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1. The CPI was 238 in one year and 244 the following year. How much did prices rise between these two years?
a.
2.46 percent
b.
5.50 percent
c.
2.52 percent
d.
0.03 percent
2. If the CPI is 100 in the base year and 108 in the current year, how much did prices rise between the base year and the
current year?
a.
8 percent
b.
108 percent
c.
1.08 percent
d.
0.08 percent
e.
80 percent
3. Suppose the market basket consists of 100X, 200Y, and 300Z. Current-year prices are $5 for each unit of X, $2 for each
unit of Y, and $3 for each unit of Z. Base-year prices are $2 for each unit of X, Y, and Z. What is the approximate CPI in
the current year?
a.
15
b.
70.20
c.
1,200
d.
150
4. One measure of the inflation rate is the
a.
sum of the CPIs of adjacent years.
b.
percentage change in the CPI of adjacent years.
c.
percentage change in the Real GDP of adjacent years.
d.
GDP minus the Real GDP in a year.
5. Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E.
Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for
each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals
a.
$100.
b.
$130.
c.
$150.
d.
$180.
e.
$550.
6. In year 1 the CPI is 140, and in year 2 the CPI is 160. From year 1 to year 2, Chiang's salary rises from $42,000 to
$49,000, and Marta's salary rises from $55,000 to $60,000. Who is "more than keeping up with inflation"?
a.
Marta
b.
Chiang
c.
both Marta and Chiang
d.
neither Marta nor Chiang
7. In year 1 the CPI is 174, and in year 2 the CPI is 190. If Sarah's salary was $49,800 in year 1, what salary in year 2
would cause her to exactly "keep up with inflation"?
a.
$34,004
b.
$42,942
c.
$40,508
d.
$54,379
8. In year 1 the CPI is 181, and in year 2 the CPI is 195. If Dennis's salary was $95,000 in year 1, what is the minimum
salary he must earn in year 2 to "keep up with inflation"?
a.
$112,500
b.
$102,348
c.
$105,750
d.
$88,180
9. Suppose that 1983 is the base year for the Consumer Price Index (CPI) and in 2015 the CPI was 226. What does this
"226" mean?
a.
What cost $100 in 1983 on average cost 226 times as much in 2015.
b.
What cost $100 in 1983 on average cost $226 more in 2015.
c.
What cost $100 in 1983 on average cost 100/226 (or 0.44) times as much in 2015 (that is, it will cost $22 in
2015).
d.
What cost $100 in 1983 on average cost $126 more in 2015.
10. Suppose that 1983 is the base year for the Consumer Price Index (CPI) and in 2014 the CPI was 220. What does this
"220" mean?
a.
What cost $100 in 1983 on average cost 2.20 times as much in 2014.
b.
What cost $100 in 1983 on average cost $220 more in 2014.
c.
What cost $100 in 1983 on average cost 0.22 times as much in 2014 (that is, it cost $22 in 2014).
d.
What cost $100 in 1983 on average cost $22 more in 2014.
11. Suppose that 1982 is the base year for the Consumer Price Index (CPI) and in 2014 the CPI was 190. What does this
"190" mean?
a.
What cost $100 in 1982 on average cost 190 times as much in 2014.
b.
What cost $100 in 1982 on average cost $190 in 2014.
c.
What cost $100 in 1982 on average cost 0.19 times as much in 2014 (that is, it cost $19 in 2014).
d.
What cost $100 in 1982 on average cost $19 more in 2014.
12. The base year is the year
a.
in which prices are unstable.
b.
in which prices are lowest.
c.
in which prices are highest.
d.
that serves as a reference point or benchmark.
e.
in which nominal output is largest.
Exhibit 6-1
Year
CPI
1
217
2
220
3
225
4
231
5
240
13. Refer to Exhibit 6-1. Prices rose by __________ percent from Year 1 to Year 2.
a.
1.38
b.
0.14
c.
1.29
d.
1.94
e.
