Question 1

An example of structural unemployment caused by a change in tastes and preferences is

Accepted Answer

A)  newspaper journalists
B)  administrative assistants
C)  lifeguards
D)  steelworkers during recessions
E)  None of the answers is correctF) A) and B)
G) A) and E)

Question 2

Workers who are temporarily unemployed but who normally find jobs quickly are called

Accepted Answer

A)  frictionally unemployed
B)  cyclically unemployed
C)  seasonally unemployed
D)  structurally unemployed
E)  discouraged workersF) C) and E)
G) A) and E)

Question 3

A decrease in the interest rate, other things constant, will

Accepted Answer

A)  shift the supply of loanable funds curve to the left
B)  shift the supply of loanable funds curve to the right
C)  decrease the quantity of loanable funds demanded
D)  decrease the quantity of loanable funds supplied
E)  shift the demand for loanable funds curve to the rightF) A) and D)
G) C) and E)

Question 4

Which of the following people would be counted as unemployed?

Accepted Answer

A)  a retired naval officer
B)  a full-time student in high school
C)  a father of preschool children who does not want to work
D)  an inner-city teenager who has given up looking for work after a year of trying
E)  a downhill ski instructor who looks for work during the summerF) A) and E)
G) A) and B)

Question 5

If top government officials claim that "more people are working now than ever before," which of the following must be true?

Accepted Answer

A)  The unemployment rate is lower now than ever before.
B)  The number of people unemployed is lower now than ever before.
C)  The employment rate is higher now than ever before.
D)  The number of people in the labor force is higher now than ever before.
E)  The number of people employed is higher now than ever before.F) C) and E)
G) A) and D)

Question 6

Suppose the official unemployment rate is 10 percent. We can conclude without question that

Accepted Answer

A)  the same 10 percent of the people in the economy were out of work for the entire year
B)  one of every ten people in the labor force is currently unemployed
C)  the same 10 percent of the people in the labor force were out of work for the entire year
D)  every person in the labor force was out of work for 10 percent of the year
E)  10 percent of the people in the economy were each out of work for 10 percent of the yearF) A) and B)
G) A) and C)

Question 7

Which of the following is most likely to reduce structural unemployment?

Accepted Answer

A)  a reduction in wage rates
B)  increasing efficiency of the job search through better information on local job openings
C)  retraining workers in marketable skills
D)  promotion of full employment through government stabilization policies
E)  reducing the cost of job loss through enhanced unemployment compensationF) B) and E)
G) B) and D)

Question 8

Underemployment refers to

Accepted Answer

A)  seasonal unemployment
B)  people working full-time though they would rather work part-time
C)  the unemployment that occurs when the actual level of employment is less than the full employment level
D)  people working in jobs that do not fully use their skills
E)  people working part-timeF) C) and D)
G) A) and E)

Question 9

Which period in U.S. economic history was not characterized by inflation?

Accepted Answer

A)  1917-1920
B)  1929-1933
C)  1947
D)  1978-1980
E)  1980-1989F) B) and E)
G) C) and D)

Question 10

Tony lent Dave $1,000 for one year with the understanding that Dave would repay $1,070. If the actual inflation rate was 7 percent, what was the real rate of interest Tony received?

Accepted Answer

A)  14 percent
B)  7 percent
C)  4 percent
D)  0 percent
E)  -7 percentF) B) and D)
G) B) and E)

Question 11

Exhibit 7-2 
-The inflation illustrated in Exhibit 7-2 would be considered:

Accepted Answer

A)  cost-pull inflation
B)  cost-push inflation
C)  demand-push inflation
D)  demand-pull inflation
E)  induced inflationF) None of the above
G) A) and D)

Question 12

When workers are over-qualified for their current jobs or can find only part-time work, we say they are

Accepted Answer

A)  unemployed
B)  discouraged workers
C)  not in the labor force
D)  overemployed
E)  underemployedF) A) and D)
G) None of the above

Question 13

If a new Ph.D. in philosophy finds work as a taxi driver, but continues to look for a college teaching position, he is counted as being employed.

