Quiz
Macroeconomic 2
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Questions in this quiz (98)
1The working-age population is the total number of people
- AA) in the labour force, aged 15 years and over, and employed.
- BB) in the labour force.
- CC) in the labour force, aged 15 years and over
- DD) aged 15 years and over.
- EE) in the labour force who are employed
2Which one of the following people would be counted as unemployed in Canada?
- AA) Kathy has stopped looking for work since she was unable to find a suitable job during a one -month search.
- BB) Sharon is a college student with a job
- CC) Benoit who was laid off when his firm closed down 2 months ago and has not been looking for work as he is going back to school.
- DD) Christos has been laid off from his job a month ago, and has not been looking for a new job as he is waiting for a severance package from his former employer.
- EE) Veena is not working, but she is looking for a full-time job
3Which one of the following people would be counted as unemployed in Canada?
- AA) Sharon recently began looking for work after staying at home for 10 years to look after her children.
- BB) Maurice is on a 2 month vacation out of the country but is still looking for a job using the internet.
- CC) Kanhaya has stopped looking for work since he was unable to find a suitable job during a two -month search.
- DD) Doris works only 5 hours a week but is looking for a full -time job.
- EE) Taylor is a homemaker
4Which one of the following people would be counted as unemployed in Canada?
- AA) Ruth is a 14-year-old student and has been looking for an after-school job every day for the past month.
- BB) Ron has quit looking because he believes that there is no work available for him.
- CC) Simone is currently working but expects to be laid off by the end of the month, before next month's survey can be completed.
- DD) Sarah has been looking for a job but is taking a month-long break from the job-seeking effort due to her lack of skills.
- EE) Rebekah is a recent graduate looking for work.
5Which one of the following people would be counted as unemployed in Canada?
- AA) a person who has been seeking a job for the last six months, but recently gave up looking because he was discouraged by his job prospects
- BB) a person who will be starting a new job in 6 months
- CC) a person who has been laid off for 10 weeks and is not looking for a job because he is waiting to be called
back to his old job - DD) a person who expects to be laid off by the end of the month before next month's survey can be completed
- EE) a part-time worker who repeatedly expresses a desire to become a full -time worker
6The labour force is
- AA) the total number of people employed.
- BB) the total number of people in the working-age population who are either employed or unemployed.
- CC) the total number of people in the working-age population who are employed.
- DD) the total number of people aged 15 years and over.
- EE) none of the above
7 The unemployment rate is defined as the number of
- AA) unemployed people divided by the number of employed people.
- BB) unemployed people divided by the sum of the people employed and the people unemployed.
- CC) employed people divided by the number of people in the country.
- DD) unemployed people divided by the number of people in the country who are employed.
- EE) unemployed people divided by the number of people in the country.
8Counting involuntary part-time workers as unemployed would
- AA) raise the full employment rate.
- BB) not change the actual unemployment rate.
- CC) raise the natural unemployment rate.
- DD) raise the measured unemployment rate.
- EE) lower the measured unemployment rate.
9Who of the following would be counted as unemployed in Canada?
- AA) Sharon is a college student with no job
- BB) Doris only works five hours a week but is looking for a full-time job.
- CC) Maurice has been laid off from his job for 20 weeks but expects to be called back soon.
- DD) Bogdan has been laid off from his job but does not expect to be called back, and is not looking.
- EE) Kanhaya has stopped looking for work since he was unable to find a suitable job during a two -month search
10Who of the following would be counted as unemployed in Canada?
- AA) Vik, who has been staying at home watching "The Old and the Boring" soap opera, and not searching since he was laid off at the flour mill.
- BB) James, who is a full-time student looking for a part-time job
- CC) Emmanuel, who lost his job at the steel plant when an automated assembly line was introduced six months ago, and has been job searching every day.
- DD) Caitlin, who is 14 years old, and looking for a babysitting job.
- EE) Youngmin, who is a part-time hamburger flipper looking for a full-time job.
11If the working-age population increases, then
- AA) the labour force participation rate will increase.
- BB) the total number of people aged 15 years and above will increase.
- CC) the number of people employed will increase
- DD) the size of the labour force will increase.
