Question 1

If the cyclical unemployment rate is negative,then the
A) natural unemployment rate is less than the actual unemployment rate in the economy.
B) natural unemployment rate is greater than the actual unemployment rate in the economy.
C) structural unemployment rate is greater than the frictional unemployment rate.
D) structural unemployment rate is less than the frictional unemployment rate.
E) a and d

Accepted Answer

When the cyclical unemployment rate is negative, it means the economy is operating above its potential, leading to an actual unemployment rate that is lower than the natural unemployment rate. This does not directly relate to the comparison between structural and frictional unemployment rates.

Question 2

Look at the following data: The frictional unemployment rate is 3 percent,the natural unemployment rate is 6.5 percent,and the cyclical unemployment rate is 2.4 percent.The structural unemployment rate is __________ percent and the actual unemployment rate (in this economy)is __________ percent.
A) 3; 8.9
B) 3.5; 8.9
C) 3.5; 9.5
D) 5.4; 2.4
E) none of the above

Accepted Answer

The answer of Look at the following data: The frictional...

Question 3

A market basket is made up of three goods,10X,12Y,and 18Z.The prices in the base year are $1.20,$2.10,and $3.25,respectively.The prices in the current year are $1.44,$2.23,and $3.88.What is the approximate consumer price index in the current year?
A) 103
B) 111
C) 116
D) 110
E) 96

Accepted Answer

1. Calculate the cost of the market basket in the base year:

10X * $1.20/X + 12Y * $2.10/Y + 18Z * $3.25/Z = $12 + $25.20 + $58.50 = $95.70

2. Calculate the cost of the market basket in the current year:

10X * $1.44/X + 12Y * $2.23/Y + 18Z * $3.88/Z = $14.40 + $26.76 + $69.84 = $111

3. Calculate the CPI:

CPI = (Cost of Market Basket in Current Year / Cost of Market Basket in Base Year) x 100

CPI = ($111 / $95.70) x 100 ≈ 116

Therefore, the approximate consumer price index in the current year is 116, so the best choice is C.

Question 4

A(n)__________ is a person who was previously employed,hasn't worked for some time,and is currently reentering the labor force.
A) discouraged worker
B) entrant
C) reentrant
D) job loser
E) job leaver

Accepted Answer

A reentrant is a person who left employment for a period of time and is now returning to the workforce. Discouraged workers are those who are able to work but have given up looking for work due to lack of available jobs. Job losers are those who have been laid off or terminated from their previous job. Job leavers are those who voluntarily left their previous employment for personal or professional reasons. Entrants are individuals new to the job market who have not had previous employment.

Question 5

Assume that Ms.Sawyer's salary is $22,000,up from $20,000 last year,while the CPI is 165 this year,up from 150 last year.This means that Ms.Sawyer's real income has
A) increased.
B) decreased.
C) stayed the same.
D) It depends on which year is the base year.

Accepted Answer

The answer of Assume that Ms.Sawyer's salary is $22,000,up from...

Question 6

If the CPI is 143 in year 1 and 149 in year 2,what is the approximate percentage change in prices between the two years?
A) 3.9 percent
B) 4.2 percent
C) 15.7 percent
D) 11.4 percent
E) 6.0 percent

Accepted Answer

To find the percentage change in prices, we can use the formula:

Percentage change = [(new value - old value) / old value] x 100%

Using the CPI values given in the question, we can plug in the numbers:

Percentage change = [(149 - 143) / 143] x 100%
Percentage change = (6 / 143) x 100%
Percentage change = 0.042 x 100%
Percentage change = 4.2%

Therefore, the approximate percentage change in prices between the two years is 4.2 percent, which corresponds to choice B.

Question 7

Which of the following statements is true?
A) Base year prices are necessarily higher than current year prices.
B) The CPI in the base year is 100.
C) If the CPI is 112 in year 1 and 123 in year 2, prices have risen by approximately 9.8 percent between the two years.
D) b and c
E) a, b, and c

Accepted Answer

Option A is false because base year prices can be lower or higher than current year prices. 
Option B is true by definition. 
Option C is almost true, but the correct percentage increase is approximately 9.8%. 
Hence, only option D is correct.

Question 8

Look at the following data: Employed persons = 110 million; civilian labor force = 135 million persons; civilian noninstitutional population = 190 million.The unemployment rate is __________ percent and the employment rate is __________ percent.
A) 10; 69
B) 8; 57.9
C) 18.5; 57.9
D) 18.5; 81.5
E) 12; 88

Accepted Answer

The answer of Look at the following data: Employed persons...

