Question 1

If the cyclical unemployment rate is negative,then the
A)economy is operating beyond full employment.
B)economy is operating at less than full employment.
C)frictional unemployment rate is negative.
D)frictional unemployment rate is greater than the structural unemployment rate.
E)real-wage unemployment rate is negative.

Accepted Answer

A negative cyclical unemployment rate means that the actual unemployment rate is below the natural or full employment rate, indicating that the economy is operating beyond full employment. This is not sustainable in the long run and can lead to inflationary pressures.

Question 2

What is the approximate measure (2014 data)of Canadaʹs productivity in terms of real GDP per hour worked (expressed in 2007 dollars)?
A)$10
B)$92
C)$200
D)$475
E)$45

Accepted Answer

The answer of What is the approximate measure (2014 data)of...

Question 3

The price level is measured in some time period with an index number,such as the number 118.6.How is such a number of use to us?
A)It allows us to compare it to the value of the same index number from another time period to determine the rate of change of the price level.
B)The index number tells us the rate of inflation.
C)It tells us the dollar value for the average basket of goods and services bought by the typical Canadian household.
D)It tells us the real value for the average basket of goods and services bought by the typical Canadian household.
E)It tells us the percentage change in the price level from the previous time period.

Accepted Answer

An index number allows us to compare the value of the same index number from different time periods to determine the rate of change of the price level. For example, if the index number was 100 in the year 2010 and 110 in the year 2015, we know that the price level has increased by 10% between those two years.

Question 4

Why is real income for an average Canadian today so much higher than it was for an average Canadian 100 years ago?
A)Because of the increase in the labour force due to rising population,immigration and the increase in female labour-force participation.
B)Primarily because productivity per worker is so much higher today than in the past.
C)Because inflation has been maintained at relatively low levels throughout that time.
D)Because free-trade agreements have vastly increased real incomes.
E)Because the life span of the average worker has increased from about 55 years to about 80 years over that time period.

Accepted Answer

The primary reason for the increase in real income for an average Canadian today compared to 100 years ago is the increase in productivity per worker. This is due to advancements in technology, education, and infrastructure. While factors like population growth and inflation may have also played a role, they are not the main drivers of the increase in real income. Free-trade agreements and increased lifespan may have some impact, but they are likely not as significant as the increase in productivity per worker.

Question 5

The most common measure of productivity is ________, which can be measured as real GDP divided by________.
A)indexed productivity; per capita output
B)factor productivity; the total number of factors employed in the economy
C)capital productivity; the number of units of capital employed in the economy
D)potential productivity; the total number of factors that would be employed in the economy at full employment
E)labour productivity; the number of units of work effort

Accepted Answer

The most common measure of productivity is labor productivity, which is measured as real GDP divided by the number of units of work effort. This is because labor is a primary factor of production and is typically the most significant contributor to economic output. In other words, labor productivity measures the efficiency with which labor is used to produce goods and services.

Question 6

Inflation,the rate of change of average prices in the economy,generally
A)benefits creditors if it is unanticipated.
B)has no real effects if it is unanticipated.
C)increases the purchasing power of money.
D)reduces the real value of existing nominal debt.
E)increases the real value of fixed money incomes.

Accepted Answer

Inflation reduces the purchasing power of money, which decreases the real value of existing nominal debt. This means that borrowers are paying back their debts with dollars that are worth less than the dollars they borrowed, which benefits creditors. However, this only holds true if the inflation is unanticipated, as creditors will adjust their interest rates to account for expected inflation.

Question 7

Changes in productivity can be analyzed by looking at how GDP per employed worker changes over time or how GDP per hour worked changes over time.Why might one measure be more preferable than the other?
A)GDP per hour worked is preferable because it eliminates the need to adjust for variations in productivity between employed workers.
B)GDP per employed worker is more accurate because the data available on the number of employed workers is more accurate than the data available on the number of hours worked.
C)GDP per hour worked is more accurate because the average number of hours worked per employed worker has changed over time.
D)GDP per employed worker is preferable because the number of employed workers has risen significantly over time.
E)Both measures are equally good.

Accepted Answer

GDP per hour worked is preferable because it takes into account changes in the average number of hours worked per employed worker over time. This is important because even if the number of employed workers stays the same, if they are working more or less hours, it will affect overall productivity. Therefore, measuring productivity in terms of GDP per hour worked is a more accurate representation of changes in productivity over time.

Question 8

Workers with marketable skills sometimes quit a job and become unemployed,with the expectation of soon finding a better job.This type of unemployment is called
A)cyclical unemployment.
B)frictional unemployment.
C)historical unemployment.
D)overly-optimistic unemployment.
E)structural unemployment.

Accepted Answer

Frictional unemployment is when workers who have marketable skills leave their job and are temporarily unemployed while they search for a better job. This is because there is always some time and effort required to search for a suitable job.

Question 9

Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million.Which of the following is the best measure of labour productivity in this economy?
A)real GDP per hour worked = $20
B)real GDP per employed worker = $20
C)real GDP per hour worked = $200
D)real GDP per employed worker = $200
E)Not able to determine from the information provided

Accepted Answer

Labor productivity is calculated as real GDP per hour worked, so dividing the real GDP ($1 billion) by the total number of hours worked (5 million) gives a labor productivity of $200 per hour worked. Choice A is incorrect because it only considers the total number of hours worked, not the number of workers. Choice B is incorrect because it assumes that all workers work the same number of hours, which may not be the case. Choice D is incorrect because it only considers the number of employed workers, not the total number of hours worked. Therefore, the best measure of labor productivity in this economy is real GDP per hour worked, which is $200.

Question 10

A change in the Consumer Price Index measures
A)a change in a specific absolute price.
B)a change in quantities of commodities sold.
C)a change in relative prices.
D)a change in a broad average price over some particular time span.
E)the change in gross domestic product.

Accepted Answer

The Consumer Price Index (CPI) measures the change in the general level of prices of goods and services consumed by households. It is a broad average price index that reflects the weighted average price of a basket of goods and services over a particular period of time, typically a month or a year. Therefore, a change in the CPI represents a change in the general level of prices of goods and services in the economy, rather than a change in a specific absolute price, quantities of commodities sold, relative prices, or gross domestic product.

Question 11

Consider a small economy with real GDP of $1 billion and the number of workers employed equal to 2500.Which of the following is the best measure of labour productivity in this economy?
A)real GDP per hour worked = $200
B)real GDP per employed worker = $200 000
C)real GDP per hour worked = $400
D)real GDP per employed worker = $400 000
E)Not able to determine from the information provided

Accepted Answer

The answer of Consider a small economy with real GDP...

Question 12

Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2%.But suppose that the price level rises by 3% over the course of the contract.In this case,
A)the employeesʹ purchasing power will rise.
B)the employeesʹ purchasing power will fall.
C)the employer will experience a greater fall in purchasing power than would have occurred if the price level had held steady.
D)both employer and employees will benefit from increased purchasing power.
E)both employer and employees will experience a loss of purchasing power.

Accepted Answer

The wage increase of 2% is lower than the increase in the price level of 3%. As a result, the employees' purchasing power will decrease. The employer may experience a smaller fall in purchasing power than if they had given a higher wage increase to offset the increase in prices.

Question 13

Most economists believe that the single largest cause of rising material living standards over long periods of time is
A)productivity growth.
B)rising employment.
C)growth in the capital stock.
D)real GDP growth.
E)rising real wages.

Accepted Answer

Productivity growth refers to the increase in output per unit of input, which means that the economy is producing more goods and services with the same amount of resources. This leads to increased material living standards for individuals, as they have access to more goods and services that improve their quality of life. The other options may contribute to economic growth and improvements in material living standards, but productivity growth is considered the most significant factor.

Question 14

Consider a small economy with 2500 employed workers who worked a total of 5 million hours at an average wage of $40 per hour.Which of the following is the best measure of labour productivity in this economy?
A)real GDP per hour worked = $40
B)real GDP per employed worker = $80 000
C)real GDP per hour worked = $80
D)real GDP per employed worker = $125 000
E)Not able to determine from the information provided

Accepted Answer

The answer of Consider a small economy with 2500 employed...

Question 15

The three main reasons that Canadaʹs real GDP has increased steadily for many years are
A)rising employment,increasing levels of education of the labour force and the increase in the participation rate of women in the labour force.
B)an increasing stock of physical capital,increasing exports and rising employment.
C)the increase in life expectancy,the rise in employment and increasing productivity.
D)rising employment,increasing stock of physical capital and increasing productivity.
E)increasing productivity of labour,increasing productivity of land and increasing productivity of the capital stock.

Accepted Answer

The three main reasons that Canada's real GDP has increased steadily for many years are rising employment, increasing stock of physical capital, and increasing productivity. These factors have led to an increase in output and a higher standard of living for Canadian citizens.

Question 16

In some macroeconomic analyses,it is common to treat the level of productivity as roughly constant.This is a justifiable assumption in
A)the long run.
B)the short run.
C)both the long run and the short run.
D)neither the long run nor the short run.
E)macroeconomics but not microeconomics.

Accepted Answer

In the short run, it is often assumed that the level of productivity remains constant because changes in productivity typically occur over longer periods due to factors like technological advancements, changes in workforce skills, and capital investments. In the short run, these factors are less likely to change significantly, making it reasonable to treat productivity as constant for analytical simplicity.

Question 17

Suppose the unemployment rate is 8.5% and we know that frictional and structural unemployment together account for 5.5%.The cyclical unemployment rate is then
A)14%.
B)8.5%.
C)5.5%.
D)3.0%.
E)-3.0%.

Accepted Answer

The cyclical unemployment rate can be calculated by subtracting the sum of frictional and structural unemployment from the total unemployment rate. Therefore, 
Cyclical unemployment rate = Unemployment rate - Frictional unemployment rate - Structural unemployment rate 
= 8.5% - 5.5% 
= 3.0%

Question 18

If the cyclical unemployment rate is greater than zero,then the
A)economy is operating beyond full employment.
B)economy is operating at full employment.
C)economy is operating at less than full employment.
D)frictional unemployment rate is greater than the structural unemployment rate.
E)real-wage unemployment rate is negative.

Accepted Answer

Cyclical unemployment is the unemployment that occurs due to fluctuations in the business cycle. If the cyclical unemployment rate is greater than zero, it means that the economy is operating at less than full employment. In other words, there are people who are willing and able to work but cannot find employment due to a slowdown in the economy.

Question 19

In general,productivity is a measure of
A)the economyʹs ability to increase real GDP per capita.
B)the amount of output that the economy produces per unit of input.
C)real GDP as a function of total employment.
D)the total amount of output that the economy is capable of producing.
E)potential output.

Accepted Answer

Productivity is a measure of how efficient an economy is at producing output, specifically how much output is produced per unit of input (such as labor or capital). Real GDP per capita, total employment, and potential output are related concepts but do not capture the efficiency of production. The total amount of output that the economy is capable of producing is also not a direct measure of productivity.

Question 20

As the banking industry becomes more and more automated,tellers find themselves with unneeded skills and some of them become unemployed.At the same time,software engineers are in increasing demand.These unemployed tellers would be classified as
A)cyclically unemployed.
B)frictionally unemployed.
C)naturally unemployed.
D)structurally unemployed.
E)underemployed.

Accepted Answer

The situation described in the question is an example of structural unemployment, where technological advancements have rendered certain jobs unnecessary and workers with those skills are unable to find new employment in the same field.

Quiz 19: What Macroeconomics Is All About

If the cyclical unemployment rate is negative,then the

What is the approximate measure (2014 data) of Canadaʹs productivity in terms of real GDP per hour worked (expressed in 2007 dollars) ?

The price level is measured in some time period with an index number,such as the number 118.6.How is such a number of use to us?

Why is real income for an average Canadian today so much higher than it was for an average Canadian 100 years ago?

The most common measure of productivity is , which can be measured as real GDP divided by.

Inflation,the rate of change of average prices in the economy,generally

Changes in productivity can be analyzed by looking at how GDP per employed worker changes over time or how GDP per hour worked changes over time.Why might one measure be more preferable than the other?

Workers with marketable skills sometimes quit a job and become unemployed,with the expectation of soon finding a better job.This type of unemployment is called

Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million.Which of the following is the best measure of labour productivity in this economy?

A change in the Consumer Price Index measures

Consider a small economy with real GDP of $1 billion and the number of workers employed equal to 2500.Which of the following is the best measure of labour productivity in this economy?

Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2%.But suppose that the price level rises by 3% over the course of the contract.In this case,

Most economists believe that the single largest cause of rising material living standards over long periods of time is

Consider a small economy with 2500 employed workers who worked a total of 5 million hours at an average wage of $40 per hour.Which of the following is the best measure of labour productivity in this economy?

The three main reasons that Canadaʹs real GDP has increased steadily for many years are

In some macroeconomic analyses,it is common to treat the level of productivity as roughly constant.This is a justifiable assumption in

Suppose the unemployment rate is 8.5% and we know that frictional and structural unemployment together account for 5.5%.The cyclical unemployment rate is then

If the cyclical unemployment rate is greater than zero,then the

In general,productivity is a measure of

As the banking industry becomes more and more automated,tellers find themselves with unneeded skills and some of them become unemployed.At the same time,software engineers are in increasing demand.These unemployed tellers would be classified as