Question 1

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

Accepted Answer

A)  A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year, and the actual rate of inflation ends up being 7 percent per year. 
B)  A worker receives a raise in salary that is less than the rate of inflation, because management under-predicted inflation. 
C)  Firms have to hire an extra worker to change prices in its store because of inflation. 
D)  A bank collects a lower amount of interest from a loan because inflation was under-predicted. 
A)  A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year, and the actual rate of inflation ends up being 7 percent per year. 
B)  A worker receives a raise in salary that is less than the rate of inflation, because management under-predicted inflation. 
C)  Firms have to hire an extra worker to change prices in its store because of inflation. 
D)  A bank collects a lower amount of interest from a loan because inflation was under-predicted. C

Question 2

Table 20-1
   Consider the data above for a simple economy.
-Refer to Table 20-1. The labor force participation rate for this simple economy equals

Accepted Answer

A)  (1,000/1,100) × 100. 
B)  (1,000/15,000) × 100. 
C)  (1,100/15,000) × 100. 
D)  (1,100/20,000) × 100. 
A)  (1,000/1,100) × 100. 
B)  (1,000/15,000) × 100. 
C)  (1,100/15,000) × 100. 
D)  (1,100/20,000) × 100. C

Question 3

If inflationary expectations are increasing, we would expect that the nominal interest rate would also be increasing, holding all else constant.

Accepted Answer

A) True 
 B)False  True

Question 4

The CPI is also referred to as

Accepted Answer

A)  the GDP deflator. 
B)  the inflation-consumption index. 
C)  the cost-of-living index. 
D)  the producer price index. 
A)  the GDP deflator. 
B)  the inflation-consumption index. 
C)  the cost-of-living index. 
D)  the producer price index.

Question 5

Jack just told his boss that he thinks his boss is an idiot. It is likely that Jack will be experiencing ________ unemployment in the near future.

Accepted Answer

A)  permanent 
B)  cyclical 
C)  frictional 
D)  structural 
A)  permanent 
B)  cyclical 
C)  frictional 
D)  structural

Question 6

What is outlet bias?

Accepted Answer

A)  the tendency for households to spend more money over time 
B)  the tendency for households to spend their money at discount stores as prices rise 
C)  the tendency for the quality of products to improve over time even though the CPI does not measure changes in quality 
D)  the tendency for consumers to purchase newer, more technologically advanced products even though they have higher prices 
A)  the tendency for households to spend more money over time 
B)  the tendency for households to spend their money at discount stores as prices rise 
C)  the tendency for the quality of products to improve over time even though the CPI does not measure changes in quality 
D)  the tendency for consumers to purchase newer, more technologically advanced products even though they have higher prices

Question 7

Most of the unemployment that occurred during the Great Depression was

Accepted Answer

A)  frictional unemployment. 
B)  structural unemployment. 
C)  cyclical unemployment. 
D)  core unemployment. 
A)  frictional unemployment. 
B)  structural unemployment. 
C)  cyclical unemployment. 
D)  core unemployment.

Question 8

Jack just received a promotion at work and now works 50 hours per week instead of 35. As a result,

Accepted Answer

A)  the unemployment rate increased. 
B)  the unemployment rate decreased. 
C)  the labor force participation rate increased. 
D)  neither the unemployment rate nor the labor force participation rate changed. 
A)  the unemployment rate increased. 
B)  the unemployment rate decreased. 
C)  the labor force participation rate increased. 
D)  neither the unemployment rate nor the labor force participation rate changed.

Question 9

Structural unemployment is the result of

Accepted Answer

A)  a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. 
B)  the search process of matching workers with jobs. 
C)  the ups and downs in inflation. 
D)  a slowdown in the economy. 
A)  a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. 
B)  the search process of matching workers with jobs. 
C)  the ups and downs in inflation. 
D)  a slowdown in the economy.

Question 10

Table 20-19
  
-Refer to Table 20-19. Looking at the table above, what is the approximate rate of growth of real average hourly earnings from 2011 to 2012?

Accepted Answer

A)  15% 
B)  4.4% 
C)  -1.5% 
D)  -4.8% 
A)  15% 
B)  4.4% 
C)  -1.5% 
D)  -4.8%

Question 11

What effect does the payment of government unemployment insurance have on the unemployment rate?

Accepted Answer

The payment of government unemployment i

Question 12

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

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 13

If inflation is higher than expected, this helps borrowers (by reducing the real interest rate they pay) and hurts lenders (by reducing the real interest rate they receive).

Accepted Answer

A) True 
 B)False

Question 14

Due to slowing growth in China and other developing countries, Caterpillar ________ the number of persons it employed in 2013 and this ________ the total number of persons unemployed in the economy.

Accepted Answer

A)  decreased; increased 
B)  decreased; decreased 
C)  increased; decreased 
D)  increased; increased 
A)  decreased; increased 
B)  decreased; decreased 
C)  increased; decreased 
D)  increased; increased

Question 15

Explain what economists mean by full employment and why this rate of unemployment is not zero.

Accepted Answer

Full employment occurs in the macro econ

Question 16

The stated interest rate on a loan is the

Accepted Answer

A)  real interest rate. 
B)  nominal interest rate. 
C)  actual inflation rate. 
D)  expected inflation rate. 
A)  real interest rate. 
B)  nominal interest rate. 
C)  actual inflation rate. 
D)  expected inflation rate.

Question 17

The Bureau of Labor Statistics would categorize a retiree who is not working as

Accepted Answer

A)  employed. 
B)  unemployed. 
C)  a discouraged worker. 
D)  out of the labor force. 
A)  employed. 
B)  unemployed. 
C)  a discouraged worker. 
D)  out of the labor force.

Question 18

If the price level rose in three consecutive years from 100 to 120 to 140, then the annual inflation rate over those years would

Accepted Answer

A)  increase. 
B)  remain the same. 
C)  decrease. 
D)  equal 20%. 
A)  increase. 
B)  remain the same. 
C)  decrease. 
D)  equal 20%.

Question 19

If inflation is anticipated, some effects of inflation on the redistribution of income can be avoided.

Accepted Answer

A) True 
 B)False

Question 20

Discuss the likely impact of each of the following on the unemployment rate:
a. The length of time workers are eligible to receive unemployment insurance payments is cut in half.
b. The government passes a law making labor unions illegal.
c. The minimum wage is raised by 50 percent.
d. The government funds an Internet site where companies can post job openings at no charge.

Accepted Answer

a. The unemployment rate will likely dec

Exam 20: Unemployment and Inflation

Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?

Table 20-1 Consider the data above for a simple economy. -Refer to Table 20-1. The labor force participation rate for this simple economy equals

If inflationary expectations are increasing, we would expect that the nominal interest rate would also be increasing, holding all else constant.

The CPI is also referred to as

Jack just told his boss that he thinks his boss is an idiot. It is likely that Jack will be experiencing ________ unemployment in the near future.

What is outlet bias?

Most of the unemployment that occurred during the Great Depression was

Jack just received a promotion at work and now works 50 hours per week instead of 35. As a result,

Structural unemployment is the result of

Table 20-19 -Refer to Table 20-19. Looking at the table above, what is the approximate rate of growth of real average hourly earnings from 2011 to 2012?

What effect does the payment of government unemployment insurance have on the unemployment rate?

Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower

If inflation is higher than expected, this helps borrowers (by reducing the real interest rate they pay) and hurts lenders (by reducing the real interest rate they receive).

Due to slowing growth in China and other developing countries, Caterpillar ________ the number of persons it employed in 2013 and this ________ the total number of persons unemployed in the economy.

Explain what economists mean by full employment and why this rate of unemployment is not zero.

The stated interest rate on a loan is the

The Bureau of Labor Statistics would categorize a retiree who is not working as

If the price level rose in three consecutive years from 100 to 120 to 140, then the annual inflation rate over those years would

If inflation is anticipated, some effects of inflation on the redistribution of income can be avoided.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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 Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Due to slowing growth in China and other developing countries, Caterpillar the number of persons it employed in 2013 and this the total number of persons unemployed in the economy.