3.00
14. Refer to Exhibit 6-1. Prices rose by __________ percent from Year 2 to Year 3.
a.
3.39
b.
0.023
c.
3.28
d.
2.22
e.
2.27
15. Refer to Exhibit 6-1. Prices rose by __________ percent from Year 4 to Year 5.
a.
3.90
b.
3.75
c.
4.30
d.
5.90
16. Refer to Exhibit 6-1. Prices rose by approximately __________ percent from Year 1 to Year 5.
a.
10.6
b.
9.6
c.
14.3
d.
4.5
17. The civilian non-institutional population consists of everyone in the population who is
a.
at least 16 years of age, in the armed forces, or institutionalized.
b.
at least 16 years of age.
c.
not in the armed forces.
d.
not institutionalized.
e.
b, c, and d
18. The civilian non-institutional population can be broken down into two groups:
a.
employed persons and unemployed persons.
b.
persons working and persons not working.
c.
persons working in service jobs and persons working in manufacturing jobs.
d.
persons not in the labor force and persons in the labor force.
19. Persons who are retired or engaged in own-home housework are considered to be in which of the following
categories?
a.
in the civilian labor force
b.
not in the labor force
c.
employed
d.
unemployed
20. A person in the civilian labor force falls into one of two categories:
a.
a person who works in a service industry or a person who works in a manufacturing industry.
b.
unemployed or employed.
c.
disemployed or unemployed.
d.
a self-employed worker or a non-self-employed worker.
21. If a person did any work as a paid employee during the Bureau of Labor Statistics survey reference week, how is she
classified?
a.
as an employed person
b.
as not in the labor force
c.
as an unemployed person
d.
as part of the labor force
e.
a and d
22. If a person worked at least 15 hours per week as an "unpaid" worker in a restaurant owned by her family, how is she
classified by the Bureau of Labor Statistics?
a.
as not in the labor force
b.
as an unemployed person
c.
as an employed person
d.
as a discouraged worker
23. If a person is waiting to be called back to a job from which she has been laid off, how is she classified by the Bureau
of Labor Statistics?
a.
as not in the labor force
b.
as an unemployed person
c.
as an employed person
d.
as a discouraged worker
24. In order to be classified as unemployed, a person must be not working,
a.
have been actively looking for work within the past four weeks, and currently be available for work.
b.
and currently be available for work, regardless of whether one is actively looking for work or not.
c.
and be waiting to be called back to work from a temporary layoff.
d.
and actively looking for work within the past year.
e.
a or c
25. The unemployment rate equals the
a.
number of employed persons divided by the number of unemployed persons.
b.
number of unemployed persons divided by the civilian non-institutional population.
c.
number of unemployed persons divided by the civilian labor force.
d.
sum of unemployed persons and discouraged workers divided by the civilian labor force.
26. The employment rate equals the number of
a.
employed persons divided by the number of unemployed persons.
b.
unemployed persons divided by the civilian non-institutional population.
c.
employed persons divided by the civilian labor force.
d.
employed persons divided by the civilian non-institutional population.
e.
none of the above
27. Suppose the civilian non-institutional population equals 250,000; there are 132,500 employed persons and 10,000
unemployed persons. How many persons are not in the labor force?
a.
122,500
b.
77,500
c.
63,500
d.
107,500
28. Suppose the civilian non-institutional population equals 100,000 persons; the civilian labor force equals 75,000
persons; there are 70,000 employed persons and 5,000 unemployed persons. If 5,000 persons who are currently "not in the
labor force" decide to join the civilian labor force, and 3,000 of them are unemployed, then
a.
both the unemployment and the employment rate rise.
b.
both the unemployment and the employment rate fall.
c.
the unemployment rate rises and the employment rate falls.
d.
the unemployment rate falls and the employment rate rises.
Exhibit 6-2
Civilian
Civilian
Employed
Noninstitutional
Labor Force
Persons
Year
Population (millions)
(millions)
(millions)
1
250
200
175
2
400
300
200
3
500
400
350
4
1000
800
720
29. Refer to Exhibit 6-2. How many persons are not in the labor force in year 1?
a.
