Question 1

Mee Ming works in her own home as a full-time caregiver and homemaker.Officially,she is:

Accepted Answer

A) officially unemployed 
B) employed 
C) not in the labour force 
D) in the labour force 
E) unofficially unemployed

Question 2

Full-time employed = 80
Part-time employed = 25
Unemployed = 15
Discouraged workers = 5
Consumer Price Index = 110

-The rate of inflation:

Accepted Answer

A) is 110 percent 
B) is 10 percent 
C) is 0 percent 
D) is 5 percent 
E) cannot be determined by the data given

Question 3

Suppose that there are 1 million unemployed workers seeking jobs.After a period of time,100,000 of them become discouraged over their job prospects and cease looking for work.As a result,the official unemployment rate would:

Accepted Answer

A) increase in the short run, but eventually decrease 
B) increase 
C) decrease 
D) remain unchanged 
E) remain unchanged in the short run, but eventually decrease

Question 4

The economic cost of unemployment can be measured by the:

Accepted Answer

A) amount by which actual real output exceeds potential output 
B) amount by which potential output exceeds actual real output 
C) excess of real output over nominal output 
D) excess of nominal output over real output 
E) amount by which the unemployment rate exceeds the inflation rate

Question 5

If a price index rises from one year to the next:

Accepted Answer

A) all prices must be rising 
B) nominal GDP must be rising 
C) real GDP must be rising 
D) real GDP must be falling 
E) some individual prices may fall or stay the same, and nominal or real GDP may fall or stay the same

Question 6

Suppose that a nation's nominal GDP is $972 billion and the GDP deflator is 90.In order to make this year's GDP comparable to the reference year GDP,this year's GDP must be:

Accepted Answer

A) adjusted downward to $687 billion 
B) deflated to $896 billion 
C) inflated to $1080 billion 
D) deflated to $875 billion 
E) inflated to $896 billion

Question 7

If real GDP in 2007 dollars is $1500 billion and the unemployment rate is 7.5 percent when the natural unemployment rate is presumed to be 6.5 percent,then according to Okun's law how much higher could real GDP have been if the economy were operating at its potential output?

Accepted Answer

A) $3.75 billion 
B) $10 billion 
C) $25 billion 
D) $37.5 billion 
E) $15 billion

Question 8

A price index is:

Accepted Answer

A) a comparison of the price of one product with the change in real GDP 
B) a comparison of real GDP in one period relative to another 
C) the cost of a basket of products in a base or reference period divided by the cost of the same basket in another period 
D) a ratio of real GDP in one period to nominal GDP in another 
E) a measure of changes in prices

Question 9

A college or university graduate searching for a job following graduation would best be classified as:

Accepted Answer

A) not officially a member of the labour force 
B) a part of structural unemployment 
C) a part of cyclical unemployment 
D) a part of frictional unemployment 
E) a part of secular unemployment

Question 10

The presence of discouraged workers:

Accepted Answer

A) increases the size of the labour force, but does not affect the unemployment rate 
B) reduces the size of the labour force, but does not affect the unemployment rate 
C) may cause the official unemployment rate to understate the level of unemployment 
D) may cause the official unemployment rate to overstate the level of unemployment 
E) increases both the size of the labour force and the unemployment rate

Question 11

The rate of inflation can be found by subtracting:

Accepted Answer

A) real income from nominal income 
B) last year's price index from this year's price index 
C) this year's price index from last year's price index, and dividing the difference by this year's price index 
D) last year's price index from this year's price index, and dividing the difference by last year's price index 
E) this year's price index from last year's price index, and dividing the difference by last year's price index

Question 12

Inflation is undesirable because it:

Accepted Answer

A) arbitrarily redistributes real income and wealth 
B) is always cumulative; that is, creeping inflation invariably causes high rates of inflation 
C) reduces everyone's standard of living 
D) is always accompanied by a declining real output 
E) can lead to higher unemployment

Question 13

Cyclical unemployment is a consequence of:

Accepted Answer

A) downturns in the economy 
B) the decreasing relative importance of goods and the increasing relative importance of services in our economy 
C) the everyday dynamics of a free labour market 
D) technological change 
E) seasonal changes in the labour market

Question 14

Full-time employed = 80
Part-time employed = 25
Unemployed = 15
Discouraged workers = 5
Consumer Price Index = 110

-The unemployment rate is:

Accepted Answer

A) 18.8 percent 
B) 12.5 percent 
C) 16.7 percent 
D) 22.3 percent 
E) 25.0 percent

Question 15

Ms.Eckstein has lost her job in a Quebec textile plant because of import competition.She intends to take a short course in electronics and move to Alberta where she anticipates new jobs will be available.We can say that Ms.Eckstein is faced with:

Accepted Answer

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

Question 16

Although economists disagree as to the level of the natural unemployment rate,most agree that full employment means an unemployment rate of about:

Accepted Answer

A) 12 percent to 15 percent 
B) 10 percent 
C) 8 percent to 9 percent 
D) 2 percent to 3 percent 
E) 6 percent to 7 percent

Question 17

Suppose that GDP in current dollars was $360 billion in 2006 and $450 billion in 2012.The GDP deflator was 120 in 2006 and 125 in 2012.It can be concluded that,between 2006 and 2012,real GDP:

Accepted Answer

A) increased by about $5 billion 
B) decreased by about $32 billion 
C) increased by about $100 billion 
D) increased by about $117 billion 
E) increased by about $60 billion

Question 18

According to David Foot's demographic analysis:

Accepted Answer

A) the Baby Boom generation was born between 1929 and 1946 
B) the Baby Bust generation was born between 1947 and 1966 
C) the Baby Boom Echo generation was born between 1995 and 2005 
D) the Baby Bust generation was born between 1967 and 1979 
E) the Baby Boom Echo generation was born after 2005

Question 19

The unemployment rate is the:

Accepted Answer

A) ratio of unemployed in the total population to employed workers 
B) number of employed workers minus the number of workers who are not in the labour force 
C) percentage of the labour force that is out of work 
D) percentage of the total population that is out of work 
E) ratio of unemployed in the labour force to employed workers in the labour force

Question 20

Suppose that a person's nominal income rises from $10 000 to $11 000 and the consumer price index rises from 100 to 105.The person's real income will:

Accepted Answer

A) fall by about 5 percent 
B) fall by about 1 percent 
C) rise by about 5 percent 
D) rise by about 10 percent 
E) rise by about 1 percent

Exam 9: Inflation and Unemployment