Question 1

It is difficult to compare unemployment rates across countries because methods of measuring unemployment are not standardized.

Accepted Answer

A) True 
 B)False

Question 2

Full employment

Accepted Answer

A)  exists when everyone in the economy has a job
B)  exists when everyone who wants a job has one
C)  exists when the unemployment rate is zero
D)  exists when everyone in the labor force has a job
E)  will always include some unemploymentF) A) and D)
G) None of the above

Question 3

Unemployment rates __________ during contractions and __________ during expansions.

Accepted Answer

A)  rise, fall
B)  fall, fall
C)  rise, stay the same
D)  stay the same, fall
E)  fall, riseF) A) and E)
G) B) and E)

Question 4

During inflationary times, which of the following is unlikely to happen?

Accepted Answer

A)  People change their expectations about the inflation rate.
B)  Workers try to get increases in nominal wages.
C)  People are willing to lend money for longer periods.
D)  Relative price changes become harder to recognize.
E)  People buy physical assets as a hedge against rising prices.F) A) and B)
G) B) and D)

Question 5

During periods of inflation, the real value (purchasing power) of a given amount of nominal dollars decreases.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following people would be counted in the labor force?

Accepted Answer

A)  Chou, who lost his job and last looked for work three months ago
B)  Stephanie, who holds a Ph.D. in history, but can only find part-time employment at a fast-food restaurant
C)  Jordan, who would like to work as a stockbroker but is now a househusband
D)  Steffan, who thinks he could easily earn $100,000 per year, despite the opinion of the psychiatrist at the state hospital where he is a patient
E)  Monique, age 90, who is enjoying her retirement in MontanaF) A) and B)
G) None of the above

Question 7

If future price changes were perfectly anticipated by both borrowers and lenders, what would happen to the real interest rate in the future if the price level changed?

Accepted Answer

A)  it would increase
B)  it would decrease
C)  it would decrease by the amount of the price increase
D)  it would increase by the amount of the price increase
E)  it would not changeF) A) and C)
G) D) and E)

Question 8

An accountant who lost their job in the last recession who gives up looking for work after 12 months of unsuccessful job search, would be considered as

Accepted Answer

A)  a discouraged worker
B)  underemployed
C)  not in the labor force
D)  unemployed
E)  both a and cF) C) and E)
G) All of the above

Question 9

Which of the following is not a way to become officially unemployed?

Accepted Answer

A)  quit your job to look for a better job in another part of the country
B)  be fired from your job
C)  look for a job after being out of the labor force for five years
D)  retire
E)  look for a job only for the period in the summer that you are out of schoolF) A) and D)
G) B) and E)

Question 10

Which of the following groups has historically had the highest unemployment rate?

Accepted Answer

A)  professional workers
B)  white teenagers
C)  black teenagers
D)  black adults
E)  white adultsF) C) and E)
G) A) and B)

Question 11

The best example of a frictionally unemployed worker is one who

Accepted Answer

A)  reduces productivity by causing frictions in a business
B)  is laid off during a recessionary period in the economy
C)  is in the process of voluntarily switching jobs
D)  is discouraged and not actively seeking work
E)  cannot find a job that matches with his skillsF) B) and D)
G) C) and E)

Question 12

A recent college graduate who is still looking for their first job, would be considered as

Accepted Answer

A)  a discouraged worker
B)  underemployed
C)  overemployed
D)  unemployed
E)  not in the labor forceF) A) and B)
G) A) and C)

Question 13

Hyperinflation refers to a situation in which

Accepted Answer

A)  prices are rising extremely rapidly
B)  prices are falling extremely rapidly
C)  the price level is extremely high
D)  the price level is extremely low
E)  the price level is negativeF) D) and E)
G) A) and E)

Question 14

Seasonal unemployment refers to unemployment that results from

Accepted Answer

A)  a mismatch of skills
B)  being in the wrong geographical location
C)  taking the time to find the best job
D)  seasonal decreases in demand for labor
E)  a recession in the economyF) C) and E)
G) B) and E)

Question 15

Since the end of World War II, the U.S. unemployment rate

Accepted Answer

A)  has displayed a downward trend
B)  has displayed an upward trend
C)  has remained almost constant from year to year
D)  was generally higher during the 1970s than during the 1990s
E)  has not displayed any clear patternF) B) and D)
G) None of the above

Question 16

An occupation with a high unemployment rate is

Accepted Answer

A)  professionals in general
B)  attorneys
C)  technical workers in general
D)  auto workers
E)  Web page designersF) A) and B)
G) A) and C)

Question 17

Inflation is

Accepted Answer

A)  a reduction in everyone's standard of living
B)  a rise in the real prices of all goods and services
C)  a general and continuing rise in the money prices of goods and services
D)  a continuing rise in everyone's standard of living
E)  an increase in the value of money compared to the value of goodsF) C) and D)
G) B) and E)

Question 18

In the United States,

Accepted Answer

A)  the average inflation rate was higher before 1950 than after
B)  the average inflation rate was higher after 1950 than before
C)  inflation caused no serious problems before World War II
D)  inflation caused no serious problems after World War II
E)  the implicit price deflator was used to measure inflation before World War II, and the consumer price index has been used since then.F) B) and C)
G) C) and D)

Question 19

If the aggregate demand curve shifts rightward,

Accepted Answer

A)  the price level increases and output decreases
B)  the resulting increase in the price level is usually called cost-push inflation
C)  the resulting increase in the price level is usually called demand-pull inflation
D)  the price level increases only if there is also a leftward shift of the aggregate supply curve
E)  the price level decreases and output decreasesF) D) and E)
G) B) and D)

Question 20

Unanticipated inflation is usually viewed as undesirable because it

Accepted Answer

A)  reduces everyone's nominal wages
B)  redistributes income and wealth
C)  is accompanied by reductions in real GDP
D)  usually results in the public sector growing less rapidly than the private sector
E)  lets lenders gain at the expense of borrowersF) A) and B)
G) B) and E)

Exam 7: Unemployment and Inflation

Unemployment rates __________ during contractions and __________ during expansions.

Correct AnswerverifiedShow Answer

Since the end of World War II, the U.S. unemployment rate

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Which of the following people would be counted in the labor force?

Correct AnswerverifiedShow Answer

The best example of a frictionally unemployed worker is one who

Correct AnswerverifiedShow Answer

Which of the following groups has historically had the highest unemployment rate?

Correct AnswerverifiedShow Answer

A recent college graduate who is still looking for their first job, would be considered as

Correct AnswerverifiedShow Answer

Inflation is

Correct AnswerverifiedShow Answer

An accountant who lost their job in the last recession who gives up looking for work after 12 months of unsuccessful job search, would be considered as

Correct AnswerverifiedShow Answer

In the United States,

Correct AnswerverifiedShow Answer

It is difficult to compare unemployment rates across countries because methods of measuring unemployment are not standardized.

Correct AnswerverifiedShow Answer

Which of the following is not a way to become officially unemployed?

Correct AnswerverifiedShow Answer

Unanticipated inflation is usually viewed as undesirable because it

Correct AnswerverifiedShow Answer

Hyperinflation refers to a situation in which

Correct AnswerverifiedShow Answer

During inflationary times, which of the following is unlikely to happen?

Correct AnswerverifiedShow Answer

During periods of inflation, the real value (purchasing power) of a given amount of nominal dollars decreases.

Correct AnswerverifiedShow Answer

An occupation with a high unemployment rate is

Correct AnswerverifiedShow Answer

Seasonal unemployment refers to unemployment that results from

Correct AnswerverifiedShow Answer

If future price changes were perfectly anticipated by both borrowers and lenders, what would happen to the real interest rate in the future if the price level changed?

Correct AnswerverifiedShow Answer

If the aggregate demand curve shifts rightward,

Correct AnswerverifiedShow Answer

Full employment

Correct AnswerverifiedShow Answer

Unemployment rates during contractions and during expansions.

Correct Answer
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