Question 1

The formula for computing a basic price index is

Accepted Answer

A) (cost of market basket today/cost of market basket in base year)× 100. 
B) (cost of market basket in base year/100)× cost of market basket today. 
C) (cost of market basket in base year/cost of market basket today)× 100. 
D) (100/cost of market basket in base year)+ cost of market basket today. 
A) (cost of market basket today/cost of market basket in base year)× 100. 
B) (cost of market basket in base year/100)× cost of market basket today. 
C) (cost of market basket in base year/cost of market basket today)× 100. 
D) (100/cost of market basket in base year)+ cost of market basket today. A

Question 2

Many politicians look at the unemployment rate as the be all and end all of economic indicators.Are they justified in their faith?Duration of employment and discouraged worker effect.

Accepted Answer

Most certainly not.They need to look into the issue of discouraged workers since they are not in the labour force but considered a part of it.Also there is the issue of the duration of unemployment.if the unemployment rate is 4% then it is a good thing.However,if the duration of unemployment is 1 year then for those individuals entering a period of unemployment then the future is bleak.

Question 3

The CPI tends to overstate the true inflation rate because

Accepted Answer

A) we cannot know what the true inflation rate is. 
B) changes in product quality are not taken into account. 
C) the market basket actually selected is inappropriate. 
D) the market basket fails to weigh housing costs sufficiently. 
A) we cannot know what the true inflation rate is. 
B) changes in product quality are not taken into account. 
C) the market basket actually selected is inappropriate. 
D) the market basket fails to weigh housing costs sufficiently. B

Question 4

An unemployment rate of zero can not be expected since

Accepted Answer

A) there are some people who do not want to work. 
B) there will always be discouraged workers. 
C) some portion of the labour force will always be between jobs. 
D) aggregate demand can never create enough job vacancies. 
A) there are some people who do not want to work. 
B) there will always be discouraged workers. 
C) some portion of the labour force will always be between jobs. 
D) aggregate demand can never create enough job vacancies.

Question 5

The nominal value of a good is

Accepted Answer

A) the good's value expressed in purchasing power terms. 
B) the good's anticipated value one year from now. 
C) the price of the good in today's dollars,minus an anticipated inflation premium. 
D) the price of the good in today's dollars. 
A) the good's value expressed in purchasing power terms. 
B) the good's anticipated value one year from now. 
C) the price of the good in today's dollars,minus an anticipated inflation premium. 
D) the price of the good in today's dollars.

Question 6

The total labour force is comprised of

Accepted Answer

A) the unemployed and the employed. 
B) only the employed. 
C) all individuals over 16 years of age,whether or not they work or are seeking work. 
D) only full-time employed individuals between the ages of 18 and 55. 
A) the unemployed and the employed. 
B) only the employed. 
C) all individuals over 16 years of age,whether or not they work or are seeking work. 
D) only full-time employed individuals between the ages of 18 and 55.

Question 7

Cyclical unemployment occurs when

Accepted Answer

A) individuals enter into the labour market making the rounds of potential employers. 
B) individuals with skills no longer valued in the domestic labour market can not find employment. 
C) individuals give up the search for employment. 
D) a downturn in economic activity reduces employment. 
A) individuals enter into the labour market making the rounds of potential employers. 
B) individuals with skills no longer valued in the domestic labour market can not find employment. 
C) individuals give up the search for employment. 
D) a downturn in economic activity reduces employment.

Question 8

The price index that measures the changes in prices of ALL goods and services produced by the economy is the

Accepted Answer

A) CPI. 
B) PPI. 
C) GDP deflator. 
D) fixed-quantity index. 
A) CPI. 
B) PPI. 
C) GDP deflator. 
D) fixed-quantity index.

Question 9

Suppose there are 100 million in the labour force,and 6 million unemployed people.During the next month,200,000 people lose their jobs and 300,000 find jobs.The new total of employed is ________ and the new unemployment rate is ________.

Accepted Answer

A) 100.1 million;5.8 percent 
B) 100 million;6.1 percent 
C) 94.1 million;5.9 percent 
D) 93.9 million;6.1 percent 
A) 100.1 million;5.8 percent 
B) 100 million;6.1 percent 
C) 94.1 million;5.9 percent 
D) 93.9 million;6.1 percent

Question 10

A price index shows

Accepted Answer

A) the current cost of a basket of goods. 
B) the relative price of necessities. 
C) the price of goods in the future. 
D) the cost of today's goods expressed in terms of the cost of goods in a base year. 
A) the current cost of a basket of goods. 
B) the relative price of necessities. 
C) the price of goods in the future. 
D) the cost of today's goods expressed in terms of the cost of goods in a base year.

Question 11

Suppose that last week 100,000 people lost their jobs or quit.We can say that

Accepted Answer

A) the number of unemployed increased by 100,000 people. 
B) the number of unemployed increased by less than 100,000 people because we should not count those who quit their jobs. 
C) the 100,000 people represent a flow known as job leavers. 
D) the 100,000 people represent a stock known as the new unemployed. 
A) the number of unemployed increased by 100,000 people. 
B) the number of unemployed increased by less than 100,000 people because we should not count those who quit their jobs. 
C) the 100,000 people represent a flow known as job leavers. 
D) the 100,000 people represent a stock known as the new unemployed.

Question 12

During a period of unanticipated inflation,the group that is most likely to benefit is

Accepted Answer

A) debtors. 
B) savers. 
C) creditors. 
D) retired individuals. 
A) debtors. 
B) savers. 
C) creditors. 
D) retired individuals.

Question 13

The inflation rate has been 4 percent for twenty years and the nominal interest rate has been 8 percent during this same time period.Unexpectedly,the actual inflation rate the next year is 8 percent.The real rate of interest this last year is

Accepted Answer

A) zero. 
B) 2 percent. 
C) 4 percent. 
D) 6 percent. 
A) zero. 
B) 2 percent. 
C) 4 percent. 
D) 6 percent.

