question
Table 6.4: Population and Employment in Nationland
1999 2000 2001
Working Age Population 100 110 125
Employed 65 70 80
Unemployed 5 10 20
Discouraged Workers 2 3 5
*all numbers are in millions
What was the unemployment rate in Nationland in 1999?
a. 7.6 percent.
b. 5.0 percent.
c. 7.1 percent.
d. 65.0 percent.
1999 2000 2001
Working Age Population 100 110 125
Employed 65 70 80
Unemployed 5 10 20
Discouraged Workers 2 3 5
*all numbers are in millions
What was the unemployment rate in Nationland in 1999?
a. 7.6 percent.
b. 5.0 percent.
c. 7.1 percent.
d. 65.0 percent.
answer
c. 7.1 percent.
question
The labor force participation rate is the number
a. Of employed divided by the number in the labor force.
b. Of unemployed divided by the number of employed.
c. Of employed divided by the total population.
d. In the labor force divided by the working-age population.
a. Of employed divided by the number in the labor force.
b. Of unemployed divided by the number of employed.
c. Of employed divided by the total population.
d. In the labor force divided by the working-age population.
answer
d. In the labor force divided by the working-age population.
question
Table 7.1
GDP
Nominal GDP(bil) GDP deflator CPI
2002 S6,992.4 106.2 151.6
2003 7,431.6 109.1 153.8
2004 7,843.2 112.3 157.8
Based on Table 7.1, the rate of inflation between 2003 and 2004, using the GDP deflator, was
a. 6.2 percent.
b. 2.9 percent.
c. 2.4 percent.
d. 4.1 percent.
GDP
Nominal GDP(bil) GDP deflator CPI
2002 S6,992.4 106.2 151.6
2003 7,431.6 109.1 153.8
2004 7,843.2 112.3 157.8
Based on Table 7.1, the rate of inflation between 2003 and 2004, using the GDP deflator, was
a. 6.2 percent.
b. 2.9 percent.
c. 2.4 percent.
d. 4.1 percent.
answer
b. 2.9 percent.
question
The observation that a 1 percent increase in unemployment tends to lead to a 2 percent decrease in real output is known as
a. Under allocation of resources.
b. A Lucas Wedge.
c. A recession.
d. Okun's Law.
a. Under allocation of resources.
b. A Lucas Wedge.
c. A recession.
d. Okun's Law.
answer
d. Okun's Law.
question
The Consumer Price Index is
a. A measure of changes in the average price of all goods and services.
b. Used to measure the impact of business speculation on consumers.
c. A measure of changes in the average price of consumer goods and services.
d. The impact felt by consumers who move into a higher tax bracket because of inflation.
a. A measure of changes in the average price of all goods and services.
b. Used to measure the impact of business speculation on consumers.
c. A measure of changes in the average price of consumer goods and services.
d. The impact felt by consumers who move into a higher tax bracket because of inflation.
answer
c. A measure of changes in the average price of consumer goods and services.
question
If the price of Bluetooth headsets rises 12 percent during a year when the level of average prices rises 13 percent, the relative price of Bluetooth headsets
a. More information is required to answer this question.
b. Decreases.
c. Increases.
d. Remains constant.
a. More information is required to answer this question.
b. Decreases.
c. Increases.
d. Remains constant.
answer
b. Decreases.
question
Changes in the relative prices of two goods indicate
a. Changes in the desired mix of output.
b. Nominal price changes adjusted for the inflation in the price of the goods.
c. That average prices for the period must not be stable.
d. Inflation.
a. Changes in the desired mix of output.
b. Nominal price changes adjusted for the inflation in the price of the goods.
c. That average prices for the period must not be stable.
d. Inflation.
answer
a. Changes in the desired mix of output.
question
If deflation is 0.5 percent per year and you receive a 1 percent decrease in your salary, then your
a. Real and nominal income both rise.
b. Real income remains unchanged, but your nominal income rises.
c. Real and nominal income both fall.
d. Real income falls, but your nominal income remains unchanged.
a. Real and nominal income both rise.
b. Real income remains unchanged, but your nominal income rises.
c. Real and nominal income both fall.
d. Real income falls, but your nominal income remains unchanged.
answer
c. Real and nominal income both fall.
question
If a nation experiences a year of unusually high immigration that increases the size of the labor force, we can conclude that the:
a. Nation's production possibilities curve will shift outward.
b. Nation will choose a different point on the production possibilities curve.
c. Nation's production possibilities curve will shift inward.
d. Nation's capital per worker will rise. Incorrect
a. Nation's production possibilities curve will shift outward.
b. Nation will choose a different point on the production possibilities curve.
c. Nation's production possibilities curve will shift inward.
d. Nation's capital per worker will rise. Incorrect
answer
a. Nation's production possibilities curve will shift outward.
