Question 1

If the inflation rate is 5 percent and you receive a wage increase of 5 percent,

Accepted Answer

A) your nominal income declines but your real income increases 
B) both your nominal income and your real income increase by 5 percent 
C) your nominal income increases but your real income declines 
D) both your nominal income and your real income decrease by 5 percent 
E) your nominal income increases by 5 percent but your real income is unchanged 
A) your nominal income declines but your real income increases 
B) both your nominal income and your real income increase by 5 percent 
C) your nominal income increases but your real income declines 
D) both your nominal income and your real income decrease by 5 percent 
E) your nominal income increases by 5 percent but your real income is unchanged E

Question 2

If top government officials claim that "more people are working now than ever before," which of the following must be true?

Accepted Answer

A) The unemployment rate is lower now than ever before. 
B) The number of people unemployed is lower now than ever before. 
C) The employment rate is higher now than ever before. 
D) The number of people in the labor force is higher now than ever before. 
E) The number of people employed is higher now than ever before. 
A) The unemployment rate is lower now than ever before. 
B) The number of people unemployed is lower now than ever before. 
C) The employment rate is higher now than ever before. 
D) The number of people in the labor force is higher now than ever before. 
E) The number of people employed is higher now than ever before. E

Question 3

A person whose skills do not match the available job openings is considered frictionally unemployed.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following will most likely qualify for unemployment compensation benefits?

Accepted Answer

A) a new college graduate who cannot find work despite a desperate job search 
B) an unemployed coal miner who has been receiving benefits for the past six months 
C) a former retail clerk who quit her job because the boss was too demanding 
D) a spot welder who has just gotten his first "pink slip" in the mail after ten years of continuous employment 
E) an accountant who was fired from his last position for drinking alcohol on the job 
A) a new college graduate who cannot find work despite a desperate job search 
B) an unemployed coal miner who has been receiving benefits for the past six months 
C) a former retail clerk who quit her job because the boss was too demanding 
D) a spot welder who has just gotten his first "pink slip" in the mail after ten years of continuous employment 
E) an accountant who was fired from his last position for drinking alcohol on the job

Question 5

Since the end of World War II, the U.S. unemployment rate

Accepted Answer

A) has displayed a downward trend 
B) has displayed an upward trend 
C) has remained almost constant from year to year 
D) was generally higher during the 1970s than during the 1990s 
E) has not displayed any clear pattern 
A) has displayed a downward trend 
B) has displayed an upward trend 
C) has remained almost constant from year to year 
D) was generally higher during the 1970s than during the 1990s 
E) has not displayed any clear pattern

Question 6

If the nominal interest rate is 5 percent and there is no inflation,

Accepted Answer

A) the real interest rate exceeds 5 percent 
B) the real interest rate is less than 5 percent 
C) the real interest rate is 5 percent 
D) there is not enough information to determine the real interest rate 
E) the real interest rate is zero 
A) the real interest rate exceeds 5 percent 
B) the real interest rate is less than 5 percent 
C) the real interest rate is 5 percent 
D) there is not enough information to determine the real interest rate 
E) the real interest rate is zero

Question 7

The metropolitan with the lowest unemployment rate is

Accepted Answer

A) Detroit 
B) Atlanta 
C) San Diego 
D) Honolulu 
E) Portland 
A) Detroit 
B) Atlanta 
C) San Diego 
D) Honolulu 
E) Portland

Question 8

The unemployment rate does not measure all of the "unemployment problem." Which of the following groups is not counted as unemployed in the official unemployment statistics?

Accepted Answer

A) the underemployed and the cyclically unemployed 
B) the underemployed and the discouraged workers 
C) the discouraged workers and the frictionally unemployed 
D) the frictionally unemployed and the structurally unemployed 
E) the cyclically unemployed and the frictionally unemployed 
A) the underemployed and the cyclically unemployed 
B) the underemployed and the discouraged workers 
C) the discouraged workers and the frictionally unemployed 
D) the frictionally unemployed and the structurally unemployed 
E) the cyclically unemployed and the frictionally unemployed

Question 9

Which of the following groups has historically had the highest unemployment rate?

Accepted Answer

A) professional workers 
B) white teenagers 
C) black teenagers 
D) black adults 
E) white adults 
A) professional workers 
B) white teenagers 
C) black teenagers 
D) black adults 
E) white adults

Question 10

Which of the following is true about U.S. history prior to 1945?

Accepted Answer

A) The inflation rate remained constant during this period. 
B) Cost-push inflation led to depressions, followed by slowly-rising price levels. 
C) The price level remained constant during this period. 
D) Major wars resulted in high inflation rates, after which the inflation rate tapered off. 
E) Major wars resulted in high inflation rates that were usually followed by deflation. 
A) The inflation rate remained constant during this period. 
B) Cost-push inflation led to depressions, followed by slowly-rising price levels. 
C) The price level remained constant during this period. 
D) Major wars resulted in high inflation rates, after which the inflation rate tapered off. 
E) Major wars resulted in high inflation rates that were usually followed by deflation.