Question 9

If the CPI was 196.5 in 2005 and 172.2 in 2000,by what percentage did prices rise during the period 2000-2005?
A) 0.10 percent
B) 6.43 percent
C) 10 percent
D) 14.1 percent

Accepted Answer

To calculate the percentage increase in prices, we use the following formula:

Percentage increase = [(final value - initial value) / initial value] x 100

Using CPI in 2000 as the initial value and CPI in 2005 as the final value, we get:

Percentage increase = [(196.5 - 172.2) / 172.2] x 100

Percentage increase = 14.1%

Therefore, prices rose by 14.1% during the period 2000-2005, which corresponds to choice D.

Question 10

Smith's income was $50,000 in year 1 and $55,600 in year 2.The CPI was 114 in year 1 and 124 in year 2.What was the approximate percentage change in Smith's real income between the two years?
A) -2.2 percent
B) +3.4 percent
C) -1.7 percent
D) +5.6 percent
E) +2.2 percent

Accepted Answer

To calculate the real income change, adjust the incomes by the CPI to get them in constant dollars. For year 1, the real income is already in constant dollars since it's the base year. For year 2, adjust the income using the CPI: $55,600 * (114 / 124) = $51,100. The change in real income is from $50,000 to $51,100, which is an increase of $1,100. The percentage change in real income is ($1,100 / $50,000) * 100% = 2.2%.

Question 11

Which of the following statements is false?
A) The sum of the unemployment rate and the employment rate always equals 100 percent.
B) The sum of the number of employed persons and the number of unemployed persons equals the civilian non-institutional population.
C) The labor force participation rate equals the number of persons in the civilian labor force divided by the number of persons in the total population.
D) a and b
E) a, b and c

Accepted Answer

Statement A is true by definition. Statement B is true by the definition of the civilian non-institutional population. Statement C is true by definition. Therefore, the false statement is E, which claims that all three statements are false.

Question 12

A movie star was paid $1 million in 1960 to do a movie.The CPI was 29.3 in 1960 and the CPI in 2012 was 226.665.Approximately how much did the movie star earn in 2012 dollars?
A) $0.87 million
B) $8.66 million
C) $6.44 million
D) $7.74 million

Accepted Answer

To adjust the earnings for inflation, we need to use the formula: 
Adjusted income = (Original income) x (Current CPI) / (CPI in the year of original income) 
Plugging in the values: 
Adjusted income = 1,000,000 x 226.665 / 29.3 = $7.74 million 
Therefore, the movie star earned approximately $7.74 million in 2012 dollars. The answer is D.

Question 13

A __________ is a person who was employed in the civilian labor force and was either fired or laid off.
A) new entrant
B) reentrant
C) job leaver
D) job fixer
E) none of the above

Accepted Answer

The correct term for a person who was employed in the civilian labor force and was either fired or laid off is "displaced worker," which is not listed among the options provided.

Question 14

Is it possible for the economy to be at full employment and still have some people who are unemployed?
A) No, full employment means that no one is unemployed.
B) Yes, since full employment exists if the economy is operating at the natural unemployment rate and there is always some natural unemployment.
C) Yes, since full employment exists if the economy is operating at the frictional unemployment rate and there is always some frictional unemployment.
D) Yes, since full employment equals the sum of the cyclical unemployment rate and the natural unemployment rate, and there is always some cyclical unemployment.
E) none of the above

Accepted Answer

Full employment occurs when the economy is operating at the natural unemployment rate. The natural unemployment rate includes both frictional unemployment (people moving between jobs) and structural unemployment (people whose skills or location make them unable to find work). Therefore, even at full employment, there will still be some people who are unemployed due to these factors.

Question 15

Suppose that the price index in 1999 was 170 and your salary was $44,000.Suppose in 2016 the consumer price index will be 290.What salary will you have to earn in 2016 in order to equal your 1999 real income?
A) $66,000
B) $77,647
C) $75,059
D) $83,209

Accepted Answer

We need to adjust our 1999 salary for inflation to get the equivalent salary in 2016. To do this, we use the formula:
Equivalent salary in 2016 = (salary in 1999) x (CPI in 2016 / CPI in 1999)

Plugging in the values:
Equivalent salary in 2016 = ($44,000) x (290 / 170)
Equivalent salary in 2016 = $74,823.53

So, we need to round this up to the nearest dollar to get the closest answer choice, which is C) $75,059.

Question 16

Good X sold for $40 in 1957.The CPI in 1957 was 27.6 and the CPI in 2009 was 214.537.What was the price of good X in 2009 dollars?
A) $514.60
B) $270.92
C) $1,201.60
D) $310.92

Accepted Answer

To adjust for inflation, we need to use the formula: 
Price in year 2 = (Price in year 1) x (CPI in year 2) / (CPI in year 1)

Plugging in the given values: 
Price in 2009 = $40 x (214.537)/(27.6) 
Price in 2009 = $310.92

Therefore, the answer is choice D, $310.92.

