Question 1

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. 
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.

Question 2

Mike has been unemployed for over a year. He hasn't looked for a job in the last three months, but he's just started looking for work again. Because Mike started looking for a new job,

Accepted Answer

A)  the unemployment rate increased. 
B)  the labor force participation rate decreased. 
C)  the unemployment rate decreased. 
D)  the working-age population increased. 
A)  the unemployment rate increased. 
B)  the labor force participation rate decreased. 
C)  the unemployment rate decreased. 
D)  the working-age population increased.

Question 3

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

Accepted Answer

A)  employed. 
B)  unemployed. 
C)  not in the labor force. 
D)  not in the working-age population. 
A)  employed. 
B)  unemployed. 
C)  not in the labor force. 
D)  not in the working-age population.

Question 4

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

Question 5

If the nominal interest rate is 6% and the inflation rate is 2% then the real interest rate is

Accepted Answer

A)  8%. 
B)  4%. 
C)  3%. 
D)  2%. 
E)  1%. 
A)  8%. 
B)  4%. 
C)  3%. 
D)  2%. 
E)  1%.

Question 6

Suppose that in 2014, all prices in the economy double and that all wages and salaries also double. In 2014 you

Accepted Answer

A)  are worse off than you were in 2013 as you can no longer afford to buy as many goods and services. 
B)  are better off than you were in 2013 as your salary is higher than it was in 2013 and you can now buy more goods and services. 
C)  are no better off or worse off than you were in 2013 as the purchasing power of your salary has remained the same. 
D)  cannot determine whether you are better off or worse off than you were in 2013, because the purchasing power of your salary cannot be determined. 
A)  are worse off than you were in 2013 as you can no longer afford to buy as many goods and services. 
B)  are better off than you were in 2013 as your salary is higher than it was in 2013 and you can now buy more goods and services. 
C)  are no better off or worse off than you were in 2013 as the purchasing power of your salary has remained the same. 
D)  cannot determine whether you are better off or worse off than you were in 2013, because the purchasing power of your salary cannot be determined.

Question 7

Efficiency wages cause unemployment because

Accepted Answer

A)  firms pay wages that are below the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied. 
B)  firms pay wages that are below the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied. 
C)  firms pay wages that are above the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied. 
D)  firms pay wages that are above the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied. 
A)  firms pay wages that are below the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied. 
B)  firms pay wages that are below the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied. 
C)  firms pay wages that are above the market wage, causing the quantity of labor demanded to be greater than the quantity of labor supplied. 
D)  firms pay wages that are above the market wage, causing the quantity of labor demanded to be less than the quantity of labor supplied.

Question 8

How would the unemployment rate and the labor force participation rate change if discouraged workers were counted as unemployed rather than counted as out of the labor force? Show using the formula for both measurements.

Accepted Answer

The unemployment rate is calculated as:

Question 9

The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect

Accepted Answer

A)  it is more likely that an incumbent president will be re-elected. 
B)  that stock prices are more likely to fall. 
C)  that jobs are less difficult to find. 
D)  that investors will be more optimistic about the economy. 
A)  it is more likely that an incumbent president will be re-elected. 
B)  that stock prices are more likely to fall. 
C)  that jobs are less difficult to find. 
D)  that investors will be more optimistic about the economy.

Question 10

If inflation increases unexpectedly, then

Accepted Answer

A)  borrowers pay a higher real interest rate than they expected. 
B)  lenders receive a lower real interest rate than they expected. 
C)  lenders gain and borrowers gain. 
D)  neither borrowers nor lenders lose. 
A)  borrowers pay a higher real interest rate than they expected. 
B)  lenders receive a lower real interest rate than they expected. 
C)  lenders gain and borrowers gain. 
D)  neither borrowers nor lenders lose.

Question 11

During the 1990s, Japan experienced periods of deflation and very low nominal interest rates, approaching zero percent. Why would lenders of money agree to a nominal interest rate of almost zero?

Accepted Answer

With the deflation, the real i

Question 12

The inflation rate measures the average prices of goods and services in the economy.

Accepted Answer

A) True 
 B)False

Question 13

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed, the BLS estimates the unemployment rate in September 2011 would have ________ compared to the measured unemployment rate.

