Question 1

Suppose the labor force in a country is 160 million people, and 8 million of them are unemployed. What is the unemployment rate? Use the formula $$	ext{Unemployment Rate} = \frac{	ext{Number of Unemployed}}{	ext{Labor Force}} 	imes 100\%.$$

Accepted Answer

8%

Question 2

Which of the following best describes a discouraged worker?

Accepted Answer

A person who has stopped looking for work because they believe no jobs are available for them.

Question 3

If the working-age population is 250 million and the labor force is 150 million, what is the labor force participation rate? Use $$	ext{LFPR} = \frac{	ext{Labor Force}}{	ext{Working-age population}} 	imes 100\%.$$

Accepted Answer

60%

Question 4

Which of the following is an example of structural unemployment?

Accepted Answer

A factory worker loses their job because the factory closes due to foreign competition and must retrain for a new industry.

Question 5

Which of the following would NOT be included in the official (U-3) unemployment rate?

Accepted Answer

A person who is working part-time but wants a full-time job.

Question 6

If the Consumer Price Index (CPI) was 120 in 2010 and 150 in 2020, what was the inflation rate over this period? Use $$	ext{Inflation Rate} = \frac{	ext{CPI}_{2020} - 	ext{CPI}_{2010}}{	ext{CPI}_{2010}} 	imes 100\%.$$

Accepted Answer

25%

Question 7

Which of the following is a major shortcoming of the CPI as a measure of inflation?

Accepted Answer

It overstates inflation due to substitution and quality biases.

Question 8

A worker is laid off during a recession and cannot find a job until the economy recovers. This is an example of:

Accepted Answer

Cyclical unemployment

Question 9

Suppose the nominal interest rate on a loan is 7% and the inflation rate is 3%. What is the real interest rate? Use $$r = i - \pi.$$

Accepted Answer

4%

Question 10

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

Accepted Answer

Providing retraining programs for workers displaced by technology

Question 11

If a country is at full employment, which of the following is true?

Accepted Answer

Cyclical unemployment is zero.

Question 12

Which of the following best explains why efficiency wages can lead to unemployment?

Accepted Answer

They set wages above the equilibrium, reducing the quantity of labor demanded.

Question 13

A person who has not looked for work in the past 4 weeks but has looked in the past 12 months is classified as:

Accepted Answer

Marginally attached worker

Question 14

If the CPI in 1985 was 115 and in 2019 it was 256, what is the value in 2019 dollars of a $$10,000 income in 1985? Use $$	ext{Value in 2019 dollars} = 	ext{Value in 1985 dollars} 	imes \frac{	ext{CPI}_{2019}}{	ext{CPI}_{1985}}$.

Accepted Answer

$$22,260$$

Question 15

Which of the following is NOT a cost of anticipated inflation?

Accepted Answer

Redistribution of income due to unexpected price changes

Question 16

Which of the following would be counted as 'underemployed'?

Accepted Answer

A person who is working part-time but wants a full-time job.

Question 17

If a country’s unemployment rate is above the natural rate, which type of unemployment is present?

Accepted Answer

Cyclical unemployment

Question 18

Which of the following is a likely effect of unanticipated inflation?

Accepted Answer

It makes borrowing and lending riskier.

Question 19

Which of the following would cause the official unemployment rate to understate the true level of unemployment?

Accepted Answer

Excluding discouraged workers from the labor force

Question 20

Suppose the labor force is 100 million, 6 million are unemployed, and 10 million are working part-time but want full-time jobs. What is the U-6 unemployment rate? Use $$	ext{U-6} = \frac{	ext{Unemployed} + 	ext{Underemployed}}{	ext{Labor Force}} 	imes 100\%.$$

Accepted Answer

16%

macro chapter 9

Study Guide - Practice Questions

Study Guide - Flashcards