Question 1

What are menu costs?

Accepted Answer

A)  the full list of a firm's costs of production
B)  the costs to a firm of changing prices
C)  the cost to a household of borrowing money when there is deflation
D)  the opportunity cost of dining in a restaurant instead of at homeE) None of the above
F) B) and D)

Question 2

Table 9-3
Base Year (2011) 2016
 
-Refer to Table 9-3.Assume the market basket for the consumer price index has three products - Cokes,hamburgers,and CDs - with the following values in 2011 and 2016 for price and quantity: The Consumer Price Index for 2016 equals

Accepted Answer

A)  75.
B)  93.
C)  108.
D)  121.E) None of the above
F) All of the above

Question 3

Most economists believe that labor unions significantly increase the overall unemployment rate in the United States.

Accepted Answer

A) True 
 B)False

Question 4

If you want to earn a real interest rate of 3% on money you lend,and you expect that inflation will be 2%,what nominal rate of interest will you charge?

Accepted Answer

A)  1%
B)  5%
C)  6%
D)  9%E) C) and D)
F) A) and B)

Question 5

Which of the following describes actual trends in the U.S.labor force participation rate?

Accepted Answer

A)  The labor force participation rate of adult men has risen since 1950.
B)  The labor force participation rate of adult women has fallen since 1950.
C)  The labor force participation rate of adult men not in school,but too young to retire has risen since 1950.
D)  The labor force participation rate of adult women has risen since 1950.
E)  The labor force participation rate of all adults has fallen since 1950.F) A) and B)
G) B) and C)

Question 6

During the Great Depression,cyclical unemployment increased as the recession continued.This increase in cyclical unemployment

Accepted Answer

A)  increased the natural rate of unemployment.
B)  decreased the natural rate of unemployment.
C)  had no effect on the natural rate of unemployment.
D)  could have increased or decreased the natural rate of unemployment.E) A) and C)
F) All of the above

Question 7

Most economists believe that biases cause changes in the CPI to overstate the inflation rate by ________ percentage points.

Accepted Answer

A)  0.1 to 0.2
B)  0.2 to 2.0
C)  0.4
D)  0.5 to 1.0
E)  1.0 to 3.0F) A) and C)
G) None of the above

Question 8

The CPI is also referred to as

Accepted Answer

A)  the GDP deflator.
B)  the inflation-consumption index.
C)  the cost-of-living index.
D)  the producer price index.E) A) and C)
F) None of the above

Question 9

Which of the following would be a consequence of substitution bias in the CPI?

Accepted Answer

A)  Social Security payments would not adequately compensate retired workers for inflation.
B)  Businesses would overcompensate employees for inflation when giving cost of living raises.
C)  The inflation rate based on the CPI would underestimate the true level of inflation.
D)  Judges would award child support payments that would not adequately keep up with the true cost of inflation.E) B) and C)
F) All of the above

Question 10

Which of the following policies would reduce structural unemployment?

Accepted Answer

A)  an increase in the minimum wage
B)  a job retraining program
C)  implementing an unemployment insurance policy
D)  building an online job database that helps workers find jobsE) C) and D)
F) B) and C)

Question 11

The U.S.unemployment insurance program

Accepted Answer

A)  increases the amount of time the unemployed spend searching for a job.
B)  decreases the level of frictional unemployment.
C)  pays the unemployed a benefit equal to twice the average wage.
D)  eliminates structural unemployment.E) A) and D)
F) A) and C)

Question 12

If the number employed is 190 million,the number unemployed is 10 million,and the working-age population is 250 million,then the labor force participation rate is

Accepted Answer

A)  4%.
B)  5.2%.
C)  60%.
D)  76%.
E)  80%.F) B) and C)
G) A) and B)

Question 13

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

Accepted Answer

A)  unemployment rate
B)  discouraged-worker ratio
C)  labor force participation rate
D)  the ratio of minimum wage to inflationE) A) and B)
F) C) and D)

Question 14

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

Accepted Answer

A) True 
 B)False

Question 15

Fill in the missing values in the table of data collected in the household survey for December,1996.The working-age population,employment,unemployment,and labor force are measured in thousands.Show your work.

