Question 1

If the expected inflation rate is 4 percent and the nominal interest rate is 9 percent, the expected real interest rate is

Accepted Answer

A) 13 percent 
B) -5 percent 
C) 9 percent 
D) -13 percent 
E) 5 percent 
A) 13 percent 
B) -5 percent 
C) 9 percent 
D) -13 percent 
E) 5 percent

Question 2

Because of the way discouraged workers and part-time employment are measured, the official unemployment rate

Accepted Answer

A) overstates the unemployment problem 
B) understates the unemployment problem 
C) truly reflects the level of unemployment 
D) overstates the size of the labor force 
E) understates the size of the labor force 
A) overstates the unemployment problem 
B) understates the unemployment problem 
C) truly reflects the level of unemployment 
D) overstates the size of the labor force 
E) understates the size of the labor force

Question 3

The view that union wage demands may be a source of inflation would be best associated with the

Accepted Answer

A) supply shock view of inflation 
B) demand pull view of inflation 
C) cost push view of inflation 
D) demand push view of inflation 
E) monetary view of inflation 
A) supply shock view of inflation 
B) demand pull view of inflation 
C) cost push view of inflation 
D) demand push view of inflation 
E) monetary view of inflation

Question 4

Cyclical unemployment results from

Accepted Answer

A) a mismatch of skills 
B) being in the wrong geographical location 
C) taking the time to find the best job 
D) seasonal decreases in demand for labor 
E) a recession in the economy 
A) a mismatch of skills 
B) being in the wrong geographical location 
C) taking the time to find the best job 
D) seasonal decreases in demand for labor 
E) a recession in the economy

Question 5

Frictional unemployment refers to unemployment that results from

Accepted Answer

A) a mismatch of skills 
B) being in the wrong geographical location 
C) taking the time to find the best job 
D) seasonal decreases in demand for labor 
E) a recession in the economy 
A) a mismatch of skills 
B) being in the wrong geographical location 
C) taking the time to find the best job 
D) seasonal decreases in demand for labor 
E) a recession in the economy

Question 6

What was the result of increased oil prices during the 1970s?

Accepted Answer

A) Aggregate demand decreased, causing cost-push inflation. 
B) Aggregate demand increased, causing demand-pull inflation. 
C) Aggregate supply increased, causing demand-pull inflation. 
D) Aggregate supply increased, causing cost-push inflation. 
E) Aggregate supply decreased, causing cost-push inflation. 
A) Aggregate demand decreased, causing cost-push inflation. 
B) Aggregate demand increased, causing demand-pull inflation. 
C) Aggregate supply increased, causing demand-pull inflation. 
D) Aggregate supply increased, causing cost-push inflation. 
E) Aggregate supply decreased, causing cost-push inflation.

Question 7

Since the end of World War II, the U.S. price level has

Accepted Answer

A) increased eightfold 
B) increased by an average of 10 percent each year 
C) increased and decreased with equal regularity, leaving the price level almost constant 
D) increased by 50 percent 
E) doubled 
A) increased eightfold 
B) increased by an average of 10 percent each year 
C) increased and decreased with equal regularity, leaving the price level almost constant 
D) increased by 50 percent 
E) doubled

Question 8

Inflation

Accepted Answer

A) always reduces real income 
B) never reduces real income 
C) reduces the real income of workers when wages increase more than prices do 
D) reduces the real income of workers when wages increase less than prices do 
E) increases the real income of workers only when wages increase less than prices do 
A) always reduces real income 
B) never reduces real income 
C) reduces the real income of workers when wages increase more than prices do 
D) reduces the real income of workers when wages increase less than prices do 
E) increases the real income of workers only when wages increase less than prices do

Question 9

Which type of unemployment is experienced by a person who is laid off at an office because new technology reduces the need to handle customer service inquiries?

Accepted Answer

A) seasonal 
B) cyclical 
C) voluntary 
D) structural 
E) frictional 
A) seasonal 
B) cyclical 
C) voluntary 
D) structural 
E) frictional

Question 10

If the aggregate demand curve shifts rightward,

Accepted Answer

A) the price level increases and output decreases 
B) the resulting increase in the price level is usually called cost-push inflation 
C) the resulting increase in the price level is usually called demand-pull inflation 
D) the price level increases only if there is also a leftward shift of the aggregate supply curve 
E) the price level decreases and output decreases 
A) the price level increases and output decreases 
B) the resulting increase in the price level is usually called cost-push inflation 
C) the resulting increase in the price level is usually called demand-pull inflation 
D) the price level increases only if there is also a leftward shift of the aggregate supply curve 
E) the price level decreases and output decreases

Question 11

Unanticipated inflation redistributes income across groups in society. Among the winners are

Accepted Answer

A) those who loan money 
B) those on fixed incomes 
C) small savers 
D) those who borrow at fixed interest rates 
E) those who hold large amounts of cash 
A) those who loan money 
B) those on fixed incomes 
C) small savers 
D) those who borrow at fixed interest rates 
E) those who hold large amounts of cash

