Question 1

The floods of 1993 caused the price of corn to increase. This is an example of

Accepted Answer

A)   inflation.
B)   deflation.
C)   a sustained inflation.
D)   the operations of supply and demand.

Question 2

If 2015 is the base year and the inflation rate between 2015 and 2016 is 6.4%, the price index in 2016 is

Accepted Answer

A)   106.4.
B)   64.0.
C)   16.4.
D)   cannot be determined from this information because the index in the base year is not given.

Question 3

The difference between the interest rate on a loan and the inflation rate is the

Accepted Answer

A)   nominal interest rate.
B)   inflation premium.
C)   real interest rate.
D)   expected interest rate.

Question 4

If the price index in 2015 is 115 and the price index in 2016 is 102, the rate of inflation between 2015 and 2016 is

Accepted Answer

A)   13.0%.
B)   12.7%.
C)   -11.3%.
D)   -13.0%.

Question 5

Most economists consider the ________ as the best overall indicator of inflationary pressures in the economy.

Accepted Answer

A)   producer price index
B)   GDP deflator
C)   wholesale price index
D)   consumer price index

Question 6

Most economists consider the GDP deflator as ________ of inflationary pressures in the economy.

Accepted Answer

A)   the least accurate measure
B)   an overvalued measure
C)   only valid as a wholesale price measure
D)   the best overall indicator

Question 7

The ________ in unemployment that occurs during recessions and depressions is called ________ unemployment.

Accepted Answer

A)   increase; cyclical
B)   increase; frictional
C)   increase; natural
D)   decrease; structural

Question 8

U.S. productivity grew the fastest in which of the following decades?

Accepted Answer

A)   1960s
B)   1970s
C)   1980s
D)   1990s

Question 9

If Lola is classified as a discouraged worker, she is

Accepted Answer

A)   part of the labor force.
B)   structurally unemployed.
C)   frictionally unemployed.
D)   not part of the labor force.

Question 10

The demand for automobiles rises when the economy experiences an expansion. If an automobile manufacturer hires additional workers during an expansion, this would be best described as an example of a reduction in

Accepted Answer

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

Question 11

The number of people classified as employed is 390,000 and the number of people classified as unemployed is 70,000. The size of the labor force

Accepted Answer

A)   equals 320,000.
B)   equals 390,000.
C)   equals 460,000.
D)   equals 480,000.

Question 12

Which of the following decreases the real interest rate?

Accepted Answer

A)   an increase in the nominal interest rate, holding the inflation rate constant
B)   an increase in both the nominal interest rate and the inflation rate by the same percentage points
C)   an increase in the inflation rate, holding the nominal interest rate constant
D)   a decrease in both the nominal interest rate and the inflation rate by the same percentage points

Question 13

Lola wants to make an 6% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge an interest rate of

Accepted Answer

A)   1%.
B)   6%.
C)   11%.
D)   16%.

Question 14

Of the following years, in which was the U.S. unemployment rate the highest?

Accepted Answer

A)   1960
B)   1982
C)   1990
D)   2015

Question 15

The labor force participation rate is the

Accepted Answer

A)   total number of people who are participating in the labor force.
B)   ratio of the number of employed people to the number of unemployed people.
C)   ratio of the labor force to the total population 16 years old or older.
D)   the number of people in the labor force minus the number of people who are unemployed.

Question 16

Which of the following is a desirable characteristic in an economy?

Accepted Answer

A)   low inflation
B)   rapid increase in the general price level
C)   high unemployment
D)   low employment

Question 17

The capital per worker ratio is a measure of

Accepted Answer

A)   how many tools or machines each worker has to work with.
B)   how productive workers are.
C)   how much GDP is growing.
D)   how much borrowed money is needed per worker.

Question 18

In normal times the number of discouraged workers is approximately ________ of the labor force.

Accepted Answer

A)   0.5%
B)   1%
C)   3%
D)   4%

Question 19

There are no costs associated with inflation if the inflation rate is perfectly anticipated.

Accepted Answer

A) True 
 B)False

Question 20

A structurally unemployed person is

Accepted Answer

A)   an individual who cannot find a job because his or her job skills have become obsolete.
B)   not counted as part of the labor force.
C)   an individual who cannot find a job because of a recession.
D)   an individual who is switching jobs within the same industry.

Exam 22: Unemployment, Inflation, and Long-Run Growth

The capital per worker ratio is a measure of

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U.S. productivity grew the fastest in which of the following decades?

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The number of people classified as employed is 390,000 and the number of people classified as unemployed is 70,000. The size of the labor force

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Lola wants to make an 6% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge an interest rate of

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In normal times the number of discouraged workers is approximately ________ of the labor force.

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If the price index in 2015 is 115 and the price index in 2016 is 102, the rate of inflation between 2015 and 2016 is

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The demand for automobiles rises when the economy experiences an expansion. If an automobile manufacturer hires additional workers during an expansion, this would be best described as an example of a reduction in

Correct AnswerverifiedShow Answer

The floods of 1993 caused the price of corn to increase. This is an example of

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There are no costs associated with inflation if the inflation rate is perfectly anticipated.

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Most economists consider the GDP deflator as ________ of inflationary pressures in the economy.

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Of the following years, in which was the U.S. unemployment rate the highest?

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The difference between the interest rate on a loan and the inflation rate is the

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Most economists consider the ________ as the best overall indicator of inflationary pressures in the economy.

Correct AnswerverifiedShow Answer

If Lola is classified as a discouraged worker, she is

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Which of the following decreases the real interest rate?

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Which of the following is a desirable characteristic in an economy?

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A structurally unemployed person is

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If 2015 is the base year and the inflation rate between 2015 and 2016 is 6.4%, the price index in 2016 is

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The labor force participation rate is the

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The ________ in unemployment that occurs during recessions and depressions is called ________ unemployment.

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The in unemployment that occurs during recessions and depressions is called unemployment.

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