Exam 20: Unemployment and Inflation

Table 20-4 -Refer to Table 20-4. Assume the market basket for the consumer price index has two products - meat and potatoes - with the following values in 2006 and 2013 for price and quantity: The Consumer Price Index for 2013 equals

Which of the following is true about the consumer price index?

Suppose that at the beginning of a loan contract, the real interest rate is 4% and expected inflation is currently 6%. If actual inflation turns out to be 7% over the loan contract period, then

An advantage of the establishment survey over the household survey of the labor market is that the establishment survey

Table 20-23 -Refer to Table 20-23. The table above lists the actual minimum wage and CPI in 1974 and in 2012. Using the above table, calculate the real minimum wage for 1974 and 2012. Calculate the rate of growth of the real minimum wage from 1974 to 2012. Are workers better off in terms of the purchasing power of a dollar in 1974 or 2012? Explain why.

Which of the following causes the unemployment rate to understate the true extent of joblessness?

Table 20-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 20-14. The real average hourly earnings for 1965 in 1982-1984 dollars equal

Which of the following would increase the unemployment rate?

If the CPI changes from 125 to 120 between 2012 and 2013, how did prices change between 2012 and 2013?

A consumer price index of 160 in 1996 with a base year of 1982-1984 would mean that the cost of the market basket

Eliminating structural unemployment would be good for the economy.

Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid?

According to the text, economists consider full employment to occur when

You agree to lend $1,000 for one year at a nominal interest rate of 10%. You anticipate that inflation will be 4% over that year. If inflation is instead 3% over that year, which of the following is true?

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

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket.

Figure 20-1 -Refer to Figure 20-1. Based on the graph of the labor market above, if a minimum wage of $8 per hour is imposed, which of the following will result?

Jack was unemployed two weeks ago but just started a new job. As a result of this increase in the number of employed workers, which of the following occurred?

Table 20-11 -Refer to Table 20-11. Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2005 is the base year, then what is the CPI for 2013?

If the number of unemployed workers is 200 million, the number of employed workers is 300 million, and the working-age population is 800 million, what is the labor force participation rate?