Question 1

_____ unemployment is caused by changes in consumer demands or technology.

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills and training of workers and the available jobs in the market. This type of unemployment is often caused by changes in consumer demands or technology, as certain industries may become obsolete or new ones may arise.

Question 2

(Table) The associated table provides a hypothetical bundle of goods and their respective prices for three different years. If 2014 is the base year, the cost of the market basket in 2017 would be

Accepted Answer

The answer of (Table) The associated table provides a hypothetical...

Question 3

Jasmine works in her family's boutique 16 hours a week and is considered an unpaid family member. Since she is not paid for her services, she is not in the labor force.

Accepted Answer

Jasmine may not receive monetary compensation for her work, but she is still contributing to the production of goods and services in the boutique. Therefore, she is considered to be part of the labor force.

Question 4

Which statement about the personal consumption expenditures (PCE) price index is TRUE?

Accepted Answer

The PCE price index accounts for changes in consumer behavior, such as product substitution, more effectively than the Consumer Price Index (CPI). This makes it a more accurate measure of inflation from the perspective of consumers' actual spending patterns.

Question 5

Jobless recoveries prolong unemployment above the nonaccelerating inflation rate of unemployment.

Accepted Answer

Jobless recoveries refer to periods of economic growth without a corresponding increase in employment. This means that even though the economy is improving, unemployment remains high. When this happens, it can be difficult for the unemployment rate to fall below the nonaccelerating inflation rate of unemployment (NAIRU), which is the level of unemployment below which inflation is expected to rise. Therefore, jobless recoveries can prolong unemployment above the NAIRU.

Question 6

(Table) According to the table, the number of people in the labor force is

Accepted Answer

The number in the cell where "Labor Force" intersects with "Total" is 140. Therefore, the best choice is C.

Question 7

All of these types of wages can cause unemployment EXCEPT

Accepted Answer

Equilibrium wages are determined by the market forces of supply and demand. If wages are set at the equilibrium level, they should not cause unemployment because they reflect the rate at which the quantity of labor supplied is equal to the quantity of labor demanded.

Question 8

Dylan quits his job in Topeka, Kansas, and moves to Austin, Texas, to get involved in live music. He is unemployed for three months while he looks for a new job. Dylan is frictionally unemployed.

Accepted Answer

Frictional unemployment occurs when people are between jobs, such as in this situation where Dylan quits his job in one location and moves to another to pursue a new career.

Question 9

In the first quarter of 2010, nominal GDP was $14,592.3 billion and the GDP deflator was 110.2. Real GDP for the first quarter of 2010, then, was equal to

Accepted Answer

Real GDP is calculated by dividing nominal GDP by the GDP deflator and then multiplying by 100. So, $14,592.3 billion / 110.2 * 100 = $13,241.7 billion.

Question 10

Zach has been laid off from his job as an aircraft worker. He has been actively looking for a job but has had no luck for the past six weeks. According to the Bureau of Labor Statistics, Zach is

Accepted Answer

Zach is actively looking for a job but has not found one in the last six weeks. This meets the definition of being unemployed according to the Bureau of Labor Statistics, which defines unemployed individuals as those who are without work, available for work, and have actively sought employment within the past four weeks. A discouraged worker is someone who has given up looking for a job, and not being in the labor force means an individual is not working and is not currently seeking employment.

Question 11

Which statement describes a difference between the consumer price index (CPI) and the producer price index (PPI)?

Accepted Answer

The PPI measures the average change over time in the selling prices received by domestic producers for their output, which relates to net revenues.

Question 12

Which is NOT a reason unemployment rates differ so much within the United States?

Accepted Answer

Cultural differences are less likely to directly affect unemployment rates compared to factors like tax differences, geographic preferences, and industry clustering, which have more tangible impacts on job availability and economic conditions.

Question 13

A passive job search

Accepted Answer

A passive job search involves exploring opportunities through personal networks, such as talking to friends about job vacancies, rather than actively seeking out job openings through job boards, job fairs or cold-calling. It is a more laid back approach to job hunting where the job seeker waits for opportunities to come their way.

Question 14

The costs of cyclical unemployment can be minimized by

Accepted Answer

By keeping the economy on a steady, low-inflationary growth path, the likelihood and duration of cyclical unemployment can be reduced. This can be achieved through policies that promote economic stability, such as countercyclical fiscal and monetary policies. Providing training can help individuals who lose their jobs, but it is not a solution to reducing the overall level of cyclical unemployment. Providing training for those with a job or new entrants may reduce frictional unemployment, but it does not address cyclical unemployment.

Question 15

When a high-quality counterfeit bill is circulated, the government ultimately loses.

Accepted Answer

When a high-quality counterfeit bill is circulated, the government ultimately loses in terms of the value of money and trust in the currency, which can lead to inflation and a decrease in economic stability.

Question 16

Which of these would be considered frictional unemployment? I. Alisha has taken a job at a different company in order to accept a promotion. She quit her current job but has one month off until she starts her new job.
II) John has lost his job as a book binder, as the demand for e-books has replaced demand for traditional books.
III) Melissa quit her full-time job to become a full-time student in order to pursue her Ph.D.

Accepted Answer

Frictional unemployment occurs when individuals are temporarily unemployed while transitioning from one job to another or entering the workforce. Alisha's situation, where she has left one job for a better opportunity and is in the process of moving to the new job, is a classic example of frictional unemployment. John's situation represents structural unemployment due to changes in the industry, and Melissa's choice to leave work for education does not fit the typical definition of unemployment in economic terms.

Question 17

Which activity would NOT qualify a person as being in the labor force?

Accepted Answer

Reading help-wanted ads does not show active engagement in seeking employment or being available for work, whereas the other activities indicate an intent to join the labor force.

Question 18

John expects to get a raise equal to the increase in the consumer price index (CPI). The CPI has gone from 160 to 164. If John's salary last year was $50,000, what salary does he expect to earn this year?

Accepted Answer

The CPI increased from 160 to 164, which is an increase of 4/160 = 0.025 or 2.5%. Therefore, John expects a 2.5% raise on his $50,000 salary, which is $50,000 * 1.025 = $51,250.

Question 19

Scott, who has a PhD in physics, waits on tables for a living. Scott is categorized as

Accepted Answer

Even though Scott has a PhD in physics, he is working in a job that does not require his level of education or skills. Therefore, he is classified as underemployed. This is different from being unemployed, which means he is actively seeking work but unable to find employment, or not part of the labor force, which means he is not working and not actively seeking work. He is also not a discouraged worker, which refers to someone who has given up looking for work due to a perceived lack of opportunities.

Question 20

Which statement(s) describe(s) the unemployment rate? I. The unemployment rate includes those people who do not have a job and have ended their job search.
II) The unemployment rate counts as employed those people who may be only working part-time.
III) The unemployment rate is the percentage of the entire U.S. population that does not have a job but is searching for one.

Accepted Answer

II) The unemployment rate includes individuals who are working part-time but are seeking full-time employment, considering them as employed. Statement I is incorrect because the unemployment rate only includes those actively searching for a job, not those who have stopped looking. Statement III is incorrect because the unemployment rate is calculated as a percentage of the labor force, not the entire population.

Quiz 6: Measuring Inflation and Unemployment