question
When there is a mismatch between the skills required for a job and the skills of job seekers, the unemployment that results is an example of
a. Frictional unemployment.
b. Cyclical unemployment.
c. Seasonal unemployment.
d. Structural unemployment.
a. Frictional unemployment.
b. Cyclical unemployment.
c. Seasonal unemployment.
d. Structural unemployment.
answer
d. Structural unemployment.
question
The type of unemployment that economists generally associate with normal growth of the labor force and expanding job opportunities in a dynamic economy is
a. Cyclical unemployment.
b. Frictional unemployment.
c. Seasonal unemployment.
d. Structural unemployment.
a. Cyclical unemployment.
b. Frictional unemployment.
c. Seasonal unemployment.
d. Structural unemployment.
answer
b. Frictional unemployment.
question
Generally speaking, which of the following groups would tend to gain real income from the wealth effects of inflation?
a. People who have savings accounts at fixed rates of interest.
b. People who hold all of their assets in the form of cash.
c. People with fixed income.
d. People who own assets that are appreciating faster than the inflation rate.
a. People who have savings accounts at fixed rates of interest.
b. People who hold all of their assets in the form of cash.
c. People with fixed income.
d. People who own assets that are appreciating faster than the inflation rate.
answer
d. People who own assets that are appreciating faster than the inflation rate.
question
Which of the following is included in the labor force?
a. A student who is still in school but not working or looking for work.
b. A person who spends the entire day taking care of his or her own young children at home.
c. A person who runs a charity as a volunteer.
d. A part-time store clerk who is looking for another job.
a. A student who is still in school but not working or looking for work.
b. A person who spends the entire day taking care of his or her own young children at home.
c. A person who runs a charity as a volunteer.
d. A part-time store clerk who is looking for another job.
answer
d. A part-time store clerk who is looking for another job.
question
If the population of a country is 250,000 people, its labor force consists of 145,000 people, 35,000 people are unemployed, 10,000 are unable to work, and 5,000 are unwilling to work, the unemployment rate is
a. 24.1 percent.
b. 22.1 percent.
c. 14.0 percent.
d. 19.4 percent.
a. 24.1 percent.
b. 22.1 percent.
c. 14.0 percent.
d. 19.4 percent.
answer
a. 24.1 percent.
question
According to Figure 7.1 in Country A,
(picture 1)
a. Average prices were constant, and unemployment was increasing.
b. Relative prices may have been changing, but average prices were constant.
c. Average prices and relative prices were definitely changing.
d. Relative prices were definitely constant.
(picture 1)
a. Average prices were constant, and unemployment was increasing.
b. Relative prices may have been changing, but average prices were constant.
c. Average prices and relative prices were definitely changing.
d. Relative prices were definitely constant.
answer
b. Relative prices may have been changing, but average prices were constant.
question
The GDP deflator
a. Reflects the price changes felt by producers but not consumers.
b. Is the broadest price index, covering all output.
c. Is the best measure of inflation for consumers.
d. Is the price index based on a fixed basket of goods and services for the government.
a. Reflects the price changes felt by producers but not consumers.
b. Is the broadest price index, covering all output.
c. Is the best measure of inflation for consumers.
d. Is the price index based on a fixed basket of goods and services for the government.
answer
b. Is the broadest price index, covering all output.
question
Which of the following was a stated goal of the Humphrey-Hawkins Act?
a. Zero percent unemployment rate.
b. 4 percent inflation rate.
c. Zero percent inflation rate.
d. 4 percent unemployment rate.
a. Zero percent unemployment rate.
b. 4 percent inflation rate.
c. Zero percent inflation rate.
d. 4 percent unemployment rate.
answer
d. 4 percent unemployment rate.
question
Individuals who are working part-time while seeking full-time employment are classified as
a. Unemployed.
b. Underemployed.
c. Discouraged workers.
d. Phantom unemployed.
a. Unemployed.
b. Underemployed.
c. Discouraged workers.
d. Phantom unemployed.
answer
b. Underemployed.
question
Inflation is
a. An increase in relative prices of all goods and services.
b. An increase in the average level of prices of goods and services.
c. A rise in the price of every good but not any service.
d. A situation in which purchasing power increases.
a. An increase in relative prices of all goods and services.
b. An increase in the average level of prices of goods and services.
c. A rise in the price of every good but not any service.
d. A situation in which purchasing power increases.
answer
b. An increase in the average level of prices of goods and services.
question
If the CPI increases from 110 to 125 for one year, the rate of inflation for that year is
a. 50 percent.
b. 15 percent.
c. 1.13 percent.
d. 13.6 percent.
a. 50 percent.
b. 15 percent.
c. 1.13 percent.
d. 13.6 percent.
answer
d. 13.6 percent.
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