Question 1

If the cyclical unemployment rate is negative,then the

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

"Full employment" is said to exist when the unemployment rate equals

Accepted Answer

Full employment is said to exist when the unemployment rate equals the natural unemployment rate. The natural unemployment rate is the combination of frictional and structural unemployment and does not include cyclical unemployment, which is caused by fluctuations in the business cycle. A zero unemployment rate is not desirable as it would indicate a potential labor shortage and can create inflationary pressures.

Question 3

Which of the following statements is true?

Accepted Answer

B is true, as the CPI in the base year is always set to 100.
C is true, as the percent change in prices between year 1 and year 2 is given by [(CPI2-CPI1)/CPI1] x 100, which in this case equals [(123-112)/112] x 100 = 9.8%. 
A is false, as base year prices are not necessarily higher than current year prices. In fact, the CPI measures the change in prices over time, so current year prices can be higher or lower than base year prices depending on the context.

Question 4

If the CPI is 230 in year 1 and 249 in year 2,what is the approximate percentage change in prices between the two years?

Accepted Answer

The percentage change in CPI is calculated as ((249 - 230) / 230) * 100 = 8.26%, which is approximately 8.3 percent.

Question 5

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.

Accepted Answer

The unemployment rate is calculated as [(Civilian Labor Force - Employed Persons) / Civilian Labor Force] * 100 = [(135 - 110) / 135] * 100 = 18.5%. The employment rate is calculated as (Employed Persons / Civilian Noninstitutional Population) * 100 = (110 / 190) * 100 = 57.9%.

Question 6

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.

Accepted Answer

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

Question 7

Which of the following statements is false?

Accepted Answer

All three statements (A,B, and C) are true, so statement D, which says that one of them is false, is false itself.

Question 8

Assume that Ms.Sawyer's salary is $35,000,up from $31,000 last year,while the CPI is 187.5 this year,up from 180 last year.This means that Ms.Sawyer's real income has ____________ since last year.

Accepted Answer

We need to calculate the real income of Ms.Sawyer by using the formula: Real Income = (Nominal Income/CPI) x 100. 
Using the values given, last year's real income was (31,000/180) x 100 = $17,222.22. 
This year's real income is (35,000/187.5) x 100 = $18,666.67. 
Comparing the two, we can see that Ms.Sawyer's real income has increased since last year.

Question 9

A movie star was paid $1 million in 1960 to do a movie.The CPI was 29.3 in 1960 and the CPI in 2014 was 240.Approximately how much did the movie star earn in 2014 dollars?

Accepted Answer

The answer of A movie star was paid $1 million...

Question 10

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 __________.

Accepted Answer

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

Question 11

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?

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 12

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?

Accepted Answer

We can use the inflation formula to calculate the movie's earnings in 2012 dollars:

Amount in 2012 dollars = Amount in 1983 dollars x (CPI in 2012 / CPI in 1983)

Amount in 2012 dollars = $264 million x (226.665 / 97.8)

Amount in 2012 dollars = $612.32 million

Therefore, the movie "Return of the Jedi" earned approximately $612 million in 2012 dollars. The closest answer choice is B.

Question 13

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?

Accepted Answer

To calculate the consumer price index (CPI), we use the following formula:
CPI = (Total cost of market basket in current year/Total cost of market basket in base year) x 100

Total cost of market basket in base year = (10 x $1.20) + (12 x $2.10) + (18 x $3.25) = $91.80
Total cost of market basket in current year = (10 x $1.44) + (12 x $2.23) + (18 x $3.88) = $120.60

CPI = ($120.60/$91.80) x 100 = 131.6 (rounded to one decimal place)

Therefore, the approximate CPI in the current year is 116.

Question 14

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

Accepted Answer

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

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

Plugging in the values we get:

Percentage change = ((196.5 - 172.2) / 172.2) x 100
Percentage change = 14.1%

Therefore, prices rose by 14.1% during the period 2000-2005. The correct answer choice is D.

Question 15

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

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 16

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

Accepted Answer

Full employment refers to an economy in which all available labor resources are being used efficiently. This does not necessarily mean that every single person in the labor force has a job, but rather that the unemployment rate is at its natural rate. The natural rate of unemployment includes some level of frictional and structural unemployment that is always present in the economy, even at full employment. Hence, Option B is the correct answer.

Question 17

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?

Accepted Answer

The answer of Suppose that the price index in 1999...

Question 18

In many large retail stores,price markdowns are now determined by computer.The "middle managers" who used to make these decisions personally became __________ unemployed.

Accepted Answer

The use of computers to determine price markdowns results in a structural change in the retail industry. Middle managers who used to make these decisions are no longer necessary and become structurally unemployed. The other options (frictional, natural, and cyclical) do not accurately describe the type of unemployment that results from this specific situation.

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.

Accepted Answer

Jones is frictionally unemployed because he has transferable skills and there are opportunities in another industry (B), indicating a temporary period of unemployment while transitioning between jobs. Smith is structurally unemployed because his skills do not match current job market demands, indicating a more permanent form of unemployment due to changes in the economy or industry.

Question 20

Good X sold for $40 in 1957.The CPI in 1957 was 27.6 and the CPI in 2014 was 244.537.What was the price of good X in 2014 dollars?

Accepted Answer

The answer of Good X sold for $40 in 1957.The...

Quiz 6: Elasticity

If the cyclical unemployment rate is negative,then the

"Full employment" is said to exist when the unemployment rate equals

Which of the following statements is true?

If the CPI is 230 in year 1 and 249 in year 2,what is the approximate percentage change in prices between the two years?

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.

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.

Which of the following statements is false?

Assume that Ms.Sawyer's salary is $35,000,up from $31,000 last year,while the CPI is 187.5 this year,up from 180 last year.This means that Ms.Sawyer's real income has ____________ since last year.

A movie star was paid $1 million in 1960 to do a movie.The CPI was 29.3 in 1960 and the CPI in 2014 was 240.Approximately how much did the movie star earn in 2014 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 .

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?

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 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?

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 __________ 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?

In many large retail stores,price markdowns are now determined by computer.The "middle managers" who used to make these decisions personally became __________ unemployed.

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.

Good X sold for $40 in 1957.The CPI in 1957 was 27.6 and the CPI in 2014 was 244.537.What was the price of good X in 2014 dollars?

Quiz 6: Elasticity

If the cyclical unemployment rate is negative,then the

"Full employment" is said to exist when the unemployment rate equals

Which of the following statements is true?

If the CPI is 230 in year 1 and 249 in year 2,what is the approximate percentage change in prices between the two years?

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.

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.

Which of the following statements is false?

Assume that Ms.Sawyer's salary is $35,000,up from $31,000 last year,while the CPI is 187.5 this year,up from 180 last year.This means that Ms.Sawyer's real income has ____________ since last year.

A movie star was paid $1 million in 1960 to do a movie.The CPI was 29.3 in 1960 and the CPI in 2014 was 240.Approximately how much did the movie star earn in 2014 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 __________.

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?

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 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?

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 __________ 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?

In many large retail stores,price markdowns are now determined by computer.The "middle managers" who used to make these decisions personally became __________ unemployed.

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.

Good X sold for $40 in 1957.The CPI in 1957 was 27.6 and the CPI in 2014 was 244.537.What was the price of good X in 2014 dollars?

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.

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.

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.