Question

Structural unemployment occurs in an economy due to:

a. business cycles.

b. the time required by employers and job seekers to explore the job market.

c. changes in tastes, technology, and taxes that reduce the demand for certain skills.

d. seasonal decreases in the demand for labor.

Which of the following suggests that there has been inflation in an economy since the base year?

a. The GDP price index in the base year is equal to zero.

b. The GDP price index in the current year is equal to zero.

c. The GDP price index in the base year is greater than 100.

d. The GDP price index in the current year is greater than 100.

A 4-percent increase in nominal wage and an annual inflation rate of 8 percent implies that:

a. real wage has increased.

b. nominal wage has fallen.

c. real wage has decreased.

d. real wage has remained unchanged.

Suppose the CPI of a country in the base year is 150 while that in the current year is 175. This implies that the country’s annual rate of inflation in the current year is approximately:

a. 8.5 percent.

b. 6.7 percent.

c. 16.67 percent.

d. 25 percent.

The price indexes reported for 2005 and 2006 in Country X were 100 and 105, respectively. This implies that the price level in Country X:

a. was 5 percent lower in 2006 than in 2005.

b. was 10 percent lower in 2006 than in 2005.

c. was 5 percent higher in 2006 than in 2005.

d. was 10 percent higher in 2006 than in 2005.

Jennifer quit her job as a flight attendant and was out of work for four months before she found a job as a teacher. During the four months that she was out of work, she experienced _____.

a. seasonal unemployment

b. frictional unemployment

c. structural unemployment

d. cyclical unemployment

Answer 1

First question. Correct the choice is option C. There needs to be structural changes in the economy that can be in the form of updated technology which makes existing skills less productive thereby decreasing their demand. This causes workers to lose their job.

Second question. Correct choice is option D. Base year has a price index of 100 and if there is an inflation in the economy the current year index should show a value of greater than 100

Third question correct choice is option C. Real wage rate is nominal wage rate divided by price. when nominal wage rate increases by less than the rate of inflation then real wage rate actually declines

4th question. Correct choice is option C

Fifth question. Correct choice is option C

6th question. Correct choice is option B.