Question 17

The movie "Return of the Jedi" earned $264 million in 1983 when it was released.The CPI in 1983 was 97.8 and the CPI in 2012 was 226.665.Approximately how much did the movie earn in 2012 dollars?
A) $590 million
B) $612 million
C) $2.12 million
D) $123 million
E) $150 million

Accepted Answer

To find the movie's earnings in 2012 dollars, we need to adjust for inflation using the CPI. To do this, we can use the following formula:

Adjusted Earnings = (Nominal Earnings / CPI in Nominal Year) x CPI in Target Year

Plugging in the values given in the problem, we get:

Adjusted Earnings = (264 million / 97.8) x 226.665
Adjusted Earnings = 2.7 billion

Therefore, "Return of the Jedi" earned approximately $2.7 billion in 2012 dollars. The closest option is B ($612 million).

Question 18

Look at the following data: Total population = 230 million; employed persons = 80 million; unemployed persons = 8 million.The unemployment rate is approximately __________ and the employment rate __________.
A) 9.1 percent; cannot be determined
B) 10 percent; is 90 percent
C) 8.2 percent; is 34 percent
D) 11 percent; is 38 percent
E) 9.1 percent; 90.9 percent

Accepted Answer

The answer of Look at the following data: Total population...

Question 19

Jones lost his job in industry A,but he has skills that can be transferred to industry B (which is currently hiring).Smith lost a job in industry C,but his skills cannot be transferred to industry B or to any other industry.Jones is __________ unemployed and Smith is __________ unemployed.
A) structurally; frictionally
B) structurally; structurally
C) frictionally; frictionally
D) frictionally; structurally

Accepted Answer

Jones is frictionally unemployed because he has transferable skills and is currently searching for a job in a hiring industry. Smith is structurally unemployed because his skills are not transferable to any other industry, making it difficult for him to find a job in his field.

Question 20

The answer is "a person employed in the civilian labor force who quits his or her job." The question is:
A) Who is a job loser?
B) Who is an entrant?
C) Who is a reentrant?
D) Who is a job leaver?
E) Who is a discouraged worker?

Accepted Answer

A person who quits their job is known as a job leaver.

Quiz 6: Macroeconomic Measurements: Prices and Unemployment

If the cyclical unemployment rate is negative,then the

Look at the following data: The frictional unemployment rate is 3 percent,the natural unemployment rate is 6.5 percent,and the cyclical unemployment rate is 2.4 percent.The structural unemployment rate is percent and the actual unemployment rate (in this economy) is percent.

A market basket is made up of three goods,10X,12Y,and 18Z.The prices in the base year are $1.20,$2.10,and $3.25,respectively.The prices in the current year are $1.44,$2.23,and $3.88.What is the approximate consumer price index in the current year?

A(n) __________ is a person who was previously employed,hasn't worked for some time,and is currently reentering the labor force.

Assume that Ms.Sawyer's salary is $22,000,up from $20,000 last year,while the CPI is 165 this year,up from 150 last year.This means that Ms.Sawyer's real income has

If the CPI is 143 in year 1 and 149 in year 2,what is the approximate percentage change in prices between the two years?

Which of the following statements is true?

Look at the following data: Employed persons = 110 million; civilian labor force = 135 million persons; civilian noninstitutional population = 190 million.The unemployment rate is percent and the employment rate is percent.

If the CPI was 196.5 in 2005 and 172.2 in 2000,by what percentage did prices rise during the period 2000-2005?

Smith's income was $50,000 in year 1 and $55,600 in year 2.The CPI was 114 in year 1 and 124 in year 2.What was the approximate percentage change in Smith's real income between the two years?

Which of the following statements is false?

A movie star was paid $1 million in 1960 to do a movie.The CPI was 29.3 in 1960 and the CPI in 2012 was 226.665.Approximately how much did the movie star earn in 2012 dollars?

A __________ is a person who was employed in the civilian labor force and was either fired or laid off.

Is it possible for the economy to be at full employment and still have some people who are unemployed?

Suppose that the price index in 1999 was 170 and your salary was $44,000.Suppose in 2016 the consumer price index will be 290.What salary will you have to earn in 2016 in order to equal your 1999 real income?

Good X sold for $40 in 1957.The CPI in 1957 was 27.6 and the CPI in 2009 was 214.537.What was the price of good X in 2009 dollars?

The movie "Return of the Jedi" earned $264 million in 1983 when it was released.The CPI in 1983 was 97.8 and the CPI in 2012 was 226.665.Approximately how much did the movie earn in 2012 dollars?

Look at the following data: Total population = 230 million; employed persons = 80 million; unemployed persons = 8 million.The unemployment rate is approximately and the employment rate .

Jones lost his job in industry A,but he has skills that can be transferred to industry B (which is currently hiring) .Smith lost a job in industry C,but his skills cannot be transferred to industry B or to any other industry.Jones is unemployed and Smith is unemployed.

The answer is "a person employed in the civilian labor force who quits his or her job." The question is: