Question 1

An estimate of total employment in the economy can be obtained from:
A)both the household and establishment surveys.
B)from the household survey, but not from the establishment survey.
C)from the establishment survey, but not from the household survey.
D)from neither the household nor the establishment surveys.

Accepted Answer

The household survey provides information on employment in households, while the establishment survey provides information on employment in businesses, so by combining the information from both surveys, an estimate of total employment in the economy can be obtained.

Question 2

If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor force participation rate equals percent.
A)50
B)58
C)60
D)67

Accepted Answer

The labor force participation rate is the percentage of the adult population (those over 16 years old) who are either employed or actively looking for work. 
Labor force participation rate = (employed + unemployed) / adult population * 100
= (145 million + 5 million) / 250 million * 100
= 60
Therefore, the answer is choice C - 60.

Question 3

If an increasing proportion of the adult population is retired, then the labor force participation rate:
A)will increase.
B)will decrease.
C)will remain constant.
D)may increase, decrease, or remain constant.

Accepted Answer

The labor force participation rate is the ratio of the labor force to the adult population. If an increasing proportion of the adult population is retired, then the labor force would decrease as fewer people would be actively working. Therefore, the labor force participation rate would also decrease. Hence, the correct option is B, which is the only one that indicates a decrease in the labor force participation rate.

Question 4

Assume two countries have the same nominal GDP (measured in the same currency using the same accounting rules). Explain at least three reasons why you cannot assume that citizens in each country enjoy approximately the same level of economic well-being.

Accepted Answer

The answer of Assume two countries have the same nominal...

Question 5

The number of households interviewed in the monthly employment survey of the U.S. Bureau of Labor Statistics is approximately:
A)6,000.
B)60,000.
C)600,000.
D)6 million.

Accepted Answer

The monthly employment survey of the U.S. Bureau of Labor Statistics is called the Current Population Survey (CPS), which is conducted on a sample of approximately 60,000 households. This sample size is considered representative of the U.S. civilian non-institutionalized population.

Question 6

Assume that the adult population of the United States is 191.6 million, total employment is 117.6 million, and 9.4 million are unemployed. Then the unemployment rate, as normally computed, is approximately percent.
A)4.9
B)7.4
C)7.9
D)9.4

Accepted Answer

The answer of Assume that the adult population of the...

Question 7

The labor-force participation rate is the percentage of the:
A)adult population that is employed.
B)adult population that is in the labor force.
C)labor force that is employed.
D)labor force that is unemployed.

Accepted Answer

The labor-force participation rate is a measure of the percentage of the adult population that is in the labor force, which includes both the employed and unemployed individuals who are actively seeking employment. Therefore, choice (B) is the correct answer. Choice (A) only measures the employed population and does not include the unemployed individuals who are also part of the labor force. Choice (C) only measures the employed individuals who are part of the labor force and ignores the unemployed individuals. Choice (D) only measures the unemployed individuals who are part of the labor force and ignores the employed individuals.

Question 8

The employment statistics computed from the establishment survey do not include:
A)workers with two jobs.
B)the self-employed.
C)workers on firms' payrolls.
D)part-time workers on firms' payrolls.

Accepted Answer

The establishment survey only covers workers on firms' payrolls and does not include self-employed individuals. Choice A and D are incorrect because the establishment survey does include workers with multiple jobs and part-time workers on firms' payrolls.

Question 9

An estimate of the number of unemployed workers in the economy can be obtained from:
A)both the household and establishment surveys.
B)from the household survey, but not from the establishment survey.
C)from the establishment survey, but not from the household survey.
D)from neither the household nor the establishment surveys.

Accepted Answer

The household survey provides information on the labor force, including the number of unemployed individuals, by asking households about their employment status. The establishment survey, on the other hand, collects data from businesses about jobs, hours, and earnings but does not directly provide information on the number of unemployed workers.

Question 10

In the United States since the end of World War II:
A)the labor force participation rates of both men and women have increased.
B)the labor force participation rates of both men and women have decreased.
C)the labor force participation rate of men has increased, while the labor force participation of women has decreased.
D)the labor force participation rate of men has decreased, while the labor force participation rate of women has increased.

Accepted Answer

Since the end of World War II in the United States, the labor force participation rate of men has gradually decreased due to factors such as automation, outsourcing of jobs, and an increase in service sector jobs which are traditionally occupied by women. On the other hand, the labor force participation rate of women has steadily increased as a result of changing social norms, increased access to education, and greater job opportunities in fields that were previously male-dominated.

Question 11

Economic statistics are not perfect. Explain at least one way in which each of the following statistics as currently calculated in the United States fails to completely or accurately measure the corresponding economic concept (in parentheses):
a. real GDP per person (economic well-being);
b. CPI (cost of living);
c. unemployment rate (involuntary unemployment).

Accepted Answer

The answer of Economic statistics are not perfect. Explain at...

Question 12

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bread for $6. The value added by the miller is:
A)$1.
B)$2.
C)$3.
D)$6.

Accepted Answer

The value added by the miller is the difference between the sale price of the flour ($3) and the cost of the wheat ($1), which is $2.

