job would most likely be

Accepted Answer

A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) seasonally unemployed. 
E) under employed. 
A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) seasonally unemployed. 
E) under employed.

Question 7

If your nominal wage rises faster than the price level, we can say your real wage has ________ and the purchasing power of your income has ________.

Accepted Answer

A) fallen; fallen 
B) fallen; risen 
C) risen; risen 
D) risen; fallen 
A) fallen; fallen 
B) fallen; risen 
C) risen; risen 
D) risen; fallen

Question 8

Table 5.15  
-Refer to Table 5.15.Looking at the table above, real average hourly earnings were equal to ________ in 2016.

Accepted Answer

A) $13.63 
B) $14.29 
C) $15.00 
D) $16.50 
E) $18.36 
A) $13.63 
B) $14.29 
C) $15.00 
D) $16.50 
E) $18.36

Question 9

The natural rate of unemployment consists of frictional unemployment plus cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 10

What does the PPI measure?

Accepted Answer

A) the average change in the prices paid for all goods produced in the economy over a given year 
B) the average of the prices received by producers of goods and services at all stages of the production process 
C) the level of production of goods and services generated in the economy in a given year 
D) the difference between the prices consumers pay for goods and services and the prices producers pay for goods and services 
E) the average change in prices paid by producers for their factors of production 
A) the average change in the prices paid for all goods produced in the economy over a given year 
B) the average of the prices received by producers of goods and services at all stages of the production process 
C) the level of production of goods and services generated in the economy in a given year 
D) the difference between the prices consumers pay for goods and services and the prices producers pay for goods and services 
E) the average change in prices paid by producers for their factors of production

Question 11

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

Accepted Answer

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

Question 12

Which of the following would be a consequence of substitution bias in the CPI?

Accepted Answer

A) Social Security payments would not adequately compensate retired workers for inflation. 
B) Businesses would overcompensate employees for inflation when giving the cost of living rises. 
C) The inflation rate based on the CPI would underestimate the true level of inflation. 
D) Judges would award child support payments that would not adequately keep up with the true cost of inflation. 
E) Economists make errors in estimating inflation when using substitutes for the CPI such as GDP deflator. 
A) Social Security payments would not adequately compensate retired workers for inflation. 
B) Businesses would overcompensate employees for inflation when giving the cost of living rises. 
C) The inflation rate based on the CPI would underestimate the true level of inflation. 
D) Judges would award child support payments that would not adequately keep up with the true cost of inflation. 
E) Economists make errors in estimating inflation when using substitutes for the CPI such as GDP deflator.

Question 13

The advice to "keep searching, there are plenty of jobs around here for which you are qualified," would be most appropriate for which of the following types of unemployment?

Accepted Answer

A) frictional unemployment 
B) structural unemployment 
C) cyclical unemployment 
D) seasonal unemployment 
E) geographical unemployment 
A) frictional unemployment 
B) structural unemployment 
C) cyclical unemployment 
D) seasonal unemployment 
E) geographical unemployment

Question 14

An efficiency wage

Accepted Answer

A) is higher than the market wage and tends to increase productivity. 
B) is lower than the market wage and tends to increase productivity. 
C) is higher than the market wage and tends to decrease productivity. 
D) is lower than the market wage and tends to decrease productivity. 
E) is lower than the market wage and tends to increase unemployment. 
A) is higher than the market wage and tends to increase productivity. 
B) is lower than the market wage and tends to increase productivity. 
C) is higher than the market wage and tends to decrease productivity. 
D) is lower than the market wage and tends to decrease productivity. 
E) is lower than the market wage and tends to increase unemployment.

Question 15

If inflation is higher than anticipated which of the following is most likely to be true

Accepted Answer

A) it will be easier to repay your student loans. 
B) it will be easier to get a new mortgage. 
C) income will be more even distributed than before. 
D) forecasting the future inflation rate will become easier. 
E) the money in your piggy bank will increase in value. 
A) it will be easier to repay your student loans. 
B) it will be easier to get a new mortgage. 
C) income will be more even distributed than before. 
D) forecasting the future inflation rate will become easier. 
E) the money in your piggy bank will increase in value.

Question 16

The nominal interest rate minus the inflation rate equals the real interest rate.

Accepted Answer

A) True 
 B)False

Question 17

Suppose the labour force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed.The labour force participation rate will

Accepted Answer

A) increase. 
B) decrease. 
C) remain constant. 
D) not change in a way that can be predicted. 
A) increase. 
B) decrease. 
C) remain constant. 
D) not change in a way that can be predicted.

