DO NOT EXPLAIN AND DO NOT TYPE THE WHOLE ANSWER, JUST TYPE: A, B, C, OR D.

Suppose the CPI figures for a country are as follows: CPI in 2004 is 158 / CPI 2005 is 165 / CPI 2006 is 160 / CPI 2007 is 170 / CPI 2008 is 180 / CPI 2009 is 189. According to these what was the rate of inflation from 2008 to 2009?

Select one:

a.

4.5%

b.

5%

c.

2%

d.

9%

Which of the following people would be classified as unemployed by the Bureau of Labor Statistics

Select one:

a.

Joyce who just quit her job and has returned to school

b.

Lisa who has graduated college and is attending job fairs

c.

Mr. Thomas who is retired and spends his day watching his grandkids

d.

Brian who is in the military, stationed in Iraq

Which of the following statements is true?

Select one:

a.

Labor market rigidity has not impact of the unemployment rate, only the GDP growth rate.

b.

In general nations with higher labor market rigidity have higher rates of long term unemployment.

c.

The U.S. labor market is much more rigid than other countries.

d.

In general nations with higher labor market rigidity have greater inflation.

The core CPI looks at the price changes of a market basket without

Select one:

a.

food and energy

b.

imported goods

c.

taxes

d.

luxury goods

A borrower and a lender agree to a fixed interest loan. Then there is an unexpected increase in inflation. What is the effect of the unexpected inflation?

Select one:

a.

Both borrower and lender are harmed (in real terms)

b.

Borrower benefits while lender is harmed (in real terms)

c.

Both borrower and lender benefit (in real terms)

d.

Lender benefits while borrower is harmed (in real terms)

Which type of unemployment is described by economist as the result of a shift in the demand for labor, for example from a change in technology?

Select one:

a.

Frictional

b.

Structural

c.

Cyclical

d.

Seasonal

Suppose the labor market statistics for a given economy are as follows: total population is 500 million / labor force is 300 million / employed is 270 million / unemployed is 30 million / discouraged workers is 8 million. According to this data, the unemployment rate for this economy is:

Select one:

a.

3%

b.

10%

c.

6%

d.

12%

Which of the following is true about potential GDP:

Select one:

a.

If the current unemployment rate is below the natural unemployment rate, then

b.

When current GDP is greater than potential GDP, then current unemployment will be below the natural unemployment rate

c.

For a nation to be at its potential GDP, the unemployment rate has to be zero.

d.

current GDP will be below potential GDP.

A nations actual GDP can never be greater than its potential

Suppose saver Amy deposits her savings in the bank can earns a nominal interest rate of 3% for 2010. Furthermore suppose the rate of inflation in the nation where Amy lives was 5% for 2010. Given this information we can conclude that

Select one:

a.

Amy's real interest rate was the same as the nominal of 3%, since the real interest rate is independent of the rate of inflation.

b.

Amy's real interest rate was actually 8%

c.

Amy's real interest rate was 0%

d.

Amy's real interest rate was actually a -2%

A country has a population of 160 million. Thirty million of its people are under the age of 16 and 10% of the population is either in the military or institutionalized. Seventy million people have jobs, and five million are looking for work. What is the labor force participation rate in this country?

Select one:

a.

52%

b.

70%

c.

66%

d.

62%

A worker repairing VHS cassette-tape players was laid off because most of his customers have started using DVD players. This worker is now:

Select one:

a.

cyclically unemployed.

b.

a discouraged worker.

c.

frictionally unemployed.

d.

structurally unemployed.

What is the term for workers who have given up looking for a job but would still like one?

Select one:

a.

discouraged workers

b.

laid off workers

c.

jobless workers

d.

discarded workers

If a price index increased from 400 to 440 over the course of a year, then the inflation rate is:

Select one:

a.

10%.

b.

40%.

c.

9%.

d.

4%.

Which of the following best describes discouraged workers?

Select one:

a.

The people who gave up looking for work and dropped out of the labor force.

b.

The people who are employed but not in the job they want to be in

c.

The employed workers who are underpaid based on their experience level

d.

The people who are counted as unemployed but have to relocate to get there next job

What do we call an increase in the average level of prices in an economy?

Select one:

a.

disinflation

b.

inflation

c.

deflation

d.

recession

An unemployed person is best defined as an adult who:

Select one:

a.

is a full-time homemaker or a full-time student and is therefore not working.

b.

is working fewer hours than she wants to.

c.

has given up looking for work after being laid off for a long period of time.

d.

does not have a job but is looking for work.

The identity that expresses the quantity theory of money is:

Select one:

a.

money supply money velocity = average price quantity of goods and services.

b.

money supplymoney velocity = average pricequantity of goods and services.

c.

money supply + money velocity = average price - quantity of goods and services.

d.

money supply - money velocity = average price - quantity of goods and services.

Suppose that Jason loses his job due to a nationwide economic slowdown. Even after checking for job vacancies in other areas and other industries he still cannot find anyplace that is hiring. Jason is an example of:

Select one:

a.

Outsource unemployment

b.

Frictional unemployment

c.

Cyclical unemployment

d.

Structural unemployment

On the way into school you hear the following report on the radio: "inflation for the month of February was 0.4%. Over the year inflation was 2.2%." Which of the following options best explains what these figures mean?

Select one:

a.

The prices of the things a typical urban consumer buys, as estimated by the Bureau of Labor Statistics, increased on average 2.2%, compared to 12 months ago.

b.

Inflation in February was much slower than it was in other months from the past year.

c.

The government increased prices by 2.2% over the past year in order to keep pace with production costs.

d.

The prices of household necessities, excluded household luxuries, increased by 2.2%, compared to 12 months ago.

If the cost of college increased 25% during a period of time when inflation was 10%, then the real price of college would:

Select one:

a.

decrease.

b.

increase.

c.

remain constant.

Which of the following policies will NOT reduce structural unemployment?

Select one:

a.

work tests

b.

raising unemployment benefits

c.

job-search assistance

d.

job retraining

A person is considered unemployment by the bureau of labor statistics (BLS) if:

Select one:

a.

They currently working but looking for a different job

b.

They are working part time but wanted to be working full time

c.

They are not working but they are looking for work

d.

They are not working regardless of whether or not they are looking for work

Which of the price indexes is best for measuring the cost of living?

Select one:

a.

consumer price index

b.

employee cost index

c.

producer price index

d.

GDP deflator

The short-term unemployment caused by the ordinary difficulties of matching employee to employer is called:

Select one:

a.

frictional unemployment.

b.

seasonal unemployment.

c.

cyclical unemployment.

d.

structural unemployment.

According to the quantity theory of money, an increase in the money supply causes an increase in _____ over the long run.

Select one:

a.

prices

b.

real GDP

c.

production

d.

the velocity of money

Inflation hurts the economy because:

Select one:

a.

it affects the ability of market prices to send signals about the value of resources.

b.

higher prices reduce real output.

c.

all can perfectly see the increases in prices.

d.

it raises all prices in the economy.

Suppose you read a report from the Bureau of Labor Statistics (BLS) that says "the official U.S. unemployment rate for the month of December was 9.0%." Which of the following options best captures the interpretation of this report?

Select one:

a.

This means that a full head count of all Americans revealed 9% of the working age population was without work but looking for work in December.

b.

This means that according to their survey the BLS estimate 9% of the labor force was without work but looking for work in December

c.

This means that 9% of Americans were currently not working in December

d.

This means that 9% of the labor force were "job losers" in December

The estimate of the natural rate of unemployment in the United States is around:

Select one:

a.

5%-5.5%

b.

8%-9%

c.

2%-3%

d.

10%-10.5%

Which is part of the economic impact of employment protection laws that make it hard for firms to lay off workers?

Select one:

a.

An increase in structural unemployment

b.

An increase in frictional unemployment

c.

A decrease in cyclical unemployment

d.

A decrease in the natural rate of unemployment