Question 13

A fixed-weight price index like the CPI the change in the cost of living because it take into account that people can substitute less expensive goods for ones that have become more expensive.
A)underestimates; does not
B)overestimates; does
C)accurately estimates; does
D)overestimates; does not

Accepted Answer

A fixed-weight price index like the CPI overestimates the change in the cost of living because it does not take into account that people can substitute less expensive goods for ones that have become more expensive. This lack of substitution bias means that the CPI may not accurately reflect how consumers adjust their spending in response to price changes.

Question 14

The labor force equals the:
A)adult population.
B)number of employed individuals.
C)number of unemployed individuals.
D)number of employed and unemployed individuals.

Accepted Answer

The labor force includes both employed and unemployed individuals who are actively seeking work. Therefore, the best choice is D, which is the number of employed and unemployed individuals. The adult population (choice A) includes everyone of working age, whether or not they are currently seeking employment. The number of employed individuals (choice B) does not account for those who are unemployed but seeking work. The number of unemployed individuals (choice C) only includes those who are seeking work but are not currently employed.

Question 15

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner). She earns $1,000,000 per year both before and after her marriage. The marriage:
A)does not change GDP.
B)decreases GDP by $60,000.
C)increases GDP by $60,000.
D)increases GDP by more than $60,000.

Accepted Answer

When the woman marries her butler and he continues to perform his duties without receiving a formal wage, his services are no longer counted as part of the market transactions that contribute to GDP. Previously, his $60,000 salary was included in GDP calculations, but post-marriage, these services are considered non-market household production, which is not included in GDP. Therefore, GDP decreases by the amount of his salary, $60,000.

Question 16

The household survey conducted by the Bureau of Labor Statistics provides estimates of the number of workers , while the establishment survey provides estimates of the number of workers .
A)self-employed; unemployed
B)unemployed; self-employed
C)with jobs; on firms' payrolls
D)on firms' payrolls; with jobs

Accepted Answer

The household survey is a survey of individuals and provides estimates of the number of people with jobs, including both employees and the self-employed. The establishment survey is a survey of businesses and provides estimates of the number of workers on firms' payrolls, which includes both employees and the self-employed who work for someone else. Therefore, the correct answer is C, with jobs and on firms' payrolls.

Question 17

A worker with two jobs is counted:
A)once in both the household and the establishment surveys.
B)once in the household survey, but twice in the establishment survey.
C)once in the establishment survey, but twice in the household survey.
D)twice in both the household and the establishment surveys.

Accepted Answer

Since the worker has two jobs, they are only counted once in the household survey (as they are considered one person) but they are counted twice in the establishment survey, once for each job.

Question 18

According to the definition used by the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they:
A)are out of a job, but not looking for work.
B)retired from the labor force before age 65.
C)do not have a job, but have looked for work in the past 4 weeks.
D)are absent from work because of bad weather or illness.

Accepted Answer

According to the definition used by the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they do not have a job, but have looked for work in the past 4 weeks. Choices A, B, and D do not meet this definition.

Question 19

If the number employed increases while the number unemployed does not change, the unemployment rate:
A)will increase.
B)will decrease.
C)will not change.
D)may either increase or decrease.

Accepted Answer

If the number employed increases while the number unemployed does not change, it means that more people are entering the labor force and finding jobs. This reduces the number of unemployed people as a proportion of the total labor force and thus lowers the unemployment rate. Therefore, the unemployment rate will decrease.

Question 20

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner). She earns $1,000,000 per year both before and after her marriage. If GDP were changed so that it truly measured the sum of all final economic activity, the marriage would:
A)decrease GDP.
B)increase GDP.
C)leave GDP unchanged.
D)first decrease and then increase GDP.

Accepted Answer

The answer of A woman marries her butler. Before they...

Quiz 2: The Data of Macroeconomics

An estimate of total employment in the economy can be obtained from:

If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor force participation rate equals percent.

If an increasing proportion of the adult population is retired, then the labor force participation rate:

Assume two countries have the same nominal GDP (measured in the same currency using the same accounting rules). Explain at least three reasons why you cannot assume that citizens in each country enjoy approximately the same level of economic well-being.

The number of households interviewed in the monthly employment survey of the U.S. Bureau of Labor Statistics is approximately:

Assume that the adult population of the United States is 191.6 million, total employment is 117.6 million, and 9.4 million are unemployed. Then the unemployment rate, as normally computed, is approximately percent.

The labor-force participation rate is the percentage of the:

The employment statistics computed from the establishment survey do not include:

An estimate of the number of unemployed workers in the economy can be obtained from:

In the United States since the end of World War II:

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bread for $6. The value added by the miller is:

A fixed-weight price index like the CPI the change in the cost of living because it take into account that people can substitute less expensive goods for ones that have become more expensive.

The labor force equals the:

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner) . She earns $1,000,000 per year both before and after her marriage. The marriage:

The household survey conducted by the Bureau of Labor Statistics provides estimates of the number of workers , while the establishment survey provides estimates of the number of workers .

A worker with two jobs is counted:

According to the definition used by the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they:

If the number employed increases while the number unemployed does not change, the unemployment rate: