Question 1

Inflation harms both debtors and individuals who live on fixed incomes.

Accepted Answer

False

Question 2

Roughly 60 percent of women participate in the labor force today.

Accepted Answer

According to a report by the World Bank, in 2020, the global labor force participation rate for women was approximately 47 percent. However, this varies significantly by country and region.

Question 3

The natural rate of unemployment can change over time as technological, demographic, institutional, and other conditions vary.

Accepted Answer

The natural rate of unemployment is not fixed and can change as various factors such as advancements in technology, changes in demographics, and shifts in institutional policies occur.

Question 4

Nearly every society desires to achieve the macroeconomic goals of high employment, a stable price level, and high economic growth.

Accepted Answer

This statement is generally true. High employment, price stability, and economic growth are the general macroeconomic goals that most societies strive for. However, there may be some exceptions where certain societies may prioritize different goals.

Question 5

Luke has lent his friend Mitch some money.However he underestimated the rate of inflation when they agreed to a repayment and interest schedule.Mitch will benefit from the inflation.

Accepted Answer

If inflation increases, the value of money decreases and Mitch will be able to repay Luke with less valuable money, ultimately benefiting from the inflation.

Question 6

If, over time, a greater proportion of the labor force is comprised of middle-aged individuals, one would expect the natural rate of unemployment to rise.

Accepted Answer

The natural rate of unemployment is primarily influenced by factors such as the structure of the labor market and institutional characteristics rather than the age composition of the labor force. Middle-aged individuals typically have stable employment, so an increase in their proportion could actually lead to a more experienced and stable workforce, not necessarily affecting the natural rate of unemployment.

Question 7

Cyclical unemployment rises and falls with fluctuations in the macroeconomy.

Accepted Answer

Cyclical unemployment is caused by the changes in business cycles and fluctuations in economic activity. As the economy enters into a recession, businesses cut back on production, leading to job losses and an increase in cyclical unemployment. As the economy recovers and expands, businesses increase production, creating more job opportunities and decreasing cyclical unemployment. Therefore, cyclical unemployment rises and falls with fluctuations in the macroeconomy.

Question 8

The cost of unemployment to society includes loss of the goods and services that might have been produced if the unemployed had been employed.

Accepted Answer

This is true as unemployment results in a decrease in production and consumption, which leads to a loss of potential goods and services that could have been produced and consumed. This loss may cause a decrease in the overall economic growth of a country, among other negative impacts on society.

Question 9

Each person in the population can be classified as employed or unemployed.

Accepted Answer

This statement is false because the population also includes individuals who are not in the labor force, such as retirees, students, homemakers, and those unable to work due to disabilities or other reasons, in addition to those classified as employed or unemployed.

Question 10

Unanticipated inflation will benefit creditors at the expense of debtors.

Accepted Answer

Unanticipated inflation will harm both creditors and debtors as it creates uncertainty and instability in the economy. Creditors will receive payments in dollars that are worth less than when they made the loan, while debtors will have to repay their loans with dollars that are worth more than when they borrowed. However, if inflation is anticipated and lenders adjust interest rates accordingly, then creditors may benefit at the expense of debtors.

Question 11

When an office worker loses his job because he lacks the computer skills the employer requires, he becomes frictionally unemployed.

Accepted Answer

Frictional unemployment refers to a temporary unemployment situation where individuals are in between jobs because they are searching for better opportunities, have recently graduated or have just entered the job market. Losing a job due to lack of a required skillset falls under structural unemployment, which is caused due to shifts in the economy and changes in business needs.

Question 12

The economy reaches full employment when the unemployment rate equals zero.

Accepted Answer

The concept of full employment refers to a state of the economy in which all available labor resources are being used in the most efficient way possible. While the unemployment rate can be very low during full employment, it is unlikely to ever reach exactly zero due to factors such as individuals transitioning between jobs or people who are temporarily unemployed.

Question 13

Economists refer to the median or "typical" rate of unemployment as the natural rate of unemployment.

Accepted Answer

This is because the natural rate of unemployment represents the rate of unemployment that exists when the economy is at full employment, with no cyclical unemployment. It is considered the rate at which there is no excessive inflationary or deflationary pressure on the economy. The median or "typical" rate of unemployment is a good approximation of the natural rate.

Question 14

Another name for the contractionary phase of a business cycle is recession.

Accepted Answer

The contractionary phase of a business cycle is also known as a recession.

Question 15

The Employment Act of 1946 dictated the U.S.goal of maintaining high employment through high economic growth but did not specify any requirements with regard to the price level.

Accepted Answer

The answer of The Employment Act of 1946 dictated the...

Question 16

Economists consider cyclical unemployment to be the byproduct of a healthy economy.

Accepted Answer

Cyclical unemployment is associated with economic downturns or recessions, not a sign of a healthy economy. It occurs when there is not enough demand for goods and services in the economy to provide jobs for everyone who wants one.

Question 17

New inventions may displace some workers, but generally lead to the growth of jobs in new industries.

Accepted Answer

This is known as creative destruction, where the old industries and jobs are replaced by new industries and jobs. History has shown that technological advancements have led to increased productivity, lower costs, and new products and services, which in turn create new jobs and industries. However, there may be a temporary displacement of workers from certain industries, but the overall trend is toward job growth.

Question 18

Unanticipated deflation will benefit creditors at the expense of debtors.

Accepted Answer

In times of deflation, the purchasing power of money increases, which means that the value of debts decreases. This benefits creditors as they can repay their loans with money that is worth more than when they initially lent it. However, debtors will have to pay back their loans with money that is worth more than when they borrowed it, which means they will be paying back more in real terms. This results in a transfer of wealth from debtors to creditors.

Question 19

Each person in the population can be classified as employed, unemployed, or not in the labor force.

Accepted Answer

This is a true statement based on the standard definitions used in labor force analysis. These three categories are used to describe the status of individuals with respect to their work (or job) situation. Those who are employed have a job and are currently working; those who are unemployed do not have a job but are actively seeking one; and those who are not in the labor force are neither employed nor unemployed, typically because they are not looking for work (e.g., retirees, students, homemakers, etc.).

Question 20

The unemployment rate measures the number of unemployed people expressed as a percentage of the total population.

Accepted Answer

The unemployment rate measures the number of unemployed people expressed as a percentage of the total labor force, not the total population.

Quiz 11: Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations