question
Suppose you are available for work but have not looked for a job for at least the last four weeks because you believe that no jobs are available. You would then be counted as __________.
A) underemployed
B) part of the labor force
C) a discouraged worker
A) underemployed
B) part of the labor force
C) a discouraged worker
answer
C) a discouraged worker
question
The natural rate of unemployment is the __________.
A) prevailing rate of unemployment in the economy in the short run
B) unemployment rate that results when the economy produces the potential level of real GDP
C) lowest unemployment rate on the short-run Phillips curve
A) prevailing rate of unemployment in the economy in the short run
B) unemployment rate that results when the economy produces the potential level of real GDP
C) lowest unemployment rate on the short-run Phillips curve
answer
B) unemployment rate that results when the economy produces the potential level of real GDP
question
In calculating the CPI, the __________.
A) largest group of items in the market basket is food and beverages
B) market basket does NOT include large equipment purchased by firms.
C) market basket of goods and services is updated monthly
A) largest group of items in the market basket is food and beverages
B) market basket does NOT include large equipment purchased by firms.
C) market basket of goods and services is updated monthly
answer
B) market basket does NOT include large equipment purchased by firms.
question
Economic variables that are calculated in current year prices are referred to as __________ variables, while variables that have been corrected to account for the effects of inflation are __________ variables.
A) nominal, deflated
B) nominal, real
C) real, nominal
A) nominal, deflated
B) nominal, real
C) real, nominal
answer
B) nominal, real
question
The producer price index tracks the prices firms receive for goods and services at:
A) all stages of production
B) the retail level
C) the final stage of production
A) all stages of production
B) the retail level
C) the final stage of production
answer
A) all stages of production
question
Suppose the CPI in 2008 was 215.3 and the CPI in 2009 was 214.6, what was the inflation rate between 2008 and 2009?
A) 0.7%
B) 0.3%
C) -0.3%
A) 0.7%
B) 0.3%
C) -0.3%
answer
C) -0.3%
question
To obtain prices of a representative group of goods and services, the Bureau of Labor Statistics (BLS) conducts a monthly survey of __________ households nationwide on their spending habits. The results of this survey are used to construct a market basket of __________ types of goods and services purchased by the typical urban family of four.
A) 10,000; 525
B) 5,000; 211
C) 30,000; 211
A) 10,000; 525
B) 5,000; 211
C) 30,000; 211
answer
C) 30,000; 211
question
Which of these persons is officially unemployed?
A) a student who will be graduating soon and looking for a job
B) a non-working individual who has looked for a job in the past week
C) a housewife who is considering looking for a job
A) a student who will be graduating soon and looking for a job
B) a non-working individual who has looked for a job in the past week
C) a housewife who is considering looking for a job
answer
B) a non-working individual who has looked for a job in the past week
question
If the inflation rate is anticipated, __________.
A) net debtors will be hurt
B) net creditors will be hurt
C) inflation may not be a major problem
A) net debtors will be hurt
B) net creditors will be hurt
C) inflation may not be a major problem
answer
C) inflation may not be a major problem
question
Which market basket specifically targets intermediate goods?
A) the basket used by the producer price index
B) the basket used by the CPI
C) The basket used by the GDP deflator
A) the basket used by the producer price index
B) the basket used by the CPI
C) The basket used by the GDP deflator
answer
A) the basket used by the producer price index
question
The short-term unemployment that arises from workers, in the process of changing jobs, is called __________ unemployment.
A) cyclical
B) frictional
C) structural
A) cyclical
B) frictional
C) structural
answer
B) frictional
question
Of the eight categories in the CPI market basket, which three categories make up more than 75% of the basket?
A) medical care, recreation, and education
B) food, apparel, and transportation
C) housing, transportation, and food
A) medical care, recreation, and education
B) food, apparel, and transportation
C) housing, transportation, and food
answer
C) housing, transportation, and food
question
The "normal or natural" underlying level of unemployment in the economy is the __________.
A) full employment rate of unemployment
B) typically around 10 or 12%
C) sum of all cyclical, structural, and frictional unemployment.
A) full employment rate of unemployment
B) typically around 10 or 12%
C) sum of all cyclical, structural, and frictional unemployment.
answer
A) full employment rate of unemployment
question
When the economy is at full employment, which types of unemployment remain?
A) cyclical and structural
B) full employment means there is zero unemployment
C) frictional and structural
A) cyclical and structural
B) full employment means there is zero unemployment
C) frictional and structural
answer
C) frictional and structural
question
In general, __________ have much lower unemployment rates than other individuals with other levels of education.
A) high school grads
B) college grads
C) high school dropouts
A) high school grads
B) college grads
C) high school dropouts
answer
B) college grads
question
If inflation is anticipated, __________.
A) it is costless to society
B) debtors gain
C) it costs less to society than if unanticipated
A) it is costless to society
B) debtors gain
C) it costs less to society than if unanticipated
answer
C) it costs less to society than if unanticipated
question
If the CPI was 207 in 2007 and 225 in 2011, what pay raise would someone who earned $50,000 in income in 2007 have to receive in order to keep her purchasing power constant in 2011?
A) $4,348
B) $1,252
C) $4,000
A) $4,348
B) $1,252
C) $4,000
answer
A) $4,348
question
Which of these groups is included in the labor force?
A) people in mental hospitals and prison
B) the unemployed
C) retirees, homemakers, and full-time students
A) people in mental hospitals and prison
B) the unemployed
C) retirees, homemakers, and full-time students
answer
B) the unemployed
question
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and job requirements is called __________ unemployment.
A) structural
B) frictional
C) cyclical
A) structural
B) frictional
C) cyclical
answer
A) structural
question
Which of these statements about interest rates and inflation is true?
A) if there is zero inflation, the nominal interest rate is equal to the real interest rate.
B) the real interest rate is equal to the nominal interest rate divided by the inflation rate
C) the real interest rate is equal to the nominal interest rate plus the inflation rate
A) if there is zero inflation, the nominal interest rate is equal to the real interest rate.
B) the real interest rate is equal to the nominal interest rate divided by the inflation rate
C) the real interest rate is equal to the nominal interest rate plus the inflation rate
answer
A) if there is zero inflation, the nominal interest rate is equal to the real interest rate.
question
The consumer price index __________.
A) measures the cost of a changing basket of goods and services
B) measures the cost of an unchanging basket of goods and services
C) changes the base period every 5 years
A) measures the cost of a changing basket of goods and services
B) measures the cost of an unchanging basket of goods and services
C) changes the base period every 5 years
answer
B) measures the cost of an unchanging basket of goods and services
question
Unanticipated deflation __________.
A) causes no economic problems
B) hurts people who hold cash
C) hurts net debtors
A) causes no economic problems
B) hurts people who hold cash
C) hurts net debtors
answer
C) hurts net debtors
question
At full employment, __________ unemployment is zero.
A) frictional
B) structural
C) cyclical
A) frictional
B) structural
C) cyclical
answer
C) cyclical
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