Question 1

Inflation can be defined as

Accepted Answer

A)   an increase in the purchasing power of money.
B)   a decrease in the purchasing power of money.
C)   no change in the purchasing power of money.
D)   an increase in real income.

Question 2

Which of the following people would be considered unemployed?

Accepted Answer

A)   Homer, who lost his job at the power plant and is not looking for work
B)   Lenny, who is working part time at a fast food restaurant
C)   Abe, who is retired
D)   Edna, who lost her job as a teacher and is currently searching for a new job

Question 3

Environmental regulation reduces the demand for West Virginia coal and the unemployment rate in West Virginia increases. This is an example of

Accepted Answer

A)   frictional unemployment.
B)   cyclical unemployment.
C)   structural unemployment.
D)   regulatory unemployment.

Question 4

The nominal value of a good is

Accepted Answer

A)   the good's value expressed in purchasing power terms.
B)   the good's anticipated value one year from now.
C)   the price of the good in today's dollars, minus an anticipated inflation premium.
D)   the price of the good in today's dollars.

Question 5

Unemployment that is caused by business recessions is called

Accepted Answer

A)   frictional unemployment.
B)   cyclical unemployment.
C)   seasonal unemployment.
D)   structural unemployment.

Question 6

The natural rate of unemployment when seasonally adjusted includes

Accepted Answer

A)   frictional and structural unemployment but not cyclical.
B)   frictional and cyclical unemployment but not structural.
C)   frictional unemployment only.
D)   cyclical and structural unemployment but not frictional.

Question 7

One criticism of the unemployment rate is that it

Accepted Answer

A)   does not include the number of discouraged workers as unemployed.
B)   does not include people who are not working and are not looking for work.
C)   counts a new entrant that is actively seeking work as unemployed.
D)   is a stock measure.

Question 8

The year that is chosen as the point of reference for comparison of prices in other years is known as the

Accepted Answer

A)   base year.
B)   price index.
C)   purchasing power.
D)   consumer price index.

Question 9

The unemployment rate will decrease when

Accepted Answer

A)   the duration of unemployment increases.
B)   the average workweek falls from 40 to 39 hours.
C)   the age of the labor force increases.
D)   people get discouraged and quit looking for work.

Question 10

The rate of unemployment is calculated as the number of

Accepted Answer

A)   unemployed workers divided by the number of employed workers.
B)   people in the civilian labor force divided by the number of unemployed.
C)   unemployed divided by the number of people in the civilian labor force.
D)   employed workers divided by the number of unemployed workers.

Question 11

Which of the following would be considered a member of the labor force?

Accepted Answer

A)   an engineer who has been laid off a year ago and since then has not looked for work
B)   an inmate in a state prison making license plates
C)   a person in a mental institution
D)   a computer programmer looking for work

Question 12

Which one of the following statements is true?

Accepted Answer

A)   The existence of unemployment places the economy at a point inside its production possibilities curve.
B)   The unemployment rate is the percentage of the population not working.
C)   To be counted as part of the labor force, an individual must be working more than 40 hours a week.
D)   The sum of wages lost by all unemployed workers gives an accurate, comprehensive estimate of the total cost of unemployment.

Question 13

The Consumer Price Index (CPI)  is a

Accepted Answer

A)   statistical measure of a weighted average of prices of a specific set of goods and services purchased by consumers in urban areas.
B)   statistical measure of a weighted average of prices of commodities that firms produce and sell.
C)   price index measuring the changes in prices of all new goods and services produced in the economy.
D)   statistical measure of average prices using annually updated weights based on surveys of consumer spending.

Question 14

Which category of unemployed individuals makes up the greatest share of those who are unemployed?

Accepted Answer

A)   New entrants
B)   Reentrants
C)   Job losers
D)   Job leavers

Question 15

The largest category of the unemployed are

Accepted Answer

A)   job losers.
B)   reentrants.
C)   job leavers.
D)   new entrants.

Question 16

-Refer to the above figure. Point B is known as

Accepted Answer

A)   a peak.
B)   a trough.
C)   an expansion.
D)   a contraction.

Question 17

The index that is not based on a fixed market basket of goods and services is the

Accepted Answer

A)   CPI.
B)   PPI.
C)   Wholesale Price Index.
D)   GDP Price Deflator.

Question 18

Deflation is the situation when

Accepted Answer

A)   the rate at which prices increase falls.
B)   the average of all prices is declining.
C)   the real rate of interest is negative.
D)   some prices are increasing and some are declining.

Question 19

Cyclical unemployment is

Accepted Answer

A)   related to job search difficulties for potential workers.
B)   a result of a poor match of worker's abilities and skills with current requirements of employers.
C)   a result of business recessions that occur when aggregate demand is insufficient to create full employment.
D)   a result of the seasonal pattern of work in specific industries.

Question 20

The U.S. Department of Labor classifies all individuals in the United States as

Accepted Answer

A)   labor force participants.
B)   either employed, unemployed, or not in the labor force.
C)   either overemployed or underemployed.
D)   potential employees.

Exam 7: The Macroeconomy: Unemployment, Inflation, and Deflation

The rate of unemployment is calculated as the number of

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Environmental regulation reduces the demand for West Virginia coal and the unemployment rate in West Virginia increases. This is an example of

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The natural rate of unemployment when seasonally adjusted includes

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Which category of unemployed individuals makes up the greatest share of those who are unemployed?

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Which one of the following statements is true?

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-Refer to the above figure. Point B is known as

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Unemployment that is caused by business recessions is called

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The unemployment rate will decrease when

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Inflation can be defined as

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One criticism of the unemployment rate is that it

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The year that is chosen as the point of reference for comparison of prices in other years is known as the

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The largest category of the unemployed are

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Deflation is the situation when

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Which of the following people would be considered unemployed?

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The U.S. Department of Labor classifies all individuals in the United States as

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The nominal value of a good is

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Cyclical unemployment is

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The index that is not based on a fixed market basket of goods and services is the

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Which of the following would be considered a member of the labor force?

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The Consumer Price Index (CPI) is a

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