Accepted Answer

Unemployment rate =

× 100.
Unemployed ...

Question 16

According to the text,economists consider full employment to occur when

Accepted Answer

A)  everyone who wants a job has a job.
B)  frictional unemployment equals zero.
C)  the sum of frictional unemployment and structural unemployment equals zero.
D)  the unemployment rate consists of only frictional and structural unemployment.E) A) and B)
F) B) and C)

Question 17

Eliminating structural unemployment would be good for the economy.

Accepted Answer

A) True 
 B)False

Question 18

Suppose you borrow $1,000 at an interest rate of 12 percent.If the expected real interest rate is 5 percent,then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation

Accepted Answer

A)  equal to 0 percent.
B)  greater than 7 percent.
C)  equal to 7 percent.
D)  less than 7 percent.E) None of the above
F) A) and C)

Question 19

Table 9-19
 
-Refer to Table 9-19.Looking at the table above,what is the rate of growth of the average price level from 2014 to 2015?

Accepted Answer

A)  1%
B)  2%
C)  3%
D)  4%
E)  5%F) A) and B)
G) D) and E)

Question 20

If inflation is positive and is perfectly anticipated,

Accepted Answer

A)  those that borrow money lose.
B)  those that lend money lose.
C)  those that hold paper money lose.
D)  no one in the economy loses.E) A) and B)
F) A) and C)

Exam 9: Unemployment and Inflation

During the Great Depression,cyclical unemployment increased as the recession continued.This increase in cyclical unemployment

Correct AnswerverifiedShow Answer

Table 9-19 -Refer to Table 9-19.Looking at the table above,what is the rate of growth of the average price level from 2014 to 2015?

Correct AnswerverifiedShow Answer

What are menu costs?

Correct AnswerverifiedShow Answer

Eliminating structural unemployment would be good for the economy.

Correct AnswerverifiedShow Answer

If inflation is higher than expected,this helps borrowers (by reducing the real interest rate they pay)and hurts lenders (by reducing the real interest rate they receive).

Correct AnswerverifiedShow Answer

The U.S.unemployment insurance program

Correct AnswerverifiedShow Answer

If inflation is positive and is perfectly anticipated,

Correct AnswerverifiedShow Answer

Which of the following policies would reduce structural unemployment?

Correct AnswerverifiedShow Answer

Which of the following would be a consequence of substitution bias in the CPI?

Correct AnswerverifiedShow Answer

If the number employed is 190 million,the number unemployed is 10 million,and the working-age population is 250 million,then the labor force participation rate is

Correct AnswerverifiedShow Answer

According to the text,economists consider full employment to occur when

Correct AnswerverifiedShow Answer

Fill in the missing values in the table of data collected in the household survey for December,1996.The working-age population,employment,unemployment,and labor force are measured in thousands.Show your work.

Correct Answerverified Unemployment rate = × 100.Unemployed ...View AnswerShow Answer

Table 9-3 Base Year (2011) 2016 -Refer to Table 9-3.Assume the market basket for the consumer price index has three products - Cokes,hamburgers,and CDs - with the following values in 2011 and 2016 for price and quantity: The Consumer Price Index for 2016 equals

Correct AnswerverifiedShow Answer

Most economists believe that biases cause changes in the CPI to overstate the inflation rate by ________ percentage points.

Correct AnswerverifiedShow Answer

Suppose you borrow $1,000 at an interest rate of 12 percent.If the expected real interest rate is 5 percent,then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate of inflation

Correct AnswerverifiedShow Answer

If you want to earn a real interest rate of 3% on money you lend,and you expect that inflation will be 2%,what nominal rate of interest will you charge?

Correct AnswerverifiedShow Answer

Most economists believe that labor unions significantly increase the overall unemployment rate in the United States.

Correct AnswerverifiedShow Answer

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

Correct AnswerverifiedShow Answer

Which of the following describes actual trends in the U.S.labor force participation rate?

Correct AnswerverifiedShow Answer

The CPI is also referred to as

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Unemployment rate = × 100.
Unemployed ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified