Deck 7: Unemployment and Inflation

Question 1

Consider an economy made up of 100 people,60 of whom hold jobs,10 of whom are looking for work,and 15 of whom are retired.The number of unemployed persons is _____.

A)10
B)15
C)40
D)30
E)90

Answer 1

10

Question 2

Suppose the total population of an economy is 150 million,the labor force is 100 million,and the unemployment is 94 million.The unemployment rate is _____.

A)6 percent
B)80 percent
C)94 percent
D)10 percent
E)15 percent

Answer 2

94 percent

Question 3

Who among the following would not be considered officially unemployed?

A)Jones,who quit his job to look for a better job in another part of the country
B)Jason,who got fired from his job when the government cut spending
C)Bourne,who is looking for a job after being out of the labor force for five years
D)Sophie,who retired early because she disliked her current job
E)Annie,who dropped out of the labor force after a year of job search

Answer 3

Sophie,who retired early because she disliked her current job

Question 4

A recent college graduate who is looking for her first job would be considered _____.

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

Question 5

In an economy,U = the number of adults who are unemployed,E = the number of adults who are employed,and NLF = the number of adults not in the labor force.The unemployment rate of the economy is equal to:

A)U/(E + NLF).
B)U/E.
C)U/(U + E).
D)U/(U + E − NLF).

Question 6

Which of the following people would be counted as employed?

A)A retired naval officer
B)A high school student
C)A stay-at-home father
D)A teenager who has given up looking for work after a year of trying
E)A ski instructor who is working during the summer

Question 7

Consider an economy made up of 100 people sixteen years of age and older,60 of whom hold jobs,10 of whom are looking for work,and 15 of whom are retired.The number of people in the labor force is _____.

A)30
B)60
C)85
D)90
E)70

Question 8

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

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.

Question 9

The unemployment rate measures the:

A)number of people in the labor force divided by the adult population.
B)percentage of people in the labor force who are unemployed.
C)percentage of people in an economy who have dropped out of the labor force.
D)number of people in the adult population who are looking for work.
E)number of people in the labor force who are not working.

Question 10

Anne is an accountant who lost her job in the last recession and has given up looking for work after an unsuccessful job search.Which of the following is true in this case?

A)She is a discouraged worker.
B)She is underemployed.
C)This is an example of cyclical unemployment.
D)This is an example of seasonal unemployment.
E)She is overemployed.

Question 11

Which of the following people would be counted among the unemployed?

A)A new college graduate selling newspaper advertisements part time while looking for other work
B)A new college graduate selling newspaper advertisements full time while looking for other work
C)A new college graduate selling newspaper advertisements part time and not looking for other work
D)A new college graduate who gets tired of selling newspaper advertisements and takes off on a motorcycle trip to Alaska
E)A new college graduate not qualified for any of the jobs available in his small town

Question 12

Which of the following is not a cost of unemployment?

A)A loss of income
B)Emotional or psychological problems
C)Loss of job skills
D)A decrease in production
E)Higher annual inflation rates

Question 13

A discouraged worker is one who:

A)is underqualified for his current job.
B)dislikes his current job but is afraid to quit.
C)drops out of the labor force because he cannot find a job.
D)quits his job because the possibility of advancement was very low.
E)is overqualified for his current job.

Question 14

Which of the following people would be classified as unemployed?

A)A person who wants a job as a fashion model but cannot find work in that field
B)Someone who quits a part-time job to attend school full time
C)Someone who does not have a job and gives up looking for one
D)A person who works at a job that underutilizes his or her skills
E)A person who works part-time and would rather work full time

Question 15

People who are not currently employed but say they want a job are counted as unemployed only if they:

A)have previously held a job.
B)are actively seeking employment.
C)are discouraged workers.
D)are between 16 and 65 years of age.
E)are willing to accept any offer of employment.

Question 16

Which of the following people would be counted in the labor force?

A)Chou,who lost his job and last looked for work three months ago
B)Stephanie,who holds a Ph.D.in history but can only find part-time employment at a fast food restaurant
C)Jordan,who would like to work as a stockbroker but is a stay-at-home father
D)Steffan,who is a patient in a mental hospital
E)Monique,age 90,who is enjoying her retirement in Montana

Question 17

The labor force in an economy consists of all:

A)the people in the economy who are not retired.
B)the 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 civilian noninstitutional adult population that is either working or looking for work.
E)the noninstitutional adult population who are graduates of high school.

Question 18

The unemployment rate will increase whenever there is a(n):

A)increase in the number of unemployed persons.
B)increase in the number of unemployed persons relative to the size of the labor force.
C)increase in the size of the U.S.population but no change in the number of unemployed persons.
D)increase in the size of the labor force.
E)increase in the size of the U.S.population and a decrease in the number of unemployed persons.

Question 19

"Discouraged workers" comprise the percentage of those in the:

A)labor force who are employed and are seeking employment.
B)labor force who have chosen early retirement because they dislike their work.
C)adult population who want to be employed but have given up the search for a job.
D)labor force who are looking for a job but cannot find one.
E)adult population who are in the labor force.

Question 20

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

A)increase in the number of persons classified as unemployed
B)decrease in the number of unemployed persons relative to the size of the labor force
C)decrease in the size of the population and 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 persons and no change the population

Question 21

Unemployment arising from a mismatch of skills is called:

A)frictional unemployment.
B)structural unemployment.
C)seasonal unemployment.
D)cyclical unemployment.
E)underemployment.

Question 22

The best example of a frictionally unemployed worker is one who:

A)has been looking for work for 27 weeks or longer.
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 23

If the official unemployment rate increases from December to January because the Christmas season is over,we can conclude that _____ is responsible for the increase.

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

Question 24

Which of the following groups experiences high unemployment rates?

A)White-collar professionals
B)Attorneys
C)Technical workers
D)Blue-collar workers
E)Web page designers

Question 25

After graduating from Harvard Law School,Anne started looking for a job.She could not find a job after looking for one week.Which of the following is true in this case?

A)This is an example of frictional unemployment.
B)This is an example of cyclical unemployment.
C)This is an example of seasonal unemployment.
D)She is underemployed.
E)She is a discouraged worker.

Question 26

Which type of unemployment is most likely to help an economy become more efficient?

A)Cyclical unemployment
B)Voluntary unemployment
C)Seasonal unemployment
D)Frictional unemployment
E)Underemployment

Question 27

The impact of _____ unemployment is removed from official monthly unemployment figures.

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

Question 28

Which of the following groups tends to have the highest unemployment rate in the United States?

A)African American teenagers
B)Workers,age 25 or older,who are college graduates
C)White women
D)Workers,25 years of age or older,who are high school dropouts
E)White teenagers

Question 29

The type of unemployment most likely to be experienced by a touring professional golfer is:

A)frictional unemployment.
B)structural unemployment.
C)seasonal unemployment.
D)cyclical unemployment.
E)discouraged-worker unemployment.

Question 30

Frictional unemployment refers to unemployment that is a result of:

A)a mismatch of skills.
B)being out of work 27 weeks or longer.
C)job search.
D)seasonal decreases in demand for labor.
E)a recession in the economy.

Question 31

Which of the following is true of labor force participation rates in the United States since the 1950s?

A)The rates for both men and women have risen.
B)The rate for women has fallen;the rate for men has risen.
C)The rate for men has fallen;the rate for women has increased.
D)The rates for both men and women have fallen.
E)The rates for both men and women have remained fairly constant.

Question 32

In April 2010,the U.S.economy added 290,000 jobs but the unemployment rate still increased from 9.7 percent to 9.9 percent.Which of the following best explains this situation?

A)The size of the labor force shrunk.
B)The number of unemployed workers also increased,but by a smaller percentage.
C)The number of illegal immigrants increased substantially.
D)The number of discouraged workers increased substantially.
E)The number of unemployed workers also increased,but by an even greater percentage.

Question 33

Consider an economy with an adult population of 100,50 of whom hold jobs,10 of whom are looking for work,and 15 of whom are retired.The labor force participation rate is _____.

A)100 percent
B)60 percent
C)50 percent
D)40 percent
E)10 percent

Question 34

Jacqueline has a Ph.D.in economics.She has turned down many job offers because she eventually hopes to teach at one of the top ten universities in her field.The type of unemployment she is experiencing is:

A)frictional unemployment.
B)structural unemployment.
C)seasonal unemployment.
D)cyclical unemployment.
E)underemployment.

Question 35

The labor force participation rate for women in the United States has _____.

A)stayed the same over the last 30 years
B)increased significantly since the 1950s
C)decreased significantly since the 1950s
D)fluctuated substantially both upward and downward since the 1950s
E)increased only very slightly since the 1950s

Question 36

Structural unemployment refers to unemployment that results from:

A)inefficiencies in the market for labor that prolong the job search.
B)being in the wrong geographical location.
C)the specialization and division of labor.
D)seasonal decreases in demand for labor.
E)a recession in the economy.

Question 37

Which of the following statements is true of unemployment?

A)Cyclical unemployment decreases during recessions and increases during expansions.
B)Some unemployment exists even when the economy is healthy and growing.
C)Unemployment and inflation are not related.
D)People who are willing and able to work but have given up the search for a job are considered unemployed.
E)Voluntary unemployment refers to a situation in which people who really do not want to work only pretend to look for jobs.

Question 38

In an economy,U = the number of adults who are unemployed,E = the number of adults who are employed,and NLF = the number of adults not in the labor force.The labor force participation rate in the economy is equal to:

A)U/(U + E).
B)E/(U + E).
C)U/(U + E + NLF).
D)E/(U + E + NLF).
E)(U + E)/(U + E + NLF).

Question 39

Which of the following types of unemployment is the hardest to reduce?

A)Cyclical unemployment
B)Structural unemployment
C)Voluntary unemployment
D)Frictional unemployment
E)Seasonal unemployment

Question 40

Which of the following is true of the labor force participation rate?

A)When workers become unemployed,the labor force participation rate declines.
B)When the unemployed become discouraged workers,the labor force participation rate declines.
C)When workers do not fully use their skills,the labor force participation rate decreases.
D)Since the 1950s,the labor force participation rate of women has decreased in the United States.
E)The trend toward earlier retirement has increased the labor force participation rate in the United States.

Question 41

Which of the following is most likely to reduce structural unemployment?

A)A reduction in wage rates
B)Access to better information on local job openings
C)Retraining workers in marketable skills
D)Promotion of full employment through government stabilization policies
E)Reducing the cost of job loss through enhanced unemployment benefits

Question 42

Juanita worked for a defense contractor in the United States.During the 2008 recession,the government cut spending and Juanita and ninety-nine others were laid off.In such a case,the unemployment Juanita is experiencing is _____.

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

Question 43

Which type of unemployment is likely to increase the most during an economy's recession?

A)Frictional unemployment
B)Seasonal unemployment
C)Structural unemployment
D)Cyclical unemployment
E)Underemployment

Question 44

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

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 45

In which of the following industries are workers least likely to suffer from cyclical unemployment?

A)Construction industry
B)Automobile manufacturing
C)Apparel industry
D)Education
E)Tourism

Question 46

_____ unemployment is experienced by a customer service representative who is laid off from a job because new technology reduces the need for people to handle customer service inquiries.

A)Seasonal
B)Cyclical
C)Voluntary
D)Structural
E)Frictional

Question 47

An increase in unemployment benefits is likely to:

A)reduce a person's incentive to look for work.
B)reduce the opportunity cost of remaining employed.
C)provide a better safety net for employed families.
D)decrease the tax imposed on consumers.
E)increase the need to accept the first job available after becoming unemployed.

Question 48

Full employment is considered a major economic goal because:

A)specialization is not possible without full employment.
B)economic growth can only occur when there is full employment.
C)the opportunity cost of unemployment is lost production.
D)profit maximization of firms can only occur when there is full employment.
E)inflation will be lower when full employment is achieved.

Question 49

When an economy is operating at full employment,_____.

A)structural unemployment does not exist
B)cyclical unemployment does not exist
C)the unemployment rate is zero
D)seasonal unemployment does not exist
E)the number of discouraged workers is zero

Question 50

In 2004,Jamal lost his job as a shipbuilder.His shipyard never reopened,and his very specialized skills as a shipbuilder were no longer in demand.Jamal's unemployment is best classified as _____.

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

Question 51

Which type of unemployment is likely to decrease the most during an economy's boom?

A)Frictional unemployment
B)Seasonal unemployment
C)Structural unemployment
D)Cyclical unemployment
E)Underemployment

Question 52

Which of the following does not exist when an economy is operating at full employment?

A)An unemployment rate of 5 percent or 6 percent
B)Seasonal unemployment
C)Structural unemployment
D)Cyclical unemployment
E)Frictional unemployment

Question 53

If the official unemployment rate increases from February to March because of sluggish sales in the automobile industry,then the increase can be blamed on:

A)seasonal unemployment.
B)cyclical unemployment.
C)structural unemployment.
D)frictional unemployment.
E)underemployment.

Question 54

In recent times,there has been a decline in the sale of newspapers in the U.S.as people prefer to read the news on the internet.This has caused many newspaper journalists to lose their jobs.This is an example of:

A)structural unemployment.
B)frictional unemployment.
C)cyclical unemployment.
D)seasonal unemployment.
E)underemployment.

Question 55

Full employment:

A)exists when,on average,nearly two out of three adults in the labor force are employed.
B)exists when everyone who wants a job has one.
C)exists when the unemployment rate is zero.
D)exists when everyone in the labor force has a job.
E)will always include some unemployment.

Question 56

Not counting _____ as unemployed understates unemployment.

A)children
B)retired persons
C)students
D)people who do not want to work
E)discouraged workers

Question 57

Cyclical unemployment results from:

A)a mismatch of skills.
B)being in the wrong geographical location.
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 58

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

A)discouraged.
B)underemployed.
C)overemployed.
D)voluntarily unemployed.
E)long-term unemployed.