Accepted Answer

A)  increased by more than 7 percentage points 
B)  more than doubled 
C)  decreased by less than 1 percentage point 
D)  barely changed 
A)  increased by more than 7 percentage points 
B)  more than doubled 
C)  decreased by less than 1 percentage point 
D)  barely changed

Question 14

If the minimum wage is set above the market wage,

Accepted Answer

A)  the quantity of labor supplied will be below the quantity of labor demanded. 
B)  unemployment will rise. 
C)  highly-skilled workers will have a harder time finding jobs. 
D)  All of the above are correct. 
A)  the quantity of labor supplied will be below the quantity of labor demanded. 
B)  unemployment will rise. 
C)  highly-skilled workers will have a harder time finding jobs. 
D)  All of the above are correct.

Question 15

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

Accepted Answer

A) True 
 B)False

Question 16

If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket, then

Accepted Answer

A)  changes in the CPI accurately reflect the true rate of inflation. 
B)  changes in the CPI understate the true rate of inflation. 
C)  changes in the CPI overstate the true rate of inflation. 
D)  changes in the CPI are unrelated to the true rate of inflation. 
A)  changes in the CPI accurately reflect the true rate of inflation. 
B)  changes in the CPI understate the true rate of inflation. 
C)  changes in the CPI overstate the true rate of inflation. 
D)  changes in the CPI are unrelated to the true rate of inflation.

Question 17

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness?

Accepted Answer

A)  inflation 
B)  discouraged workers 
C)  counting people as employed who are working part time, although they would prefer to be working full time 
D)  unemployed persons falsely report themselves to be actively looking for a job 
A)  inflation 
B)  discouraged workers 
C)  counting people as employed who are working part time, although they would prefer to be working full time 
D)  unemployed persons falsely report themselves to be actively looking for a job

Question 18

During the month of May, 10 million workers moved from being classified as "unemployed" to being classified as "employed." As a result,

Accepted Answer

A)  the unemployment rate rose. 
B)  the labor force participation rate fell. 
C)  the unemployment rate fell. 
D)  the labor force participation rate rose. 
A)  the unemployment rate rose. 
B)  the labor force participation rate fell. 
C)  the unemployment rate fell. 
D)  the labor force participation rate rose.

Question 19

Table 20-22
  
-Refer to Table 20-22. Using the above table, calculate real average hourly earnings for 2011, 2012, and 2013. Calculate the rate of growth of real average hourly earnings from 2012 to 2013.

Accepted Answer

Real average hourly earnings in 2011 are

Question 20

An unemployment insurance program has which of the following effects?

Accepted Answer

A)  It decreases the amount of personal income of the unemployed. 
B)  It contributes to the severity of a recession or economic downturn. 
C)  It increases the amount of time spent searching for a job. 
D)  It lowers the overall unemployment rate. 
A)  It decreases the amount of personal income of the unemployed. 
B)  It contributes to the severity of a recession or economic downturn. 
C)  It increases the amount of time spent searching for a job. 
D)  It lowers the overall unemployment rate.

Exam 20: Unemployment and Inflation

An efficiency wage

Mike has been unemployed for over a year. He hasn't looked for a job in the last three months, but he's just started looking for work again. Because Mike started looking for a new job,

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

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?

If the nominal interest rate is 6% and the inflation rate is 2% then the real interest rate is

Suppose that in 2014, all prices in the economy double and that all wages and salaries also double. In 2014 you

Efficiency wages cause unemployment because

How would the unemployment rate and the labor force participation rate change if discouraged workers were counted as unemployed rather than counted as out of the labor force? Show using the formula for both measurements.

The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect

If inflation increases unexpectedly, then

During the 1990s, Japan experienced periods of deflation and very low nominal interest rates, approaching zero percent. Why would lenders of money agree to a nominal interest rate of almost zero?

The inflation rate measures the average prices of goods and services in the economy.

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed, the BLS estimates the unemployment rate in September 2011 would have ________ compared to the measured unemployment rate.

If the minimum wage is set above the market wage,

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket, then

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness?

During the month of May, 10 million workers moved from being classified as "unemployed" to being classified as "employed." As a result,

Table 20-22 -Refer to Table 20-22. Using the above table, calculate real average hourly earnings for 2011, 2012, and 2013. Calculate the rate of growth of real average hourly earnings from 2012 to 2013.

An unemployment insurance program has which of the following effects?

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

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