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INFLATION AND UNEMPLOYMENT SECTION A (TRUE/ FALSE/MULTIPLE-CHOICE QUESTIONS) 1. When the inflation rate rises, the purchasing power of nominal income decreases. T/F 2. If the nominal rate of interest is less than the inflation rate lenders win. T /F 3. If the average level of nominal income is RM30,000 and the consumer price level index is 154, then the average real income would be about RM19,481. T/F 4. The type of unemployment associated with recession is called structural unemployment. T/F 5. The best example of a frictionally unemployed worker is one who is in the process of voluntarily switching jobs. T/F 6. Stagflation can be described as a period of rising prices and low unemployment. T/F Use the information below to answer questions 8 to 10. A) Karl just graduated from Taylor's University College and is now looking for work. He has had three job interviews in the past month. B) Klein works in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in several months when the economic conditions improve. C) Arden worked as an aircraft design engineer for a company that produces limitary aircraft until she lost her job when the government cut defense spending. She has been looking for similar work for a year but no company seems interested in her aircraft design skills. D) Ralph lost his job last year when his company downsized and laid off middle-level managers. He tried to find another job for a year but was unsuccessful and quit looking for work. 7. Klein is frictionally unemployed. T/F 8. Arden is structurally unemployed. T/F 9. Ralph is cyclically unemployed. T/F