Question 1

The labor force participation rate climbs with education.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not a way to become officially unemployed?

Accepted Answer

A) quit your job to look for a better job in another part of the country 
B) be fired from your job 
C) look for a job after being out of the labor force for five years 
D) retire 
E) look for a job only for the period in the summer that you are out of school 
A) quit your job to look for a better job in another part of the country 
B) be fired from your job 
C) look for a job after being out of the labor force for five years 
D) retire 
E) look for a job only for the period in the summer that you are out of school

Question 3

When the economy is at full employment, what types of unemployment may exist?

Accepted Answer

A) none 
B) structural and frictional 
C) seasonal and cyclical 
D) frictional, cyclical, and structural 
E) cyclical 
A) none 
B) structural and frictional 
C) seasonal and cyclical 
D) frictional, cyclical, and structural 
E) cyclical

Question 4

The Consumer Price Index measures the cost of

Accepted Answer

A) all goods and services produced in the U.S. economy 
B) all goods produced in the U.S. economy 
C) a fixed market basket of consumer goods and services produced in the U.S. economy 
D) a fixed market basket of producer goods and services 
E) food and energy in the U.S. economy 
A) all goods and services produced in the U.S. economy 
B) all goods produced in the U.S. economy 
C) a fixed market basket of consumer goods and services produced in the U.S. economy 
D) a fixed market basket of producer goods and services 
E) food and energy in the U.S. economy

Question 5

An individual with a Ph.D. in physics, who can find employment only in a pizza parlor, would be considered as

Accepted Answer

A) a discouraged worker 
B) underemployed 
C) overemployed 
D) unemployed 
E) not in the labor force 
A) a discouraged worker 
B) underemployed 
C) overemployed 
D) unemployed 
E) not in the labor force

Question 6

Raul borrowed $1,000 from Marta for a year and agreed to repay her $1,050 at the end of the year. If the inflation rate was 3 percent, what is the real rate of interest Marta received?

Accepted Answer

A) 10 percent 
B) 5 percent 
C) 3 percent 
D) 2 percent 
E) -2 percent 
A) 10 percent 
B) 5 percent 
C) 3 percent 
D) 2 percent 
E) -2 percent

Question 7

Hyperinflation refers to a period of extremely erratic inflation rates.

Accepted Answer

A) True 
 B)False

Question 8

Inflation is

Accepted Answer

A) a reduction in everyone's standard of living 
B) a rise in the real prices of all goods and services 
C) a general and continuing rise in the money prices of goods and services 
D) a continuing rise in everyone's standard of living 
E) an increase in the value of money compared to the value of goods 
A) a reduction in everyone's standard of living 
B) a rise in the real prices of all goods and services 
C) a general and continuing rise in the money prices of goods and services 
D) a continuing rise in everyone's standard of living 
E) an increase in the value of money compared to the value of goods

Question 9

Which of the following is true about inflation?

Accepted Answer

A) Inflation promotes social harmony by uniting people against the government. 
B) Inflation is more damaging if it is anticipated than if it is not anticipated. 
C) Accurate anticipation of inflation is possible for everyone who is well informed about economic events. 
D) Those who have borrowed money at an interest rate below the rate of inflation will generally benefit. 
E) If people anticipate inflation, their actions will prevent the inflation. 
A) Inflation promotes social harmony by uniting people against the government. 
B) Inflation is more damaging if it is anticipated than if it is not anticipated. 
C) Accurate anticipation of inflation is possible for everyone who is well informed about economic events. 
D) Those who have borrowed money at an interest rate below the rate of inflation will generally benefit. 
E) If people anticipate inflation, their actions will prevent the inflation.

Question 10

Structural unemployment results from

Accepted Answer

A) a mismatch of skills 
B) the availability of unemployment insurance 
C) monetary cost and the time it takes to find the best job 
D) seasonal decreases in demand for labor 
E) prolonged declines in business activity 
A) a mismatch of skills 
B) the availability of unemployment insurance 
C) monetary cost and the time it takes to find the best job 
D) seasonal decreases in demand for labor 
E) prolonged declines in business activity

Question 11

The unemployment rate is the

Accepted Answer

A) percentage of people in the economy who do not hold jobs 
B) percentage of the labor force that does not have a job 
C) number of people in the economy who have given up looking for employment 
D) number of people in the labor force without jobs 
E) ratio of unemployed to employed high school graduates in the economy 
A) percentage of people in the economy who do not hold jobs 
B) percentage of the labor force that does not have a job 
C) number of people in the economy who have given up looking for employment 
D) number of people in the labor force without jobs 
E) ratio of unemployed to employed high school graduates in the economy

Question 12

If the CPI is 200, then the price level has doubled since the base year.