25 million
b.
50 million
c.
75 million
d.
175 million
e.
200 million
30. Refer to Exhibit 6-2. How many unemployed persons are there in year 1?
a.
25 million
b.
50 million
c.
75 million
d.
175 million
e.
200 million
31. Refer to Exhibit 6-2. The unemployment rate in year 1 is
a.
12 1/2 percent.
b.
70 percent.
c.
87 1/2 percent.
d.
30 percent.
e.
10 percent.
32. Refer to Exhibit 6-2. The labor force participation rate in year 1 is
a.
12 1/2 percent.
b.
80 percent.
c.
87 1/2 percent.
d.
70 percent.
e.
10 percent.
33. Refer to Exhibit 6-2. The employment rate in year 1 is
a.
12 1/2 percent.
b.
70 percent.
c.
87 1/2 percent.
d.
30 percent.
e.
10 percent.
34. Refer to Exhibit 6-2. How many persons are unemployed in year 2?
a.
200 million
b.
50 million
c.
75 million
d.
175 million
e.
100 million
35. Refer to Exhibit 6-2. How many persons are not in the labor force in year 2?
a.
200 million
b.
50 million
c.
75 million
d.
175 million
e.
100 million
36. Refer to Exhibit 6-2. The employment rate in year 2 is
a.
12 1/2 percent.
b.
75 percent.
c.
87 1/2 percent.
d.
30 percent.
e.
50 percent.
37. Refer to Exhibit 6-2. The unemployment rate in year 2 is
a.
75 percent.
b.
33 1/3 percent.
c.
50 percent.
d.
66 2/3 percent.
e.
25 percent.
38. Refer to Exhibit 6-2. The unemployment rate in year 3 is
a.
12 1/2 percent.
b.
33 1/3 percent.
c.
50 percent.
d.
66 2/3 percent.
e.
25 percent.
39. Refer to Exhibit 6-2. The employment rate in year 3 is
a.
12 1/2 percent.
b.
33 1/3 percent.
c.
70 percent.
d.
66 2/3 percent.
e.
25 percent.
40. Refer to Exhibit 6-2. How many persons are not in the labor force in year 3?
a.
50 million
b.
100 million
c.
150 million
d.
350 million
e.
400 million
41. Refer to Exhibit 6-2. How many unemployed persons are there in year 3?
a.
50 million
b.
100 million
c.
150 million
d.
350 million
e.
400 million
42. Refer to Exhibit 6-2. How many unemployed persons are there in year 4?
a.
80 million
b.
100 million
c.
150 million
d.
350 million
e.
400 million
43. Refer to Exhibit 6-2. How many persons are not in the labor force in year 4?
a.
80 million
b.
100 million
c.
150 million
d.
350 million
e.
200 million
44. Refer to Exhibit 6-2. The labor force participation rate in year 3 is
a.
12 1/2 percent.
b.
70 percent.
c.
80 percent.
d.
30 percent.
e.
50 percent.
45. Refer to Exhibit 6-2. The labor force participation rate in year 4 is
a.
12 1/2 percent.
b.
72 percent.
c.
87 1/2 percent.
d.
30 percent.
e.
80 percent.
46. Refer to Exhibit 6-2. The unemployment rate in year 4 is
a.
12 1/2 percent.
b.
72 percent.
c.
87 1/2 percent.
d.
10 percent.
e.
90 percent.
47. Refer to Exhibit 6-2. The employment rate in year 4 is
a.
12.5 percent.
b.
7.2 percent.
c.
72 percent.
d.
10 percent.
e.
90 percent.
48. In an economy with a population of 100 million persons, 50 million hold civilian jobs and 20 million are not working
but are looking for a job. The number of persons in the civilian labor force is
a.
50 million.
b.
70 million.
c.
170 million.
d.
180 million..
49. In an economy with a population of 100 million persons, 50 million hold civilian jobs and 20 million are not working
but are looking for a job. The unemployment rate is
a.
