Unemployment, Immigration, and Inflation – Chapter 14 Review

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25 Q&A flashcards summarizing key facts and definitions on unemployment types, inflation concepts, labor-force metrics, and immigration effects from Chapter 14.

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25 Terms

1
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Which policy would NOT help reduce structural unemployment?

A) Providing retraining programs for displaced workers.
B) Offering relocation subsidies for workers moving to areas with job opportunities.
C) Implementing direct job creation programs for specific skills.
D) General policies to expand Gross Domestic Product (GDP).

D)

2
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Which of the following lists represents three common consequences of inflation?

A) Increased consumer spending, stable prices, and higher employment.
B) Redistribution of purchasing power, menu costs, and greater uncertainty and inefficiency.
C) Reduced government debt, decreased interest rates, and trade surpluses.
D) Labor shortages, improved product quality, and technological advancements.

B)

3
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What type of inflation is triggered by rising energy prices that raise firms’ production costs?

A) Demand-pull inflation.
B) Hyperinflation.
C) Cost-push inflation.
D) Built-in inflation.

C)

4
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How did the 2021 U.S. inflation rate compare with historical norms?

A) It was lower than usual.
B) It was about the same as usual.
C) It was higher than usual.
D) It was negative, indicating deflation.

C)

5
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An autoworker laid off because robots replace tasks is experiencing what kind of unemployment?

A) Frictional unemployment.
B) Cyclical unemployment.
C) Seasonal unemployment.
D) Structural unemployment.

D)

6
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What can large-scale immigration of low-skill workers do to the low-skill labor market?

A) Lower wages for low-skill jobs.
B) Raise total employment in the low-skill sector.
C) Reduce employment of native-born low-skill workers.
D) All of the above.

D)

7
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How is the labor-force participation rate calculated?

A) \frac{\text{Employed Population}}{\text{Total Population}} \times 100
B) \frac{\text{Labor Force}}{\text{Population aged 16 and older}} \times 100
C) \frac{\text{Unemployed Population}}{\text{Labor Force}} \times 100
D) \frac{\text{Population aged 16 and older}}{\text{Labor Force}} \times 100

B)

8
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In macroeconomics, “full employment” typically refers to the absence of which type of unemployment?

A) Frictional unemployment.
B) Structural unemployment.
C) Cyclical unemployment.
D) Seasonal unemployment.

C)

9
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Why does the official unemployment rate often understate the true extent of job-market problems?

A) It includes too many categories of workers.
B) It focuses only on full-time employment.
C) It excludes discouraged workers and underemployed part-timers.
D) It overestimates the number of available jobs.

C)

10
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Among the following, which groups commonly have unemployment rates above the U.S. average?

A) College graduates, older workers, and non-military personnel.
B) Teens, women, and Asian Americans.
C) Teens, Hispanics, and African Americans.
D) White men, government employees, and unionized workers.

C)

11
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What is the term for directly exchanging one good or service for another without the use of money?

A) Commerce.
B) Barter.
C) Trade.
D) Transaction.

B)

12
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Among the following U.S. racial/ethnic groups, which typically has the highest unemployment rate?

A) White Americans.
B) Asian Americans.
C) Hispanic Americans.
D) African Americans.

D)

13
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What do most economists believe about the Consumer Price Index (CPI)'s accuracy in measuring inflation over time?

A) It tends to understate the true inflation rate.
B) It tends to perfectly capture the true inflation rate.
C) It tends to overstate the true inflation rate.
D) Its accuracy varies too widely to make a general statement.

C)

14
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The theoretical effects of imposing a minimum wage above the market-clearing equilibrium in a low-skill labor market include:

A) A higher wage for those employed.
B) A higher quantity of labor supplied.
C) A lower quantity of labor demanded.
D) All of the above.

D)

15
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Which of the following is an example of a microeconomic (not macroeconomic) topic?

A) The national unemployment rate.
B) The behavior of an individual market (e.g., the corn market).
C) The overall rate of inflation in an economy.
D) The growth rate of the Gross Domestic Product (GDP).

B)

16
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True or False: Full employment means there is zero unemployment.

A) True. Zero unemployment is the goal of full employment.
B) False. Full employment allows for structural and frictional unemployment; only cyclical unemployment is zero.

B)

17
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True or False: In the long run, large-scale immigration tends to reduce overall economic growth.

A) True.
B) False.

B)

18
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True or False: Cost-push inflation is characterized by a general increase in prices due to rising production costs, such as higher energy prices or wages.

A) True.
B) False.

A)

19
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True or False: Demand-pull inflation occurs when the aggregate demand for goods and services in an economy exceeds its supply capacity.

A) True.
B) False.

A)

20
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True or False: Unemployment that is directly attributable to economic recessions or downturns is known as cyclical unemployment.

A) True.
B) False.

A)

21
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Which of the following best defines structural unemployment?

A) Short-term joblessness experienced by people voluntarily changing jobs.
B) Unemployment caused by a lack of demand in the economy during a recession.
C) Joblessness arising from a mismatch between workers’ skills/location and employers’ needs.
D) Unemployment that occurs only at specific times of the year due to seasonal work.

C)

22
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Which of the following best defines frictional unemployment?

A) Joblessness due to a significant downturn in the overall economy.
B) Long-term unemployment caused by skill mismatches.
C) Short-term unemployment that occurs while people are between jobs or first entering the labor market.
D) Unemployment resulting from a lack of available job information.

C)

23
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Which of the following best defines cyclical unemployment?

A) Joblessness arising from a mismatch of skills and job requirements.
B) Short-term unemployment during job transitions.
C) Unemployment caused by downturns in the business cycle—insufficient aggregate demand.
D) Unemployment related to seasonal variations in employment.

C)

24
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Which statement accurately differentiates between cost-push and demand-pull inflation?

A) Cost-push inflation is caused by government spending, while demand-pull inflation is caused by natural disasters.
B) Cost-push inflation stems from rising production costs; demand-pull inflation is driven by excess aggregate demand over the economy’s capacity.
C) Cost-push inflation leads to deflation, while demand-pull inflation leads to hyperinflation.
D) Cost-push inflation affects only services, while demand-pull inflation affects only goods.

B)

25
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What is the primary function of a COLA (Cost-of-Living Adjustment) clause?

A) To reduce wages during periods of economic recession.
B) To automatically raise wages or benefits to keep pace with inflation as measured by an index like the CPI.
C) To cap the maximum wage growth in a contract.
D) To tie wages directly to company profits instead of inflation.

B)