Question 12

Unanticipated inflation is usually viewed as undesirable because it

Accepted Answer

A) reduces everyone's nominal wages 
B) redistributes income and wealth 
C) is accompanied by reductions in real GDP 
D) usually results in the public sector growing less rapidly than the private sector 
E) lets lenders gain at the expense of borrowers 
A) reduces everyone's nominal wages 
B) redistributes income and wealth 
C) is accompanied by reductions in real GDP 
D) usually results in the public sector growing less rapidly than the private sector 
E) lets lenders gain at the expense of borrowers

Question 13

The labor force participation rate is the number of people

Accepted Answer

A) employed divided by the adult population 
B) employed divided by the number of people in the labor force 
C) in the labor force divided by the adult population 
D) unemployed divided by the number of people in the labor force 
E) in the labor force divided by the number of people employed 
A) employed divided by the adult population 
B) employed divided by the number of people in the labor force 
C) in the labor force divided by the adult population 
D) unemployed divided by the number of people in the labor force 
E) in the labor force divided by the number of people employed

Question 14

Inflation can only be caused by an increase in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 15

In April of 2010, the US economy added 290,000 jobs but the unemployment rate still rose from 9.7% to 9.9%. Which of the following best explains how this can happen?

Accepted Answer

A) the size of the labor force shrunk 
B) the number of unemployed workers also rose but by a smaller percentage 
C) the number of illegal immigrants rose substantially 
D) it was a mistake 
E) the number of unemployed workers also rose but by an even greater percentage 
A) the size of the labor force shrunk 
B) the number of unemployed workers also rose but by a smaller percentage 
C) the number of illegal immigrants rose substantially 
D) it was a mistake 
E) the number of unemployed workers also rose but by an even greater percentage

Question 16

An increase in the interest rate will increase the demand for loanable funds.

Accepted Answer

A) True 
 B)False

Question 17

Unemployment rates __________ during contractions and __________ during expansions.

Accepted Answer

A) rise, fall 
B) fall, fall 
C) rise, stay the same 
D) stay the same, fall 
E) fall, rise 
A) rise, fall 
B) fall, fall 
C) rise, stay the same 
D) stay the same, fall 
E) fall, rise

Question 18

The best example of a frictionally unemployed worker is one who

Accepted Answer

A) reduces productivity by causing frictions in a business 
B) is laid off during a recessionary period in the economy 
C) is in the process of voluntarily switching jobs 
D) is discouraged and not actively seeking work 
E) cannot find a job that matches with his skills 
A) reduces productivity by causing frictions in a business 
B) is laid off during a recessionary period in the economy 
C) is in the process of voluntarily switching jobs 
D) is discouraged and not actively seeking work 
E) cannot find a job that matches with his skills

Question 19

Which of the following are classified as "discouraged workers"?

Accepted Answer

A) all those between 16 and 65 who are neither disabled nor in an institution and are also neither employed nor seeking employment 
B) labor force members who have chosen early retirement because they dislike their work or think the pay is too low 
C) members of the noninstitutional population who say they want to be employed but are not searching for a job 
D) members of the labor force who are looking for a job but cannot find one 
E) anyone in the population who is not working 
A) all those between 16 and 65 who are neither disabled nor in an institution and are also neither employed nor seeking employment 
B) labor force members who have chosen early retirement because they dislike their work or think the pay is too low 
C) members of the noninstitutional population who say they want to be employed but are not searching for a job 
D) members of the labor force who are looking for a job but cannot find one 
E) anyone in the population who is not working

Question 20

A major cost of unemployment is lost production.

Accepted Answer

A) True 
 B)False

Exam 8: Unemployment and Inflation

If the expected inflation rate is 4 percent and the nominal interest rate is 9 percent, the expected real interest rate is

Because of the way discouraged workers and part-time employment are measured, the official unemployment rate

The view that union wage demands may be a source of inflation would be best associated with the

Cyclical unemployment results from

Frictional unemployment refers to unemployment that results from

What was the result of increased oil prices during the 1970s?

Since the end of World War II, the U.S. price level has

Inflation

Which type of unemployment is experienced by a person who is laid off at an office because new technology reduces the need to handle customer service inquiries?

If the aggregate demand curve shifts rightward,

Unanticipated inflation redistributes income across groups in society. Among the winners are

Unanticipated inflation is usually viewed as undesirable because it

The labor force participation rate is the number of people

Inflation can only be caused by an increase in aggregate demand.

In April of 2010, the US economy added 290,000 jobs but the unemployment rate still rose from 9.7% to 9.9%. Which of the following best explains how this can happen?

An increase in the interest rate will increase the demand for loanable funds.

Unemployment rates __________ during contractions and __________ during expansions.

The best example of a frictionally unemployed worker is one who

Which of the following are classified as "discouraged workers"?

A major cost of unemployment is lost production.

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

Filters

Unemployment rates during contractions and during expansions.