Chapter 5/6

The working-age population is defined as the   people over the age of 16 who are not in jail, hospital, or other institution. 

  people looking for work. 

  people who have a job. 

  people working full-time jobs who are over the age of 16. 

Question 2

Full-time students and prisoners are

  counted as unemployed. 

  counted as discouraged workers. 

  in the labor force. 

  not in the labor force. 

Question 3

Which of the following is NOT considered to be in the labor force?

  a person who is waiting to start a new job in the next 30 days 

  a person who is not working and who has not tried to find a job 

  a student who works part-time 

  a person who is not working but who has tried to find a job in the past week 

Question 4

The unemployment rate is the ________ who are unemployed.

  percentage of the working-age population 

  number of people in the labor force 

  percentage of people in the labor force 

  percentage of people in the country 

Question 5

The percentage of people employed aged 16 years and older divided by the working-age population is known as the

  working-age population ratio. 

  employment-to-population ratio. 

  labor force participation rate. 

  employment rate. 

Question 6

Who of the following is counted as unemployed?

  Rene, a retired chemist 

  Homer, a full-time student at a vocational school 

  Glenn, a student who just graduated from college last week and is currently looking for a job

  Kim, a worker on strike from her company for a week 

Question 7

Suppose that Matt quits a job with the XYZ Corporation in order to look for more rewarding employment. Matt is best be considered as

  still being employed. 

  included in the economy's "hidden employment."

  cyclically unemployed. 

  frictionally unemployed. 

Question 8

The best example of a cyclically unemployed individual is

  Mary who lost her job in the textile industry following a decrease in the tariff on textiles. 

  Bob who has just graduated from college and is entering the labor market. 

  Charles who lost his job as a real estate salesperson when the housing market went soft because of a recession. 

  Alice who quit her job to enter college. 

Question 9

Full employment occurs when

  frictional unemployment is zero. 

  cyclical unemployment is zero. 

  structural unemployment is zero. 

  cyclical and frictional unemployment are zero. 

Question 10

The economy is at full employment when

  there are fewer unemployed workers than available jobs. 

  all unemployment is frictional or structural. 

  there are no unemployed workers. 

  all unemployment is cyclical. 

Question 11

The unemployment rate generally falls during ________ in the business cycle.

  a trough 

  an expansion 

  a peak 

  a recession 

Question 12

The cost of inflation to society includes

  II only 

  neither I nor II 

  I only 

  both I and II 

Question 13

In a period of rapid, unexpected inflation, resources can be lost

  Both answers when firms use resources to forecast inflation and because rapid inflation almost always turns into a hyperinflation0 are correct. 

  because rapid inflation almost always turns into a hyperinflation. 

  when firms use resources to forecast inflation. 

  when firms invest in research and development instead of forecasting inflation. 

Question 14

Hyperinflation is defined as

  very low inflation rates. 

  very high inflation rates. 

  declining inflation rates. 

  rising but low inflation rates. 

Question 15

If the CPI for this year is 220 and the CPI for last year was 215, the inflation rate is

  just over 2 percent. 

  just over 5 percent. 

  5 percent. 

  10 percent. 

Question 16

The currently used method for calculating the CPI

  probably overstates inflation. 

  has no effect on government expenditures. 

  None of these answers are correct. 

  accounts for people increasing consumption of a good that falls in relative price. 

Question 17

The best definition for economic growth is

  a sustained expansion of production goods over a given period. 

  a sustained expansion of consumption goods over a given period. 

  a sustained expansion of production possibilities measured as the increase in real GDP over a given period. 

  a sustained expansion of production possibilities measured as the increase in nominal GDP over a given period. 

Question 18

We are interested in long-term growth primarily because it brings

  higher standards of living. 

  higher price levels. 

  trade wars with our trading partners. 

  lower price levels. 

Question 19

The Rule of 70 is used to

  calculate the economy's growth rate.

  estimate how long it will take the level of any variable to double. 

  calculate the standard of living. 

  estimate how much of an economy's growth rate is due to increases in capital per hour of labor.

Question 20

Using the Rule of 70, if China's current growth rate of real GDP per person was 7 percent a year, how long would it take the country's real GDP per person to double?

  49 years 

  35 years 

  14 years 

  10 years 

Question 21

A country in which real GDP per person has grown more slowly than the United States since 1980 would be

  Taiwan. 

  Hong Kong. 

  Mexico. 

  Singapore. 

Question 22

Over the last 120 years, the average U.S. growth rate in real GDP per person was about

  2 percent per year. 

  12.5 percent per year. 

  6 percent per year. 

  1 percent per year. 

Question 23

 pts

The real wage rate measures the

  dollar value of what a worker could earn in another job. 

  average weekly earnings in dollars of a worker. 

  quantity of goods and services that an hour of work will buy. 

  dollar value of an hour of work. 

Question 24

 pts

Because the productivity of labor decreases as the quantity of labor employed increases

  the aggregate production function shifts upward as the real wage rate decreases. 

  the quantity of labor a firm demands increases as the real wage rate decreases. 

  the labor demand curve shifts right as the real wage rate decreases. 

  the quantity of labor a firm demands increases as the money wage rate decreases. 

Question 25

Which of the following is TRUE regarding the labor market?

workers.

demand to work fewer hours.

  I, II and III 

  I and II 

  II only 

  I and III 

Question 26

If the price level falls by 5 percent and workers' money wage rates remain constant, firms'

  quantity of labor demanded will decrease. 

  quantity of labor demanded will increase. 

  supply of jobs will increase. 

  None of these answers are correct. 

Question 27

If the price level increases and workers' money wage rates remain constant, which of the following will occur?

  II and III 

  I and II 

  I only 

  I, II and III 

Question 28

If the labor market is in equilibrium and then the labor supply curve shifts rightward

  there will be a surplus of jobs at the new equilibrium. 

  there will be a surplus of labor at the original equilibrium wage rate. 

  the equilibrium wage rate will rise. 

  there will be a shortage of labor at the original equilibrium wage rate. 

Question 29

Employment and (total) potential GDP increase if the

  None of these answers are correct. 

  labor supply curve shifts rightward and the labor demand curve does not shift. 

  labor demand curve shifts leftward and the labor supply curve does not shift. 

  labor demand curve shifts leftward more than the labor supply curve shifts rightward. 

Question 30

If the population increases, then potential GDP ________ and employment ________.

  decreases; decreases 

  decreases; increases 

  increases; decreases 

  increases; increases 

Question 31

Potential GDP per labor hour can increase due to

  increases in labor productivity. 

  increases in population. 

  decreases in the quantity of capital. 

  increases in the quantity of money. 

Question 32

Labor productivity is

  real GDP per hour of labor. 

  real GDP per hour of labor times the number of people. 

  the rate of change in real GDP per hour of labor. 

  real GDP per hour of labor times the hours of work. 

Question 33

If both the supply of labor and the demand for labor increase, then

  potential GDP increases. 

  potential GDP decreases. 

  full employment decreases. 

  the impact on potential GDP is uncertain. 

Question 34

Technological change

  increases potential GDP. 

  decreases labor productivity. 

  has no effect on employment. 

  lowers the real wage rate. 

Question 35

Human capital is the

  technology used by humans to produce GDP. 

  plant and equipment produced by humans and not by machines. 

  machinery used by humans to produce GDP. 

  skill and knowledge accumulated by humans.