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65. Suppose that the price index in 1999 was 170 and your salary was $44,000. Suppose in 2016 the consumer price index
will be 290. What salary will you have to earn in 2016 in order to equal your 1999 real income?
a.
$66,000
b.
$77,647
c.
$75,059
d.
$83,209
66. Look at the following data: Employed persons = 110 million; civilian labor force = 135 million persons; civilian
noninstitutional population = 190 million. The unemployment rate is __________ percent and the employment rate is
__________ percent.
a.
10; 69
b.
8; 57.9
c.
18.5; 57.9
d.
18.5; 81.5
e.
12; 88
67. Look at the following data: Total population = 230 million; employed persons = 80 million; unemployed persons = 8
million. The unemployment rate is approximately __________ and the employment rate __________.
a.
9.1 percent; cannot be determined
b.
10 percent; is 90 percent
c.
8.2 percent; is 34 percent
d.
11 percent; is 38 percent
e.
9.1 percent; 90.9 percent
68. Which of the following statements is false?
a.
The sum of the unemployment rate and the employment rate always equals 100 percent.
b.
The sum of the number of employed persons and the number of unemployed persons equals the civilian non-
institutional population.
c.
The labor force participation rate equals the number of persons in the civilian labor force divided by the
number of persons in the total population.
d.
a, b, and c
69. Look at the following data: The frictional unemployment rate is 3 percent, the natural unemployment rate is 6.5
percent, and the cyclical unemployment rate is 2.4 percent. The structural unemployment rate is __________ percent and
the actual unemployment rate (in this economy) is __________ percent.
a.
3; 8.9
b.
3.5; 8.9
c.
3.5; 9.5
d.
5.4; 2.4
e.
none of the above
70. If the cyclical unemployment rate is negative, then the
a.
natural unemployment rate is less than the actual unemployment rate in the economy.
b.
natural unemployment rate is greater than the actual unemployment rate in the economy.
c.
structural unemployment rate is greater than the frictional unemployment rate.
d.
structural unemployment rate is less than the frictional unemployment rate.
e.
a and d
71. Is it possible for the economy to be at full employment and still have some people who are unemployed?
a.
No, full employment means that no one is unemployed.
b.
Yes, since full employment exists if the economy is operating at the natural unemployment rate and there is
always some natural unemployment.
c.
Yes, since full employment exists if the economy is operating at the frictional unemployment rate and there is
always some frictional unemployment.
d.
Yes, since full employment equals the sum of the cyclical unemployment rate and the natural unemployment
rate, and there is always some cyclical unemployment.
e.
none of the above
72. Jones lost his job in industry A, but he has skills that can be transferred to industry B (which is currently hiring).
Smith lost a job in industry C, but his skills cannot be transferred to industry B or to any other industry. Jones is
__________ unemployed and Smith is __________ unemployed.
a.
structurally; frictionally
b.
structurally; structurally
c.
frictionally; frictionally
d.
frictionally; structurally
73. If the CPI was 196.5 in 2005 and 172.2 in 2000, by what percentage did prices rise during the period 2000-2005?
a.
0.10 percent
b.
6.43 percent
c.
10 percent
d.
14.1 percent
74. Good X sold for $40 in 1957. The CPI in 1957 was 27.6 and the CPI in 2014 was 244.537. What was the price of good
X in 2014 dollars?
a.
$514.60
b.
$270.92
c.
$1,201.60
d.
$310.92
e.
$354.40
75. A __________ is a person who was employed in the civilian labor force and was either fired or laid off.
a.
new entrant
b.
reentrant
c.
job leaver
d.
job fixer
e.
none of the above
76. The answer is "a person employed in the civilian labor force who quits his or her job." The question is:
a.
Who is a job loser?
b.
Who is an entrant?
c.
Who is a reentrant?
d.
Who is a job leaver?
e.
Who is a discouraged worker?
77. A(n) __________ is a person who was previously employed, hasn't worked for some time, and is currently reentering
the labor force.
a.
discouraged worker
b.
entrant
c.
reentrant
d.
job loser
e.
job leaver
78. Which of the following statements is false?
a.
A discouraged worker is counted as an unemployed worker.
b.
The frictional unemployment rate is greater than the natural unemployment rate.
c.
The natural unemployment rate is greater than the structural unemployment rate.
d.
The natural unemployment rate is equal to the sum of the frictional unemployment rate and the structural
unemployment rate.
e.
a and b
79. Of all the categories of unemployment, most unemployed persons fall into the category of
a.
reentrant.
b.
new entrant.
c.
job leaver.
d.
job loser.
e.
none of the above
80. If there are 10 job losers, 12 job leavers, 13 reentrants, and 12 new entrants, then there are __________ unemployed
persons.
a.
35
b.
47
c.
25
d.
37
e.
There is not enough information to answer the question.
81. The number of employed persons plus the number of unemployed persons equals the number of persons
a.
in the total population.
b.
in the civilian noninstitutional population.
c.
in the civilian labor force.
d.
not in the labor force.
e.
none of the above
82. If we subtract the number of persons not in the labor force from the civilian noninstitutional population, we get the
number of people in the
a.
ranks of the unemployed.
b.
civilian labor force.
c.
ranks of the employed.
d.
ranks of discouraged workers.
e.
none of the above
83. Which of the following statements is true?
a.
If the actual unemployment rate is currently 5% and the natural unemployment rate is 5%, then the economy is
operating at full-employment.
b.
The labor force participation rate is equal to the civilian noninstitutional population divided by the civilian
labor force.
c.
A discouraged worker is counted as an unemployed worker.
d.
a and c
e.
a, b, and c
84. Juan lost his job as a nuclear physicist working for a defense contractor. He can not find a job because no firms in the
defense industry or any other industry are hiring people with his skills. Juan is ______________ unemployed.
a.
frictionally
b.
cyclically
c.
structurally
d.
naturally
85. Look at the following data: The structural unemployment rate is 4 percent, the natural unemployment rate is 5 percent,
and the cyclical unemployment rate is 3 percent. The frictional unemployment rate is ____________ percent and the
actual unemployment rate is __________ percent.
a.
2; 7
b.
2; 8
c.
1; 7
d.
1; 8
86. Look at the following data: The frictional unemployment rate is 2 percent, the structural unemployment rate is 3.5
percent, and the actual unemployment rate is 9.5 percent. The natural unemployment rate is ____________ percent and
the cyclical unemployment rate is __________ percent.
a.
1.5; 4
b.
5.5; 4
c.
1.5; 6
d.
6; 15
87. Look at the following data: The frictional unemployment rate is 1.5 percent, the natural unemployment rate is 4.5
percent, and the cyclical unemployment rate is -1 percent. The structural unemployment rate is _________ percent and
the actual unemployment rate (in this economy) is ___________ percent.
a.
6; 3.5
b.
3; 5.5
c.
3; 3.5
d.
6; 5.5
88. If the CPI is 220 and nominal income is $37,000, approximately what does real income equal?
a.
$81,400
b.
$16,818
c.
$76,500
d.
$44,118
89. Suppose there are 65 million employed persons, 5 million unemployed persons, and 35 million persons not in the
labor force. What does the civilian noninstitutional population equal?
a.
70 million
b.
110 million
c.
65 million
d.
105 million
90. Suppose there are 200 million persons in the population, 120 million persons in the civilian labor force, and 90 million
persons are employed. The number of persons unemployed is _______ million and the unemployment rate is
___________ percent.
a.
30; 25
b.
30; 33
c.
30; 5
d.
80; 40
91. Suppose there are 50 million persons in the population, 25 million persons in the civilian labor force, and 20 million
persons are employed. The number of persons unemployed is _______ million and the unemployment rate is
___________ percent.
a.
25; 50
b.
5; 10
c.
5; 20
d.
10; 10
92. At the time of Carol’s 10 year high school reunion she was earning $30,000 and the CPI was 90. Now that it is time
for her to attend her 20 year high school reunion, Carol’s income has risen to $65,000 and the CPI is 200. At her 20 year
reunion, can Carol rightfully brag that her real income has risen since the last time she saw her former classmates ten
years ago?
a.
Yes, Carol’s real income rose during that 10 year period.
b.
No, Carol’s real income fell during that 10 year period.
c.
No, Carol’s real income remained constant during that 10 year period.
d.
It is impossible to determine what happened to Carol’s real income.
93. At the time of Kelsey’s 20 year high school reunion she was earning $50,000 and the CPI was 120. Now that it is
time for her to attend her 30 year high school reunion, Kelsey’s income has risen to $97,000 and the CPI is 230. At her 30
year reunion, can Kelsey rightfully brag that her real income has risen since the last time she saw her former classmates
ten years ago?
a.
Yes, Kelsey’s real income rose during that 10 year period.
b.
No, Kelsey’s real income fell during that 10 year period.
c.
No, Kelsey’s real income remained constant during that 10 year period.
d.
It is impossible to determine what happened to Kelsey’s real income.
94. Every ____________ the U.S. government surveys ______________ of households to gather information about the
number of Americans unemployed.
a.
month; millions
b.
week; millions
c.
week; thousands
d.
month; thousands
95. The labor force participation rate (LFPR) equals the number of
a.
employed persons divided by the number of unemployed persons.
b.
unemployed persons divided by the civilian noninstitutional population.
c.
employed persons divided by the civilian labor force.
d.
employed persons divided by the civilian noninstitutional population.
e.
none of the above
96. At the time of Elise’s 20 year high school reunion she was earning $50,000 and the CPI was 80. Now that it is time
for her to attend her 25 year high school reunion, Elise’s income has risen to $80,000 and the CPI is 150. At her 25 year
reunion, can Elise rightfully brag that her real income has risen since the last time she saw her former classmates five
years ago?
a.
Yes, Elise’s real income rose during that 5 year period.
b.
No, Elise’s real income fell during that 5 year period.
c.
No, Elise’s real income remained constant during that 5 year period.
d.
It is impossible to determine what happened to Elise’s real income.
97. A plumber who quits his job in Indianapolis and moves to Orlando where additional plumbers are needed is said to be
___________________ unemployed
a.
frictionally
b.
structurally
c.
cyclically
d.
underemployed
98. The value of the consumer price index (CPI) is always equal to ______________ in the base year.
a.
1
b.
10
c.
100
d.
1,000
e.
There is not enough information given to answer this question.
99. Which of the following statements is false?
a.
Changes in technology can lead to changes in the ways in which people are employed.
b.
Cultural differences may help to explain why some men have difficulty finding jobs in some sectors of the
modern economy.
c.
In recent years, the demand for workers in the manufacturing sector has grown dramatically compared to the
demand for workers in the service sector.
d.
Some people may be at a loss as to what skills are required of them in the current labor market.
100. In year 1 the CPI is 180, and in year 2 the CPI is 192. From year 1 to year 2, Javier's salary rises from $40,000 to
$42,000, and Tom's salary rises from $55,000 to $57,000. Who is "more than keeping up with inflation"?
a.
Javier
b.
Tom
c.
both Tom and Javier
d.
neither Tom nor Javier
101. The sum of the unemployment rate and the employment rate always equals 100 percent.
a.
True
b.
False
102. Discouraged workers are not counted as unemployed because they are working.
a.
True
b.
False
103. "Full employment" is said to exist when the actual unemployment rate is zero.
a.
True
b.
False
104. A common measure of inflation is the percentage change in the CPI of adjacent years.
a.
True
b.
False
105. The CPI in the base year is always equal to 100.
a.
True
b.
False
106. The base year is always the year in which prices were the lowest.
a.
True
b.
False
107. The cyclical unemployment rate can never be negative.
a.
True
b.
False
108. Jamaal lost his job when a mechanical device replaced people with his skills. If Jamaal's skills are non-transferable,
he would be considered to be structurally unemployed.
a.
True
b.
False
109. Structural unemployment results primarily from automation and long-lasting changes in demand.
a.
True
b.
False
110. Most unemployed persons fall into the category of job loser.
a.
True
b.
False
111. The federal government agency that is responsible for determining the inflation rate and the unemployment rate is the
Federal Reserve.
a.
True
b.
False
112. The CPI is based on a representative group of goods called the market basket.
a.
True
b.
False
113. A seamstress who quits her job in Houston and moves to New York where additional seamstresses are needed is said
to be frictionally unemployed.
a.
True
b.
False
114. If Jorge is temporarily absent from his regular job because of an industrial dispute, the Bureau of Labor Statistics will
classify him as unemployed.
a.
True
b.
False
115. If Carlos is waiting to be called back to his job from which he has been temporarily laid off, the Bureau of Labor
Statistics will classify him as unemployed.
a.
True
b.
False
116. If the Bureau of Labor Statistics considers Jessica to be a discouraged worker, then she is not counted as unemployed
for purposes of computing the official unemployment rate.
a.
True
b.
False
117. If the unemployment rate drops, then it necessarily follows that some of the people who were once unemployed are
now employed.
a.
True
b.
False
118. Some economists argue that the recent relatively high rate of unemployment has resulted in part from the fact that a
part of the workforce has not made the adjustment to new technologies.
a.
True
b.
False
119. When making historical comparison’s of one’s income, is it better to use real income or nominal income for the basis
of your comparison? Explain why one makes a better comparison than the other.
120. Describe the terms frictional unemployment, structural unemployment, and cyclical unemployment. Give a
hypothetical example of each to help support your answer.
121. Describe what the term "full employment" means to an economist.
122. Describe what the unemployment rate and the employment rate measure. If we were to sum the unemployment rate
and the employment rate, would that sum be equal to one hundred percent? Explain why or why not.
123. Describe the difference between the employment rate and the labor force participation rate (LFPR). Under what
circumstance would the two be equal to one another?
124. For all practical purposes, a discouraged worker is an unemployed person because a discouraged worker is not
working.
a.
True
b.
False
125. Some economists believe that because the government ______________ discouraged workers as unemployed, the
unemployment rate is biased ________________.
a.
counts; upward
b.
counts; downward
c.
does not count; upward
d.
does not count; downward
126. A worker is underemployed if she is working at a job for which her skills far exceed the requirements for the job.
a.
True
b.
False
127. Which of the following statements is false?
a.
Discouraged workers are a subset of a larger group termed marginally attached workers.
b.
Discouraged workers are counted as unemployed in the official unemployment rate calculation.
c.
A person is considered underemployed if he is working at a job for which his skills far exceed the skills
required for his job.
d.
People who are underemployed are not counted as unemployed.
