Question 1 The substitution bias in the consumer price index refers to the idea

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Question 1 The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket. change; over-estimates change; under-estimates do not change; over-estimates do not change; under-estimates . 1 points Question 2 Which of the following would reduce the labor force participation rate, all else equal? an increase in the number of people in the labor force an increase in the unemployment rate a decrease in the unemployment rate an increase in the working-age population . 1 points Question 3 Which of the following policies would reduce frictional unemployment? a decrease in the minimum wage a job retraining program implementing an unemployment insurance policy building an on-line job database that helps workers find jobs . 1 points Question 4 If your nominal wage rises more slowly than the price level, we can say your real wage has ________ and the purchasing power of a dollar has ________. fallen; fallen fallen; risen risen; risen risen; fallen . 1 points Question 5 The unemployment rate is an important economic statistic that can tell us about the health of the economy. If the unemployment rate turns out to be high or higher than anticipated, we would expect it is more likely that an incumbent president will be re-elected. that stock prices are more likely to fall. that jobs are less difficult to find. that investors will be more optimistic about the economy. . 1 points Question 6 The natural rate of unemployment is the amount of unemployment associated with the business cycle. equal to frictional plus structural unemployment. that exists when the economy goes into recession. that exists when the economy is in an expansion. . 1 points Question 7 Frictional unemployment is the result of a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs. the search process of matching workers with jobs. the ups and downs in inflation. a slowdown in the economy. . 1 points Question 8 People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering frictional unemployment. structural unemployment. cyclical unemployment. seasonal unemployment. unnatural unemployment. . 1 points Question 9 The consumer price index implicitly assumes that the demand curve for each good and service in the representative market basket is positively sloped. negatively sloped. vertical. horizontal. . 1 points Question 10 Most of the unemployment that occurred during the Great Depression was frictional unemployment. structural unemployment. cyclical unemployment. core unemployment. . 1 points Question 11 Which of the following explains why many European countries have unemployment rates that are higher than in the United States? Technological change occurs at a faster rate in Europe, so structural unemployment is higher in Europe. European countries offer higher unemployment benefits than the United States. Firms in European countries offer employees higher wages and higher benefits than do firms in the United States. The minimum wage in Europe is lower than it is in the United States. . 1 points Question 12 Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower frictional unemployment. structural unemployment. cyclical unemployment. seasonal unemployment. unnatural unemployment. . 1 points Question 13 The PPI is the price parity index. prime producer index. producer price index. production performance indicator. . 1 points Question 14 Jack was unemployed two weeks ago but just started a new job. As a result of this increase in the number of employed workers, which of the following occurred? The labor force participation rate increased. The unemployment rate increased. The labor force participation rate decreased. The unemployment rate decreased. . 1 points Question 15 Which of the following is an example of a worker experiencing frictional unemployment? A worker quits his job at the Post Office to find more interesting work. A computer programmer loses her job because it is outsourced to India. An employee is laid off because the economy is suffering a recession. A United Airlines pilot loses her job because of lack of demand for air travel. . 1 points Question 16 Which of the following is not a cost posed by inflation? Inflation reduces the affordability of goods and services to the average consumer. The money that consumers and firms hold loses its purchasing power. Firms must pay for changing prices on products and printing new catalogs. Banks can lose if they under predict inflation and charge an interest rate that does not completely compensate for inflation. . 1 points Question 17 The consumer price index is the cost of a market basket of goods and services typically consumed in the base year. cost of a market basket of goods and services typically consumed in the current period. average of the prices of the goods and services purchased by a typical urban family of four. average of the prices of new final goods and services produced in the economy over a period of time. . 1 points Question 18 An increase in cyclical unemployment will result in an increase in the natural rate of unemployment. an increase in the unemployment rate. an increase in structural unemployment. a decrease in frictional unemployment. . 1 points Question 19 Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid? 16 percent 12 percent 8 percent 6 percent . 1 points Question 20 Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest. If the inflation rate was 7%, what was the real interest rate you paid? 17 percent 10 percent 7 percent 3 percent

Explanation / Answer

Answer) i) Do not change .,ii) change, iii) an increase in the working-age population, iv) building an on-line job database that helps workers find jobs .v) Fallen,

vi) that stock prices are more likely to fall.

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