Question

Select TRUE/FALSE or SELECT A,B,C,D

23. (T/F) When the quality of a good improves while its price remains the same, the purchasing power value of money increases, but the government understates this change in the cost of living if the quality improvement is not taken into account in formulating the consumer price index.

24. who of the following would be included in the bureau of labor statistics monthly count of the "unemployed" (A, Miguel who is on temporary layoff) (B, Marina who neither has a job nor is looking for one) (C, Manny who worked only 15 hours in each of the last 4 weeks) (D, None of the above)

25. sam works part-time at best buy, but really wants a full-time job at the store. The buureau of labor statistics counts sam as (A, a discouraged worker) (B, as part-time structurally unemployed) (C, as employed and in the labor force) (D, all of the above)

26. suppose that the adult population in the country of atlantis is 115 million. if 80 million people are employed and 5 million are unemployed, then (A, 35 million are not in the labor force) (B, 75 million are in the labor force) (C, 35 million are in the labor force) (D, 30 million are not in the labor force.

27. Which of the following is not an explanation for the existence of structural unemployment in the US? (A, the increasing productivity of US workers) (B, Unions) (C, Technological displacement) (D,state and federal minimum wage laws)

28. some economists contended that frictional unemployement in the US could be reduced if the government (A, reduced unemployemt insurance benefits) (B, Provided all US residents with universal health insurance benefits) (C, eliminated all federal and state minimum wage laws) (D, all of the above)

29. in 2016, the US unemployement rate averaged 5% economists consider most of this rate to be a (A, Cyclical unemployement) (B, structural unemployement) (C, frictional unemployement) (D, Seasonal unemployement)

30. US data on unemployement and inflation in the 1970s shows that in some years both inflation and unemployement increased. according to phillips curve analysis this was due to (A, unanticipated shock inflation) (B, a mis-reading of the data; the curve shifted to the right in the 1970s) (C, a fundamental shift in the elasticity (i.e., degree of responsiveness ) of the phillips curve) (D, the effects of the wage-price spiral)

31. (T/F) According to the phillips curve analysis, if unemployement is at its "natural rate", a stimulative monetary and fiscal policy will not cause inflation.

32. wage-price controls are seen by advocates as a way for government to (A, eliminate cost push pressure in the economy) (B, prevent inflationary expectations from developing in the economy) (C, bring to the market fairer prices for consumers and fairer wages for workers) (D, all of the above)

Answer 1

23. F. CPI will overstate the inflation because CPI does not take into account the improvements in quality of the product. CPI takes into account the current year prices and fixed basket of goods in the base year.

24. A. Miguel since he is on a temporary lay off. Marina is not in labor force as she has not actively looked for work. Manny is employed even though he has worked part time. To be considered unemployed, one has to actively look for work.

25. C. Sam is employed, as employed is part-time and full time.

26. D. 30 million are not in labor force.

Labor force consists of employed and unemployed

Labor force = 80 million + 5 million = 85 million

Adult population is 115 million, therefore, not in labor force is 115 million -85 million= 30 million.