Multiple choice

Question 1

The labour-force participation rate:

a) measures the percentage of the total adult population in the labour force

b) measures the percentage of the number of employed in the labour force

c) equals one minus the unemployment rate

d) equals one minus the labour force

Question 2

The unemployment rate is never zero because:

a) of maximum wage laws

b) some wages are always above the market equilibrium level

c) of the presence of discouraged workers

d) there is always some frictional and structural unemployment

Question 3

Effective collective bargaining will:

a) raise the wage of union workers

b) increase the demand for union workers

c) none of the options

d) decrease the supply of labour in the non-unionised parts of the economy

Question 4

Wages at a rate greater than the minimum level can:

a) encourage a labour surplus

b) encourage higher quality candidates to apply for positions

c) create productivity gains if managed correctly

d) all of the options

Question 5

Sally has just graduated with an aeronautical engineering degree and has struggled to find work because of aeronautical jobs has just recently moved overseas. She decides that she needs to remain competitive in the market and has enrolled in a business degree part-time. The category of unemployment that Sally falls under is:

a) Demand-deficient unemployment

b) Frictional unemployment

c) Wage-induced unemployment

d) Structural unemployment

Question 6

Mary has been out of the paid workforce in order to raise her children. Now she decides to do paid work and is looking for a job.

This means that the number of unemployed [ Select ] ["decreases", "increases", "is unchanged", "there is not enough information to say"] and the labour force [ Select ] ["there is not enough information to say", "decreases", "increases", "is unchanged"] .

D Question 7 2 pts Suppose that the adult population consists of 19.04 million, those not in the labour force are 7.56 million and the number of unemployed is 0.88 million. Prior to the calculation of these gures, 0.1 million people dropped out of the labour force as they were unable to nd suitable work. What is the total number of employed? Write your answer in millions, and round it to 1 decimal place. Question 8 2 pts If the bank posts a nominal interest rate of 7 per cent per year and the ination rate is 4 per cent per year, then what is the real interest rate? Write your answer as a percentage. D Question 9 1 pts A rise in the price level means a: O lower value of goods O deflation O higher value of money O lower value of money D Question 10 1 pts Cost-push inflation is most likely caused by: O A surge in aggregate demand, causing firms spend more to rebuild inventories and therefore raise prices O Unions with strong bargaining power successfully negotiate higher wages for workers O A reduction in interest rates by the Reserve Bank of Australia O An increase in the price levelD Question 11 2 pts Which of the following variables is not a real variable? O The dollar wage O The price of bananas relative to the price of oranges O The nominal interest rate adjusted for inflation O The amount of corn D Question 12 1 pts A fall in the amount of inflation, given a fixed nominal interest rate will cause: O The nominal interest rate to fall O The real interest rate to fall O The real interest rate to rise O The nominal interest rate to riseD Question 13 2 pts In which situation is the real interest rate lowest? O The nominal interest rate is 11% and the inflation rate 9%. O The nominal interest rate is 8% and the inflation rate 5%. O The nominal interest rate is 2% and the inflation rate 1%. O The nominal interest rate is 25% and the inflation rate 30%. D Question 14 1 pts Profit-push inflation is caused by: O Firms raising prices to raise profits further O Firms negotiate lower pay with unions for stronger job security, creating larger profit margins for the firm O Workers push for higher wages, causing firms to raise prices and their cost of production has now risen O Firms lowering prices, causing demand to increase and eventually inflation to riseQuestion 15 1 pts Masako buys a house in 1999. She obtains a mortgage that carries an annual interest rate of 12 per cent, and makes payments of $880 per month. The CPI in 1999 is 100, in 2000 it is 110, and in 2001 it is 120. What is the real interest rate in 2001? O 4 per cent 0 9 per cent 0 21 per cent 0 3 per cent