Question 11

The difference between demand-pull inflation and cost-push inflation is that

Accepted Answer

A) demand-pull inflation is caused by movements of the aggregate supply curve; cost-push inflation is caused by changes in firms' costs of production 
B) cost-push inflation is caused by movements of the aggregate demand curve; demand-pull inflation is caused by cyclical activity in the economy 
C) demand-pull inflation is caused by movements of the aggregate demand curve; cost-push inflation is caused by movements of the aggregate supply curve 
D) demand-pull inflation is caused by government deficit spending; cost-push inflation is caused by firms 
E) demand-pull inflation is caused by foreign demand; cost-push inflation is caused by domestic production problems 
A) demand-pull inflation is caused by movements of the aggregate supply curve; cost-push inflation is caused by changes in firms' costs of production 
B) cost-push inflation is caused by movements of the aggregate demand curve; demand-pull inflation is caused by cyclical activity in the economy 
C) demand-pull inflation is caused by movements of the aggregate demand curve; cost-push inflation is caused by movements of the aggregate supply curve 
D) demand-pull inflation is caused by government deficit spending; cost-push inflation is caused by firms 
E) demand-pull inflation is caused by foreign demand; cost-push inflation is caused by domestic production problems

Question 12

An increase in the demand for loanable funds, other things constant, will increase the interest rate.

Accepted Answer

A) True 
 B)False

Question 13

An increase in the interest rate, other things constant, will

Accepted Answer

A) shift the demand for loanable funds curve to the right 
B) shift the demand for loanable funds curve to the left 
C) decrease the quantity of loanable funds supplied 
D) decrease the quantity of loanable funds demanded 
E) shift the supply of loanable funds curve to the right 
A) shift the demand for loanable funds curve to the right 
B) shift the demand for loanable funds curve to the left 
C) decrease the quantity of loanable funds supplied 
D) decrease the quantity of loanable funds demanded 
E) shift the supply of loanable funds curve to the right

Question 14

Which of the following is not considered a cost of unemployment?

Accepted Answer

A) loss of self-respect by those who are unemployed 
B) waste of the economy's resources 
C) negative psychological effects on those who have lost their jobs 
D) higher inflation rates 
E) loss of income by those who are unemployed 
A) loss of self-respect by those who are unemployed 
B) waste of the economy's resources 
C) negative psychological effects on those who have lost their jobs 
D) higher inflation rates 
E) loss of income by those who are unemployed

Question 15

The unemployment rate trended down from the early 1980s to 2000 because there were fewer people in the workforce like

Accepted Answer

A) Juan, age 28 
B) Chien, age 38 
C) Billy, age 18 
D) Daniel, age 48 
E) Gregory, age 58 
A) Juan, age 28 
B) Chien, age 38 
C) Billy, age 18 
D) Daniel, age 48 
E) Gregory, age 58

Question 16

Most of the unemployment during the Great Depression was cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 17

The unemployment rate will decrease whenever there is a(n)

Accepted Answer

A) increase in the number of persons classified as unemployed 
B) decrease in the number of unemployed relative to the size of the labor force 
C) decrease in the size of the population and there is no change in the number of persons classified as employed 
D) reduction in the size of the labor force 
E) decrease in the number of unemployed and the population does not change 
A) increase in the number of persons classified as unemployed 
B) decrease in the number of unemployed relative to the size of the labor force 
C) decrease in the size of the population and there is no change in the number of persons classified as employed 
D) reduction in the size of the labor force 
E) decrease in the number of unemployed and the population does not change

Question 18

Suppose you received a 3 percent increase in your nominal wage. Over the year, inflation ran about 6 percent. Which of the following is true?

Accepted Answer

A) Your real wage fell. 
B) Your nominal wage fell. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell, your real wage increased. 
E) Both nominal and real wages increased. 
A) Your real wage fell. 
B) Your nominal wage fell. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell, your real wage increased. 
E) Both nominal and real wages increased.

Question 19

A sustained decrease in the price level is known as deflation.

Accepted Answer

A) True 
 B)False

Question 20

Anticipated inflation distorts markets more than does unanticipated inflation.

Accepted Answer

A) True 
 B)False

Exam 8: Unemployment and Inflation

If the inflation rate is 5 percent and you receive a wage increase of 5 percent,

If top government officials claim that "more people are working now than ever before," which of the following must be true?

A person whose skills do not match the available job openings is considered frictionally unemployed.

Which of the following will most likely qualify for unemployment compensation benefits?

Since the end of World War II, the U.S. unemployment rate

If the nominal interest rate is 5 percent and there is no inflation,

The metropolitan with the lowest unemployment rate is

The unemployment rate does not measure all of the "unemployment problem." Which of the following groups is not counted as unemployed in the official unemployment statistics?

Which of the following groups has historically had the highest unemployment rate?

Which of the following is true about U.S. history prior to 1945?

The difference between demand-pull inflation and cost-push inflation is that

An increase in the demand for loanable funds, other things constant, will increase the interest rate.

An increase in the interest rate, other things constant, will

Which of the following is not considered a cost of unemployment?

The unemployment rate trended down from the early 1980s to 2000 because there were fewer people in the workforce like

Most of the unemployment during the Great Depression was cyclical unemployment.

The unemployment rate will decrease whenever there is a(n)

Suppose you received a 3 percent increase in your nominal wage. Over the year, inflation ran about 6 percent. Which of the following is true?

A sustained decrease in the price level is known as deflation.

Anticipated inflation distorts markets more than does unanticipated inflation.

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

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

International Trade

International Finance

Economic Development

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