Question 18

If the number of unemployed workers is 20 million, the number of employed workers is 30 million, and the working-age population is 80 million, what is the labour force participation rate?

Accepted Answer

A) 12.5% 
B) 18% 
C) 37.5% 
D) 40% 
E) 62.5% 
A) 12.5% 
B) 18% 
C) 37.5% 
D) 40% 
E) 62.5%

Question 19

Which of the following statements is true about the Canadian economy?

Accepted Answer

A) Each year, many new jobs are created, but few existing jobs are destroyed, and the unemployed find jobs quickly. 
B) Each year, few new jobs are created, but few existing jobs are destroyed, keeping unemployment low. 
C) Each year, many new jobs are created and many existing jobs are destroyed. 
D) Each year few jobs are created, and therefore it takes the unemployed a long time to find a new job. 
E) Each year many more jobs are destroyed than are created. 
A) Each year, many new jobs are created, but few existing jobs are destroyed, and the unemployed find jobs quickly. 
B) Each year, few new jobs are created, but few existing jobs are destroyed, keeping unemployment low. 
C) Each year, many new jobs are created and many existing jobs are destroyed. 
D) Each year few jobs are created, and therefore it takes the unemployed a long time to find a new job. 
E) Each year many more jobs are destroyed than are created.

Question 20

Suppose you borrow $1,000 at an interest rate of 12 percent.If the expected real interest rate is 5 percent, then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation

Accepted Answer

A) equal to 0 percent. 
B) greater than 7 percent. 
C) equal to 7 percent. 
D) less than 7 percent. 
E) equal to 3 percent. 
A) equal to 0 percent. 
B) greater than 7 percent. 
C) equal to 7 percent. 
D) less than 7 percent. 
E) equal to 3 percent.

Most economists believe that labour unions significantly increase the overall unemployment rate in Canada.

The natural rate of unemployment is the amount of unemployment

The labour force is the sum of

Minimum wage laws cause unemployment because the legal minimum wage is set

Which of the following policies would reduce frictional unemployment?

A student who just graduated from college but has not found a job would most likely be

If your nominal wage rises faster than the price level, we can say your real wage has and the purchasing power of your income has .

Table 5.15 -Refer to Table 5.15.Looking at the table above, real average hourly earnings were equal to ________ in 2016.

The natural rate of unemployment consists of frictional unemployment plus cyclical unemployment.

What does the PPI measure?

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

Which of the following would be a consequence of substitution bias in the CPI?

The advice to "keep searching, there are plenty of jobs around here for which you are qualified," would be most appropriate for which of the following types of unemployment?

An efficiency wage

If inflation is higher than anticipated which of the following is most likely to be true

The nominal interest rate minus the inflation rate equals the real interest rate.

Suppose the labour force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed.The labour force participation rate will

If the number of unemployed workers is 20 million, the number of employed workers is 30 million, and the working-age population is 80 million, what is the labour force participation rate?

Which of the following statements is true about the Canadian economy?

Suppose you borrow $1,000 at an interest rate of 12 percent.If the expected real interest rate is 5 percent, then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

GDP: Measuring Total Production and Income

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 5: Unemployment and Inflation

Most economists believe that labour unions significantly increase the overall unemployment rate in Canada.

The natural rate of unemployment is the amount of unemployment

The labour force is the sum of

Minimum wage laws cause unemployment because the legal minimum wage is set

Which of the following policies would reduce frictional unemployment?

A student who just graduated from college but has not found a job would most likely be

If your nominal wage rises faster than the price level, we can say your real wage has ________ and the purchasing power of your income has ________.

Table 5.15 -Refer to Table 5.15.Looking at the table above, real average hourly earnings were equal to ________ in 2016.

The natural rate of unemployment consists of frictional unemployment plus cyclical unemployment.

What does the PPI measure?

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering

Which of the following would be a consequence of substitution bias in the CPI?

The advice to "keep searching, there are plenty of jobs around here for which you are qualified," would be most appropriate for which of the following types of unemployment?

An efficiency wage

If inflation is higher than anticipated which of the following is most likely to be true

The nominal interest rate minus the inflation rate equals the real interest rate.

Suppose the labour force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed.The labour force participation rate will

If the number of unemployed workers is 20 million, the number of employed workers is 30 million, and the working-age population is 80 million, what is the labour force participation rate?

Which of the following statements is true about the Canadian economy?

Suppose you borrow $1,000 at an interest rate of 12 percent.If the expected real interest rate is 5 percent, then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

GDP: Measuring Total Production and Income

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

If your nominal wage rises faster than the price level, we can say your real wage has and the purchasing power of your income has .