Question 14

Deflation refers to the situation when

Accepted Answer

A) the inflation rate decreases. 
B) the average of all prices is falling. 
C) there is a recession and inflation. 
D) prices are not changing. 
A) the inflation rate decreases. 
B) the average of all prices is falling. 
C) there is a recession and inflation. 
D) prices are not changing.

Question 15

A lifeguard who is out of work in the winter is

Accepted Answer

A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) seasonally unemployed. 
A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) seasonally unemployed.

Question 16

Inflation can cause a misallocation of resources because

Accepted Answer

inflation doesn't proceed even

Question 17

Under which one of the following situations would you be better off?

Accepted Answer

A) You have $10,000 in your savings account paying 5 percent per year,and unanticipated inflation is 8 percent per year. 
B) You have paid $500 for a $1,000 Canada savings bond that matures in 10 years,and unanticipated inflation is 10 percent per year. 
C) You lend a friend $1,000 at 6 percent to be repaid in one year,and unanticipated inflation is 7 percent during the year. 
D) You borrowed $2,500 at 7 percent to pay for this year's college expenses,and unanticipated inflation is 12 percent during the year. 
A) You have $10,000 in your savings account paying 5 percent per year,and unanticipated inflation is 8 percent per year. 
B) You have paid $500 for a $1,000 Canada savings bond that matures in 10 years,and unanticipated inflation is 10 percent per year. 
C) You lend a friend $1,000 at 6 percent to be repaid in one year,and unanticipated inflation is 7 percent during the year. 
D) You borrowed $2,500 at 7 percent to pay for this year's college expenses,and unanticipated inflation is 12 percent during the year.

Question 18

Unanticipated negative inflation will create

Accepted Answer

A) losses for creditors and gains for debtors. 
B) losses for both creditors and debtors. 
C) gains for both creditors and debtors. 
D) gains for creditors and losses for debtors. 
A) losses for creditors and gains for debtors. 
B) losses for both creditors and debtors. 
C) gains for both creditors and debtors. 
D) gains for creditors and losses for debtors.

Question 19

Prices have been rising 8 percent a year for ten years.The nominal interest rate is 12 percent.The real rate of interest is

Accepted Answer

A) 20 percent. 
B) 12 percent. 
C) 8 percent. 
D) 4 percent. 
A) 20 percent. 
B) 12 percent. 
C) 8 percent. 
D) 4 percent.

Question 20

If the current price of a market basket of goods is $850 and the base year price for the same basket is $500,what is the value of the price index?

Accepted Answer

A) 140 
B) 170 
C) 120 
D) 100 
A) 140 
B) 170 
C) 120 
D) 100

The formula for computing a basic price index is

Many politicians look at the unemployment rate as the be all and end all of economic indicators.Are they justified in their faith?Duration of employment and discouraged worker effect.

The CPI tends to overstate the true inflation rate because

An unemployment rate of zero can not be expected since

The nominal value of a good is

The total labour force is comprised of

Cyclical unemployment occurs when

The price index that measures the changes in prices of ALL goods and services produced by the economy is the

Suppose there are 100 million in the labour force,and 6 million unemployed people.During the next month,200,000 people lose their jobs and 300,000 find jobs.The new total of employed is and the new unemployment rate is .

A price index shows

Suppose that last week 100,000 people lost their jobs or quit.We can say that

During a period of unanticipated inflation,the group that is most likely to benefit is

The inflation rate has been 4 percent for twenty years and the nominal interest rate has been 8 percent during this same time period.Unexpectedly,the actual inflation rate the next year is 8 percent.The real rate of interest this last year is

Deflation refers to the situation when

A lifeguard who is out of work in the winter is

Inflation can cause a misallocation of resources because

Under which one of the following situations would you be better off?

Unanticipated negative inflation will create

Prices have been rising 8 percent a year for ten years.The nominal interest rate is 12 percent.The real rate of interest is

If the current price of a market basket of goods is $850 and the base year price for the same basket is $500,what is the value of the price index?

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 4: Introduction to Macroeconomics

The formula for computing a basic price index is

Many politicians look at the unemployment rate as the be all and end all of economic indicators.Are they justified in their faith?Duration of employment and discouraged worker effect.

The CPI tends to overstate the true inflation rate because

An unemployment rate of zero can not be expected since

The nominal value of a good is

The total labour force is comprised of

Cyclical unemployment occurs when

The price index that measures the changes in prices of ALL goods and services produced by the economy is the

Suppose there are 100 million in the labour force,and 6 million unemployed people.During the next month,200,000 people lose their jobs and 300,000 find jobs.The new total of employed is ________ and the new unemployment rate is ________.

A price index shows

Suppose that last week 100,000 people lost their jobs or quit.We can say that

During a period of unanticipated inflation,the group that is most likely to benefit is

The inflation rate has been 4 percent for twenty years and the nominal interest rate has been 8 percent during this same time period.Unexpectedly,the actual inflation rate the next year is 8 percent.The real rate of interest this last year is

Deflation refers to the situation when

A lifeguard who is out of work in the winter is

Inflation can cause a misallocation of resources because

Under which one of the following situations would you be better off?

Unanticipated negative inflation will create

Prices have been rising 8 percent a year for ten years.The nominal interest rate is 12 percent.The real rate of interest is

If the current price of a market basket of goods is $850 and the base year price for the same basket is $500,what is the value of the price index?

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Suppose there are 100 million in the labour force,and 6 million unemployed people.During the next month,200,000 people lose their jobs and 300,000 find jobs.The new total of employed is and the new unemployment rate is .