Question 1

Suppose that the CPI in Thailand was 345 in 2011 and 388 in 2012. The inflation rate between those two years was approximately

Accepted Answer

A)   11.2 percent.
B)   14.3 percent.
C)   12.5 percent.
D)   43 percent.E) A) and B)
F) B) and C)

Question 2

The chain-weighted index for GDP and the CPI differ in that the CPI

Accepted Answer

A)   excludes price changes from used and imported goods while the chain-weighted index includes these price changes.
B)   asks how much a fixed basket of goods costs in the current year as compared to the cost of those same goods in a base year while the chain-weighted index takes an average of price changes using base years from neighboring years.
C)   is calculated by the Commerce Department while the chain-weighted index is calculated by local newspapers.
D)   is calculated in nominal terms and the chain-weighted index is calculated in real terms.E) B) and C)
F) None of the above

Question 3

Customer service representatives who have lost their jobs as a result of call centers being outsourced to India are an example of

Accepted Answer

A)   structural unemployment.
B)   cyclical unemployment.
C)   frictional unemployment.
D)   voluntary unemployment.E) A) and B)
F) A) and C)

Question 4

Table 6.2
The following table lists the basket of goods in the
Consumer Price Index for the nation of Astro (Assume 2010 is the base year.) 
 
-Using the information in Table 6.2, the Astro Consumer Price Index for 2011 is

Accepted Answer

A)   87.
B)   99.
C)   126.
D)   238.E) C) and D)
F) B) and C)

Question 5

What is meant by the term "the natural rate of unemployment"?

Accepted Answer

The natural rate of unemployme...

Question 6

Economists define the labor force to include

Accepted Answer

A)   only people who are working full time.
B)   people who are working.
C)   people who are not working but are actively looking for a job, and people who are working.
D)   all individuals of working age, regardless of whether they are working or looking for a job.E) All of the above
F) B) and C)

Question 7

The principal reason why the chain-weighted index for GDP and the CPI both overstate actual changes in prices is that

Accepted Answer

A)   it is hard to measure quality changes.
B)   the basket of goods purchased by consumers never changes.
C)   price data is often inaccurate.
D)   all of the aboveE) B) and D)
F) A) and D)

Question 8

Individuals who are not working and are not actively looking for work are counted as unemployed if they have looked for work in the past.

Accepted Answer

A) True 
 B)False

Question 9

The unemployment rate is calculated by dividing the number unemployed and looking for work by the sum of the number employed and the number unemployed and looking for work.

Accepted Answer

A) True 
 B)False

Question 10

At full employment the unemployment rate equals the

Accepted Answer

A)   cyclical unemployment rate.
B)   structural unemployment rate.
C)   structural unemployment rate plus the cyclical unemployment rate.
D)   structural unemployment rate plus the frictional unemployment rate.E) B) and C)
F) A) and D)

Question 11

Social security payments automatically increase when the CPI goes up because of the

Accepted Answer

A)   age of the recipient.
B)   years receiving social security.
C)   cost-of-living adjustments.
D)   individual being married or unmarried.E) A) and C)
F) B) and C)

Question 12

The unemployment rate is the number of unemployed people

Accepted Answer

A)   divided by the number of people who are working.
B)   divided by the total working-age population.
C)   divided by the sum of the number of people who are working and the number of people who are looking for work.
D)   and the number of people working fewer than their desired number of hours, divided by the number of people who are working or looking for work.E) All of the above
F) C) and D)

Question 13

Individuals who have stopped looking for work after an active search because of the lack of transportation or lack of affordable child care, etc. are classified as ________ workers.

Accepted Answer

A)   non-contributing
B)   nonfunctional
C)   marginally attached
D)   very lazyE) B) and C)
F) A) and B)

Question 14

The labor force participation rate is the fraction of the population over 16 years of age that is looking for work.

Accepted Answer

A) True 
 B)False

Question 15

On what kind of income is our tax system based?

Accepted Answer

A)   real
B)   nominal
C)   adjusted
D)   inflationaryE) A) and B)
F) C) and D)

Question 16

When wages or benefits are automatically increased based on the reported inflation rate, it is called the ________ adjustment.

Accepted Answer

A)   natural flow of money
B)   cost-of-living
C)   change in exports
D)   change in importsE) B) and D)
F) A) and B)

Question 17

Auto workers laid off from Hot-Rod Autoworks as the result of a recession are considered

Accepted Answer

A)   structurally unemployed.
B)   cyclically unemployed.
C)   frictionally unemployed.
D)   seasonally unemployed.E) A) and B)
F) A) and C)

Question 18

Unemployment that naturally occurs during the normal workings of an economy as people change jobs and move across the country is called

Accepted Answer

A)   natural unemployment.
B)   frictional unemployment.
C)   structural unemployment.
D)   cyclical unemployment.E) B) and C)
F) A) and D)

Question 19

Most economists believe that price indices

Accepted Answer

A)   overstate inflation and understate growth in nominal GDP.
B)   overstate inflation and understate growth in real GDP.
C)   understate inflation and understate growth in nominal GDP.
D)   understate inflation and understate growth in real GDP.E) All of the above
F) None of the above

Question 20

The real-nominal principle can be stated as

Accepted Answer

A)   production generates income.
B)   only final goods and services should be counted in GDP.
C)   what matters to people is the purchasing power of money or income.
D)   only the manufacture of real goods is production.E) A) and B)
F) C) and D)

Exam 6:Unemployment and Inflation

The chain-weighted index for GDP and the CPI differ in that the CPI

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Most economists believe that price indices

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Suppose that the CPI in Thailand was 345 in 2011 and 388 in 2012. The inflation rate between those two years was approximately

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At full employment the unemployment rate equals the

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The principal reason why the chain-weighted index for GDP and the CPI both overstate actual changes in prices is that

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On what kind of income is our tax system based?

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What is meant by the term "the natural rate of unemployment"?

Correct AnswerverifiedThe natural rate of unemployme...View AnswerShow Answer

Individuals who have stopped looking for work after an active search because of the lack of transportation or lack of affordable child care, etc. are classified as ________ workers.

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The real-nominal principle can be stated as

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The labor force participation rate is the fraction of the population over 16 years of age that is looking for work.

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Individuals who are not working and are not actively looking for work are counted as unemployed if they have looked for work in the past.

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Auto workers laid off from Hot-Rod Autoworks as the result of a recession are considered

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Economists define the labor force to include

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Customer service representatives who have lost their jobs as a result of call centers being outsourced to India are an example of

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The unemployment rate is the number of unemployed people

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Table 6.2 The following table lists the basket of goods in the Consumer Price Index for the nation of Astro (Assume 2010 is the base year.) -Using the information in Table 6.2, the Astro Consumer Price Index for 2011 is

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Social security payments automatically increase when the CPI goes up because of the

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Unemployment that naturally occurs during the normal workings of an economy as people change jobs and move across the country is called

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When wages or benefits are automatically increased based on the reported inflation rate, it is called the ________ adjustment.

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The unemployment rate is calculated by dividing the number unemployed and looking for work by the sum of the number employed and the number unemployed and looking for work.

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The natural rate of unemployme...
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