Question 1

To convert a nominal change to a real change in dollar terms,the base year index must be set at 100.

Accepted Answer

A) True 
 B)False

Question 2

If the current year's consumer price index is 214 and last year's was 209,then the rate of inflation is:

Accepted Answer

A)  2.4%. 
B)  5%. 
C)  3%. 
D)  2.8%.

Question 3

The nonaccelerating inflation rate of unemployment is a measure of the natural rate of inflation.

Accepted Answer

A) True 
 B)False

Question 4

Frictional unemployment occurs when job openings:

Accepted Answer

A)  exist and people are willing to take them,but the applicants do not have the necessary skill set. 
B)  do not exist,although people are willing to work,so it makes no sense to try to bring the two together. 
C)  exist,but people are not willing to take them,so it makes no sense to bring the two together. 
D)  exist,and people are willing to take them,but it takes some time to bring the two together.

Question 5

Core inflation is more stable than headline inflation because the two most volatile components are not included in core inflation.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is NOT generally considered a problem with using the consumer price index to measure consumer prices?

Accepted Answer

A)  Only private goods are considered and public goods are excluded. 
B)  Many federal benefits and income tax rates are indexed to the consumer price index. 
C)  Quality improvements are difficult to account for. 
D)  New products are often overlooked.

Question 7

The Weekly Jobs Report is used as a way to estimate trends in layoffs and hiring.

Accepted Answer

A) True 
 B)False

Question 8

_____ is a reduction in the rate of inflation.

Accepted Answer

A)  Disinflation 
B)  Deflation 
C)  Hyperinflation 
D)  The price level

Question 9

Robert lost his job and now takes care of the children while his wife works.Robert has decided he likes his daddy duties.Robert would take a job similar to the one he lost if it was offered,but he is not actively seeking work.How is Robert categorized in the unemployment figures?

Accepted Answer

A)  Robert is unemployed. 
B)  Robert is employed because he is providing a useful product. 
C)  Robert is not part of the labor force. 
D)  Robert is underemployed.

Question 10

There are 630,700 residents in a certain metropolitan area.Of these 630,700 people,214,400 residents are under 16 years of age,and 38,500 are institutionalized adults.People in the last two categories are not considered to be in the labor force.Of the remaining 377,800 residents,47,900 have given up searching for a job,15,800 are unemployed and actively seeking work,and 62,820 work part-time.The rest work full time.
a.Calculate the unemployment rate for this metropolitan area.Round the percentage to one decimal place;that is,0.0436 is 4.4%
b.If this economy is similar to that of the United States,is this unemployment rate a cause for concern? Choose One: Yes/No.Defend your answer.

Accepted Answer

The answer of There are 630,700 residents in a certain...

Question 11

Jordan Meadows lost his job as an airline pilot and has not been able to find another job as a pilot.Since he is old enough to be eligible for his pension,he decides to retire and devote himself to caring for his elderly parents,According to the Bureau of Labor Statistics,Jordan is:

Accepted Answer

A)  employed. 
B)  unemployed. 
C)  a discouraged worker. 
D)  not in the labor force.

Question 12

Cathy works part-time as a bookkeeper but would like to have a full-time position.She has been actively searching for months but so far has not found a job.According to the Bureau of Labor Statistics,Cathy is unemployed.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is INCORRECT?

Accepted Answer

A)  The natural rate of unemployment is generally considered the equivalent of full employment. 
B)  The natural rate of unemployment consists of only frictional or structural unemployment. 
C)  The natural rate of unemployment is the level at which inflationary pressures in the economy are at their maximum. 
D)  The natural rate of unemployment is when cyclical unemployment is zero.

Question 14

Other things equal,if a recession gets worse,the number of discouraged workers __________,and the number of those in the labor force _____________.

Accepted Answer

A)  increases;decreases 
B)  decreases;decreases 
C)  increases;increases 
D)  decreases;increases

Question 15

Cyclical unemployment can be mitigated by keeping the economy on a steady,low-inflationary,solid growth path.

Accepted Answer

A) True 
 B)False

Question 16

The costs of inflation are greater when it is unanticipated.

Accepted Answer

A) True 
 B)False

Question 17

"Even if an economy is healthy,it will never have a zero unemployment rate." Explain.

Accepted Answer

The answer of "Even if an economy is healthy,it will...

Question 18

A person is considered to be unemployed if he or she has been either actively or passively looking for work.

Accepted Answer

A) True 
 B)False

Question 19

Workers who want to work but have been frustrated by the inability to find work and have stopped searching are known as:

Accepted Answer

A)  the invisible unemployed. 
B)  temporary workers. 
C)  discouraged workers. 
D)  the disgruntled unemployed.

Question 20

Structural and cyclical unemployment are unavoidable;therefore,the economy is in full employment when frictional unemployment is zero.

Accepted Answer

A) True 
 B)False

Exam 6: Measuring Inflation and Unemployment

To convert a nominal change to a real change in dollar terms,the base year index must be set at 100.

If the current year's consumer price index is 214 and last year's was 209,then the rate of inflation is:

The nonaccelerating inflation rate of unemployment is a measure of the natural rate of inflation.

Frictional unemployment occurs when job openings:

Core inflation is more stable than headline inflation because the two most volatile components are not included in core inflation.

Which of the following is NOT generally considered a problem with using the consumer price index to measure consumer prices?

The Weekly Jobs Report is used as a way to estimate trends in layoffs and hiring.

_____ is a reduction in the rate of inflation.

Robert lost his job and now takes care of the children while his wife works.Robert has decided he likes his daddy duties.Robert would take a job similar to the one he lost if it was offered,but he is not actively seeking work.How is Robert categorized in the unemployment figures?

Jordan Meadows lost his job as an airline pilot and has not been able to find another job as a pilot.Since he is old enough to be eligible for his pension,he decides to retire and devote himself to caring for his elderly parents,According to the Bureau of Labor Statistics,Jordan is:

Cathy works part-time as a bookkeeper but would like to have a full-time position.She has been actively searching for months but so far has not found a job.According to the Bureau of Labor Statistics,Cathy is unemployed.

Which of the following statements is INCORRECT?

Other things equal,if a recession gets worse,the number of discouraged workers ,and the number of those in the labor force ___.

Cyclical unemployment can be mitigated by keeping the economy on a steady,low-inflationary,solid growth path.

The costs of inflation are greater when it is unanticipated.

"Even if an economy is healthy,it will never have a zero unemployment rate." Explain.

A person is considered to be unemployed if he or she has been either actively or passively looking for work.

Workers who want to work but have been frustrated by the inability to find work and have stopped searching are known as:

Structural and cyclical unemployment are unavoidable;therefore,the economy is in full employment when frictional unemployment is zero.