Accepted Answer

A) True 
 B)False

Question 13

The official unemployment rate would be higher if it included the existence of hidden unemployment or individuals who are

Accepted Answer

A) on unemployment compensation 
B) not working 
C) working part-time but prefer full-time work 
D) voluntarily retired 
E) unemployed and looking for work 
A) on unemployment compensation 
B) not working 
C) working part-time but prefer full-time work 
D) voluntarily retired 
E) unemployed and looking for work

Question 14

The labor force consists of all

Accepted Answer

A) the people in the economy who are not retired 
B) people in the economy over 16 years of age 
C) the adults in the economy between 18 and 65 years old who are able to work 
D) the noninstitutionalized population over 16 in the economy who hold jobs or are looking for them 
E) the citizens in the economy who are graduates of high school 
A) the people in the economy who are not retired 
B) people in the economy over 16 years of age 
C) the adults in the economy between 18 and 65 years old who are able to work 
D) the noninstitutionalized population over 16 in the economy who hold jobs or are looking for them 
E) the citizens in the economy who are graduates of high school

Question 15

Discouraged workers are included in the labor force figures but not in unemployment figures.

Accepted Answer

A) True 
 B)False

Question 16

An example of structural unemployment caused by a change in tastes and preferences is

Accepted Answer

A) newspaper journalists 
B) administrative assistants 
C) lifeguards 
D) steelworkers during recessions 
E) None of the answers is correct 
A) newspaper journalists 
B) administrative assistants 
C) lifeguards 
D) steelworkers during recessions 
E) None of the answers is correct

Question 17

Structural unemployment refers to unemployment that results from

Accepted Answer

A) inefficiencies in the market for labor that prolong the job search 
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) inefficiencies in the market for labor that prolong the job search 
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 18

Relative prices describe the terms at which individual goods are exchanged for one another.

Accepted Answer

A) True 
 B)False

Question 19

Tony lent Dave $1,000 for one year with the understanding that Dave would repay $1,070. If the actual inflation rate was 7 percent, what was the real rate of interest Tony received?

Accepted Answer

A) 14 percent 
B) 7 percent 
C) 4 percent 
D) 0 percent 
E) -7 percent 
A) 14 percent 
B) 7 percent 
C) 4 percent 
D) 0 percent 
E) -7 percent

Question 20

Anticipated inflation causes more problems in the economy than unanticipated inflation.

Accepted Answer

A) True 
 B)False

Exam 8: Unemployment and Inflation

The labor force participation rate climbs with education.

Which of the following is not a way to become officially unemployed?

When the economy is at full employment, what types of unemployment may exist?

The Consumer Price Index measures the cost of

An individual with a Ph.D. in physics, who can find employment only in a pizza parlor, would be considered as

Raul borrowed $1,000 from Marta for a year and agreed to repay her $1,050 at the end of the year. If the inflation rate was 3 percent, what is the real rate of interest Marta received?

Hyperinflation refers to a period of extremely erratic inflation rates.

Inflation is

Which of the following is true about inflation?

Structural unemployment results from

The unemployment rate is the

If the CPI is 200, then the price level has doubled since the base year.

The official unemployment rate would be higher if it included the existence of hidden unemployment or individuals who are

The labor force consists of all

Discouraged workers are included in the labor force figures but not in unemployment figures.

An example of structural unemployment caused by a change in tastes and preferences is

Structural unemployment refers to unemployment that results from

Relative prices describe the terms at which individual goods are exchanged for one another.

Tony lent Dave $1,000 for one year with the understanding that Dave would repay $1,070. If the actual inflation rate was 7 percent, what was the real rate of interest Tony received?

Anticipated inflation causes more problems in the economy than 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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