28.6%.
b.
20%
c.
25%
d.
13.33%
e.
There is not enough information to answer this question.
50. In an economy with a population of 100 million persons, 40 million hold civilian jobs and 9 million are not working
but are looking for jobs. The number counted as unemployed is
a.
91 million.
b.
9 million.
c.
51 million.
d.
40 million.
e.
49 million.
51. In an economy with 100 million people, 70 million hold civilian jobs and 19 million are not working but are looking
for jobs. The unemployment rate is
a.
12.86%
b.
21.35%.
c.
9.19%.
d.
27.14%.
e.
2.87%
52. In an economy with a population of 100 million persons, 44 million hold civilian jobs and 6 million are not working
but are looking for jobs. The unemployment rate is
a.
6.0 percent.
b.
13.6 percent.
c.
7.3 percent.
d.
9.4 percent.
e.
12.0 percent.
53. Unemployment that arises as a result of the time it takes for unemployed people to locate a job utilizing their
transferable skills is called __________ unemployment.
a.
structural
b.
cyclical
c.
natural
d.
frictional
54. The unemployment due to changes in the types of skills employers require is called __________ unemployment.
a.
structural
b.
cyclical
c.
natural
d.
frictional
55. The cyclical unemployment rate is defined as the __________ unemployment rates.
a.
sum of the structural and the frictional
b.
difference between the structural and the frictional
c.
difference between the existing (actual) and the natural
d.
sum of the natural and the frictional
56. "Full employment" is said to exist when the unemployment rate equals
a.
zero.
b.
the cyclical unemployment rate.
c.
the structural unemployment rate.
d.
the natural unemployment rate.
57. In many large retail stores, price markdowns are now determined by computer. The "middle managers" who used to
make these decisions personally became __________ unemployed.
a.
frictionally
b.
structurally
c.
naturally
d.
cyclically
58. Assume that Ms. Sawyer's salary is $42,000, up from $40,000 last year, while the CPI is 157.5 this year, up from 150
last year. This means that Ms. Sawyer's real income has
a.
increased.
b.
decreased.
c.
stayed the same.
d.
It depends on which year is the base year.
59. A market basket is made up of three goods, 10X, 12Y, and 18Z. The prices in the base year are $1.20, $2.10, and
$3.25, respectively. The prices in the current year are $1.44, $2.23, and $3.88. What is the approximate consumer price
index in the current year?
a.
103
b.
111
c.
116
d.
110
e.
96
60. If the CPI is 230 in year 1 and 249 in year 2, what is the approximate percentage change in prices between the two
years?
a.
7.6 percent
b.
8.3 percent
c.
15.7 percent
d.
11.4 percent
e.
6.0 percent
61. Which of the following statements is true?
a.
Base year prices are necessarily higher than current year prices.
b.
The CPI in the base year is always 100.
c.
If the CPI is 112 in year 1 and 123 in year 2, prices have risen by approximately 9.8 percent between the two
years.
d.
b and c
e.
a, b, and c
62. Smith's income was $50,000 in year 1 and $55,600 in year 2. The CPI was 114 in year 1 and 124 in year 2. What was
the approximate percentage change in Smith's real income between the two years?
a.
-2.2 percent
b.
+3.4 percent
c.
-1.7 percent
d.
+5.6 percent
e.
+2.2 percent
63. A movie star was paid $1 million in 1960 to do a movie. The CPI was 29.3 in 1960 and the CPI in 2014 was 240.
Approximately how much did the movie star earn in 2014 dollars?
a.
$0.87 million
b.
$8.66 million
c.
$6.44 million
d.
$7.74 million
e.
$8.19 million
64. The movie "Return of the Jedi" earned $264 million in 1983 when it was released. The CPI in 1983 was 97.8 and the
CPI in 2012 was 226.665. Approximately how much did the movie earn in 2012 dollars?
a.
$590 million
b.
$612 million
c.
$2.12 million
d.
$123 million
e.
$150 million