Accepted Answer

A) True 
 B)False  True

Question 14

Inflation

Accepted Answer

A)  always reduces real income
B)  never reduces real income
C)  reduces the real income of workers when wages increase more than prices do
D)  reduces the real income of workers when wages increase less than prices do
E)  increases the real income of workers only when wages increase less than prices doF) C) and D)
G) B) and C) D

Question 15

Which of the following people would be classified as unemployed?

Accepted Answer

A)  a person who wants a job as a fashion model but cannot find work in that field
B)  someone who quits a part-time job to attend school full-time
C)  someone who gives up looking for a job
D)  a person who works at a job that underemploys his or her skills
E)  a person who works part-time and would rather work full-timeF) A) and E)
G) A) and C)

Question 16

Which of the following is true about U.S. history prior to 1945?

Accepted Answer

A)  The inflation rate remained constant during this period.
B)  Cost-push inflation led to depressions, followed by slowly-rising price levels.
C)  The price level remained constant during this period.
D)  Major wars resulted in high inflation rates, after which the inflation rate tapered off.
E)  Major wars resulted in high inflation rates that were usually followed by deflation.F) C) and D)
G) All of the above

Question 17

Which of the following will most likely qualify for unemployment compensation benefits?

Accepted Answer

A)  a new college graduate who cannot find work despite a desperate job search
B)  an unemployed coal miner who has been receiving benefits for the past six months
C)  a former retail clerk who quit her job because the boss was too demanding
D)  a spot welder who has just gotten his first "pink slip" in the mail after ten years of continuous employment
E)  an accountant who was fired from his last position for drinking alcohol on the jobF) A) and C)
G) None of the above D

Question 18

Suppose you received a 4 percent increase in your nominal wage. Over the year, inflation runs about 7 percent. Which of the following is true?

Accepted Answer

A)  Your real wage increased.
B)  Both the nominal and real wages increased.
C)  Both your nominal and real wages decreased.
D)  Although your nominal wage fell, your real wage increased.
E)  Although your nominal wage rose, your real wage decreased.F) B) and D)
G) A) and C)

Question 19

Which of the following is not a cost of unemployment?

Accepted Answer

A)  Unemployed individuals suffer a loss of income.
B)  Unemployed individuals are more likely to have emotional or psychological problems.
C)  Unemployed individuals can lose their job skills over time.
D)  Unemployment causes production to decrease from what it could be.
E)  The opportunity cost of unemployment is a higher inflation rate.F) All of the above
G) C) and D)

Question 20

Anticipated inflation

Accepted Answer

A)  allows us to eliminate the problems associated with unemployment
B)  causes more problems than unanticipated inflation
C)  causes fewer problems than unanticipated inflation
D)  is easy to predict for economists
E)  prevents workers from increasing their purchasing powerF) C) and E)
G) B) and D)

Exam 7: Unemployment and Inflation

An example of structural unemployment caused by a change in tastes and preferences is

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Workers who are temporarily unemployed but who normally find jobs quickly are called

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A decrease in the interest rate, other things constant, will

Correct AnswerverifiedShow Answer

Which of the following people would be counted as unemployed?

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If top government officials claim that "more people are working now than ever before," which of the following must be true?

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Suppose the official unemployment rate is 10 percent. We can conclude without question that

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Which of the following is most likely to reduce structural unemployment?

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Underemployment refers to

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Which period in U.S. economic history was not characterized by inflation?

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Tony lent Dave $1,000 for one year with the understanding that Dave would repay $1,070. If the actual inflation rate was 7 percent, what was the real rate of interest Tony received?

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Exhibit 7-2 -The inflation illustrated in Exhibit 7-2 would be considered:

Correct AnswerverifiedShow Answer

When workers are over-qualified for their current jobs or can find only part-time work, we say they are

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If a new Ph.D. in philosophy finds work as a taxi driver, but continues to look for a college teaching position, he is counted as being employed.

Correct AnswerverifiedTrue

Inflation

Correct AnswerverifiedD

Which of the following people would be classified as unemployed?

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Which of the following is true about U.S. history prior to 1945?

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Which of the following will most likely qualify for unemployment compensation benefits?

Correct AnswerverifiedD

Suppose you received a 4 percent increase in your nominal wage. Over the year, inflation runs about 7 percent. Which of the following is true?

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Which of the following is not a cost of unemployment?

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Anticipated inflation

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True

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D

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D

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