Question 59

Recently,banking has become easier with automated teller machines replacing bank tellers.The loss of tellers' jobs is an example of _____.

A)cyclical unemployment
B)structural unemployment
C)frictional unemployment
D)underemployment
E)voluntary unemployment

Question 60

The official unemployment rate disguises the extent of the unemployment problem because:

A)children are not counted as unemployed.
B)retired persons are not counted as unemployed.
C)full-time students are not counted as unemployed.
D)discouraged workers are counted as unemployed.
E)people overqualified for their current job are not considered unemployed.

Question 61

One of the most widely reported measures of inflation is the:

A)consumer price index.
B)producer price index.
C)GDP deflator.
D)Gini coefficient.
E)real interest rate.

Question 62

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

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 63

If the CPI in the United States was 150 in 2003 and 160 in 2004,the inflation rate over the year is _____.

A)10 percent
B)20 percent
C)7 percent
D)30 percent
E)50 percent

Question 64

The following image shows the aggregate demand and aggregate supply curves of an economy.In the graph below,the rise in the price levels from P₁ to P₂ is a result of:

A)cost-pull inflation.
B)cost-push inflation.
C)demand-push inflation.
D)demand-pull inflation.
E)induced inflation.

Question 65

Which of the following decades was characterized by the highest inflation rate in the U.S.?

A)1920s
B)1930s
C)1950s
D)1970s
E)1960s

Question 66

Inflation is:

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 67

Which of the following is true about U.S.history prior to the 1950s?

A)The inflation rate remained constant during this period.
B)Cost-push inflation led to depressions,which were 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 68

If the aggregate demand curve shifts rightward,then _____.

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 as long as the aggregate supply curve shifts leftward
E)the price level decreases and output decreases

Question 69

The inflation experienced in the United States during the 1970s as a result of OPEC oil price increases is an example of:

A)demand-pull inflation.
B)hyperinflation.
C)cost-push inflation.
D)cyclical inflation.
E)disinflation.

Question 70

Underemployment refers to:

A)seasonal unemployment.
B)people working full time though they would rather work part time.
C)the unemployment that occurs when the actual level of employment is less than the full employment level.
D)people working in jobs that do not fully use their skills.
E)people working part time.

Question 71

The inflation experienced in the United States during the late 1960s as a result of the spending on the Vietnam War is an example of:

A)hyperinflation.
B)demand-pull inflation.
C)disinflation.
D)cost-push inflation.
E)cyclical inflation.

Question 72

Which of the following factors makes the official unemployment rate an overstatement of the actual level of unemployment in the economy?

A)Inclusion of discouraged workers
B)Inclusion of those only working part time
C)Inclusion of those who are overqualified for their current jobs
D)Inclusion of those who are marginally attached to the labor force
E)Inclusion of those who pretend to look for work in order to qualify for welfare programs

Question 73

Which of the following periods was not characterized by inflation in the U.S.economic history?

A)1917-1920
B)1929-1933
C)1947
D)1978-1980
E)1980-1989

Question 74

Cost-push inflation:

A)occurs when the aggregate demand curve shifts rightward.
B)occurs when the aggregate supply curve shifts rightward.
C)results in a decrease in the unemployment rate.
D)results in a movement along the aggregate demand curve.
E)is caused by the same factors that lead to demand-pull inflation.

Question 75

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

A)doubled
B)quadrupled
C)tripled
D)increased five times
E)increased six times

Question 76

The consumer price index measures:

A)the cost of all goods and services produced in the U.S.economy.
B)the average change over time in the selling prices received by domestic producers for their output.
C)the cost of a fixed market basket of consumer goods and services produced in the U.S.economy.
D)the ratio of an economy's nominal GDP to its real GDP.
E)the income distribution of an economy.

Question 77

Suppose the price levels in an economy in four successive years are 100,120,133,and 140.Which of the following is true in such a case?

A)The economy is experiencing hyperinflation.
B)The economy is experiencing deflation.
C)The economy is experiencing inflation.
D)The economy is experiencing increasing inflation.
E)The economy is experiencing disinflation.

Question 78

The unemployment rate does not reflect the true extent of the unemployment problem.Which of the following groups is not counted as unemployed in the official unemployment statistics?

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

Question 79

If the aggregate supply curve shifts leftward,then _____.

A)the price level increases and output increases
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 as long as the aggregate demand curve shifts rightward
E)the price level decreases and output increases

Question 80

Inflation can be caused:

A)only by increases in aggregate demand.
B)only by increases in aggregate supply.
C)only by decreases in aggregate supply.
D)by increases in aggregate supply or decreases in aggregate demand.
E)by increases in aggregate demand or decreases in aggregate supply.