Question 1

Unanticipated inflation penalizes:​

Accepted Answer

A) those who are saving. 
B) those who are borrowing. 
C) governments. 
D) those who are in high-growth industries where wages are growing faster than prices. 
E) those who can't find jobs at any wage rate. 
A) those who are saving. 
B) those who are borrowing. 
C) governments. 
D) those who are in high-growth industries where wages are growing faster than prices. 
E) those who can't find jobs at any wage rate.

Question 2

Suppose the nominal wages of workers in an economy increase by 7 percent while the price level rises by 5 percent.The real wages:​

Accepted Answer

A) would increase by about 2 percent. 
B) would decrease by about 5 percent. 
C) would increase by about 50 percent. 
D) would increase by about 10 percent. 
E) would decrease by about 25 percent. 
A) would increase by about 2 percent. 
B) would decrease by about 5 percent. 
C) would increase by about 50 percent. 
D) would increase by about 10 percent. 
E) would decrease by about 25 percent.

Question 3

Which of the following is true of the labor force participation rate?​

Accepted Answer

A) When workers become unemployed,the labor force participation rate declines. 
B) When the unemployed become discouraged workers,the labor force participation rate declines. 
C) When workers do not fully use their skills,the labor force participation rate decreases. 
D) Since the 1950s,the labor force participation rate of women has decreased in the United States. 
E) The trend toward earlier retirement has increased the labor force participation rate in the United States. 
A) When workers become unemployed,the labor force participation rate declines. 
B) When the unemployed become discouraged workers,the labor force participation rate declines. 
C) When workers do not fully use their skills,the labor force participation rate decreases. 
D) Since the 1950s,the labor force participation rate of women has decreased in the United States. 
E) The trend toward earlier retirement has increased the labor force participation rate in the United States.

Question 4

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 5

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 6

Raul borrowed $1,000 from Marta for a year and agreed to repay her $1,050 at the end of the year.If the inflation rate was 3 percent,which of the following is the real rate of interest Marta received?​

Accepted Answer

A) 10 percent 
B) 5 percent​ 
C) 3 percent​ 
D) 2 percent​ 
E) −2 percent​ 
A) 10 percent 
B) 5 percent​ 
C) 3 percent​ 
D) 2 percent​ 
E) −2 percent​

Question 7

Suppose an economy had an inflation rate of 7 percent last year.This has decreased to 6 percent this year.This means that the economy is:​

Accepted Answer

A) suffering from hyperinflation. 
B) experiencing deflation. 
C) experiencing disinflation. 
D) experiencing a wage-price spiral. 
E) experiencing a decrease in real wage. 
A) suffering from hyperinflation. 
B) experiencing deflation. 
C) experiencing disinflation. 
D) experiencing a wage-price spiral. 
E) experiencing a decrease in real wage.

Question 8

If the inflation rate in an economy is higher than expected,which of the following groups in the society would be most likely to gain?​

Accepted Answer

A) Borrowers 
B) Lenders 
C) Persons holding large amounts of money 
D) Persons on fixed incomes 
E) Workers under contract without a cost of living adjustment 
A) Borrowers 
B) Lenders 
C) Persons holding large amounts of money 
D) Persons on fixed incomes 
E) Workers under contract without a cost of living adjustment

Question 9

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 does not have a job and gives up looking for one​ 
D) A person who works at a job that underutilizes 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 does not have a job and gives up looking for one​ 
D) A person who works at a job that underutilizes his or her skills​ 
E) A person who works part-time and would rather work full time​

Question 10

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 11

Since World War II,the consumer price index has increased by an average of _____.​

Accepted Answer

A) 1.4 percent per year 
B) 2.1 percent per year​ 
C) 6.4 percent per year​ 
D) 5.6 percent per year​ 
E) 3.5 percent per year​ 
A) 1.4 percent per year 
B) 2.1 percent per year​ 
C) 6.4 percent per year​ 
D) 5.6 percent per year​ 
E) 3.5 percent per year​

Question 12

If the aggregate supply curve shifts leftward,then _____.​

Accepted Answer

A) the price level increases and output increases 
B) the resulting increase in the price level is usually called cost-push inflation​ 
C) the resulting increase in the price level is usually called demand-pull inflation​ 
D) the price level increases as long as the aggregate demand curve shifts rightward​ 
E) the price level decreases and output increases​ 
A) the price level increases and output increases 
B) the resulting increase in the price level is usually called cost-push inflation​ 
C) the resulting increase in the price level is usually called demand-pull inflation​ 
D) the price level increases as long as the aggregate demand curve shifts rightward​ 
E) the price level decreases and output increases​

Question 13

Which of the following statements is true of unemployment?​

Accepted Answer

A) Cyclical unemployment decreases during recessions and increases during expansions. 
B) Some unemployment exists even when the economy is healthy and growing. 
C) Unemployment and inflation are not related. 
D) People who are willing and able to work but have given up the search for a job are considered unemployed. 
E) Voluntary unemployment refers to a situation in which people who really do not want to work only pretend to look for jobs. 
A) Cyclical unemployment decreases during recessions and increases during expansions. 
B) Some unemployment exists even when the economy is healthy and growing. 
C) Unemployment and inflation are not related. 
D) People who are willing and able to work but have given up the search for a job are considered unemployed. 
E) Voluntary unemployment refers to a situation in which people who really do not want to work only pretend to look for jobs.

Question 14

If two parties to a loan contract agree that the lender should earn an 8 percent increase in purchasing power as a result of a loan and if the inflation rate is 5 percent,the nominal interest rate is _____.​

Accepted Answer

A) 13 percent 
B) 8 percent​ 
C) 5 percent​ 
D) 3 percent​ 
E) 1 percent​ 
A) 13 percent 
B) 8 percent​ 
C) 5 percent​ 
D) 3 percent​ 
E) 1 percent​

Question 15

Consider an economy made up of 100 people sixteen years of age and older,60 of whom hold jobs,10 of whom are looking for work,and 15 of whom are retired.The number of people in the labor force is _____.​

Accepted Answer

A) 30 
B) 60​ 
C) 85​ 
D) 90​ 
E) 70 
A) 30 
B) 60​ 
C) 85​ 
D) 90​ 
E) 70

Question 16

Which of the following people is least likely to be hurt by inflation?​

Accepted Answer

A) A salesperson who works on commission 
B) A retired couple living on a pension​ 
C) An individual who enters into a fixed-wage contract for the next three years​ 
D) An individual who agrees to lend money at a fixed rate of interest for the next three years​ 
E) An individual working at the minimum wage which seldom changes​ 
A) A salesperson who works on commission 
B) A retired couple living on a pension​ 
C) An individual who enters into a fixed-wage contract for the next three years​ 
D) An individual who agrees to lend money at a fixed rate of interest for the next three years​ 
E) An individual working at the minimum wage which seldom changes​

Question 17

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 18

During periods of inflation,the real value of a given amount of nominal dollars decreases.​

Accepted Answer

A) True 
 B)False

Question 19

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 20

Anticipated inflation causes more problems in the economy than unanticipated inflation.​

Accepted Answer

A) True 
 B)False

Unanticipated inflation penalizes:

Suppose the nominal wages of workers in an economy increase by 7 percent while the price level rises by 5 percent.The real wages:

Which of the following is true of the labor force participation rate?

A discouraged worker is one who:

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:

Raul borrowed $1,000 from Marta for a year and agreed to repay her $1,050 at the end of the year.If the inflation rate was 3 percent,which of the following is the real rate of interest Marta received?

Suppose an economy had an inflation rate of 7 percent last year.This has decreased to 6 percent this year.This means that the economy is:

If the inflation rate in an economy is higher than expected,which of the following groups in the society would be most likely to gain?

Which of the following people would be classified as unemployed?

Underemployment refers to:

Since World War II,the consumer price index has increased by an average of _____.

If the aggregate supply curve shifts leftward,then _____.

Which of the following statements is true of unemployment?

If two parties to a loan contract agree that the lender should earn an 8 percent increase in purchasing power as a result of a loan and if the inflation rate is 5 percent,the nominal interest rate is _____.

Consider an economy made up of 100 people sixteen years of age and older,60 of whom hold jobs,10 of whom are looking for work,and 15 of whom are retired.The number of people in the labor force is _____.

Which of the following people is least likely to be hurt by inflation?

Cost-push inflation:

During periods of inflation,the real value of a given amount of nominal dollars decreases.

The higher the expected inflation,_____.

Anticipated inflation causes more problems in the economy than unanticipated inflation.

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Economic Decision Makers

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Introduction to Macroeconomics

Tracking the Useconomy

Productivity and Growth

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Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

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Exam 7: Unemployment and Inflation