- EE) the unemployment rate will increase
12In a country with a working-age population of 20 million, 13 million are employed, 1.5 million are unemployed, and 1 million of the employed are working part-time, half of whom wish to work full-time. The size of the labour force is
- AA) 20 million.
- BB) 11.5 million.
- CC) 13 million.
- DD) 15.5 million
- EE) 14.5 million
13In a country with a working-age population of 20 million, 13 million are employed, 1.5 million are unemployed, and 1 million of the employed are working part-time, half of whom wish to work full-time. The labour force participation rate is
- AA) 72.5 percent.
- BB) 57.5 percent
- CC) 65 percent.
- DD) 75.5 percent
- EE) none of the above.
14In a country with a working-age population of 22 million, 16 million are employed, 2 million are unemployed, and 1 million of the employed are working part-time, half of whom wish to work full-time. The unemployment rate is
- AA) 15.4 percent.
- BB) 10 percent
- CC) 10.3 percent.
- DD) 11.1 percent.
- EE) none of the above.
15) In a country with a working-age population of 22 million, 16 million are employed, 2 million are unemployed,
and 1 million of the employed are working part-time, half of whom wish to work full-time. The
employment-to-population ratio is- AA) 65 percent.
- BB) 57.5 percent
- CC) 72.7 percent.
- DD) 75.5 percent
- EE) none of the above.
16In a country with a working-age population of 22 million, 16 million are employed, 2 million are unemployed, and 1 million of the employed are working part-time, half of whom wish to work full-time. The involuntary part-time rate is
- AA) 6.3 percent.
- BB) 2.8 percent.
- CC) 5 percent.
- DD) 12.5 percent.
- EE) none of the above.
17In a country with a working-age population of 30 million, 18 million are employed, 2 million are unemployed, and 2 million of the employed are working part-time, half of whom wish to work full-time. The labour force is
- AA) 18 million.
- BB) 20 million
- CC) 22 million
- DD) 30 million.
- EE) 16 million.
18In a country with a working-age population of 30 million, 18 million are employed, 2 million are unemployed, and 2 million of the employed are working part-time, half of whom wish to work full-time. The labour force
participation rate is- AA) 60 percent
- BB) 66.7 percent.
- CC) 53.3 percent.
- DD) 73.3 percent
- EE) none of the above
19In a country with a working-age population of 30 million, 18 million are employed, 2 million are unemployed, and 2 million of the employed are working part-time, half of whom wish to work full-time. The unemployment rate is
- AA) 9.1 percent.
- BB) 10 percent
- CC) 14.3 percent.
- DD) 11.1 percent.
- EE) none of the above.
20In a country with a working-age population of 30 million, 18 million are employed, 2 million are unemployed, and 2 million of the employed are working part-time, half of whom wish to work full-time. The employment-to-population ratio is
- AA) 60 percent.
- BB) 66.7 percent.
- CC) 73.3 percent
- DD) 53.3 percent
- EE) none of the above.
21In a country with a working-age population of 30 million, 18 million are employed, 2 million are unemployed, and 2 million of the employed are working part-time, half of whom wish to work full-time. The involuntary part-time rate is
- AA) 4.5 percent
- BB) 10 percent.
- CC) 4.8 percent.
- DD) 5 percent
- EE) none of the above.
22Which of the following reflects an increase in unemployment?
- AA) an increase in the labour force participation rate
- BB) an increase in the involuntary part-time rate
- CC) a decrease in the unemployment rate
- DD) an increase in the employment-to-population ratio
- EE) none of the above
23The labour force participation rate is
- AA) the percentage of the working-age population who are employed.
- BB) the percentage of the labour force who are employed.
- CC) the percentage of the labour force who are unemployed or employed
- DD) the percentage of the working-age population who are unemployed or employed.
- EE) none of the above.
24 The employment-to-population ratio is
- AA) the percentage of the working-age population who are employed.
- BB) the percentage of the labour force who are unemployed or employed.
- CC) the percentage of the labour force who are employed.
- DD) the percentage of the working-age population who are unemployed or employed.
- EE) none of the above
25In a recession, typically
- AA) unemployment rises
- BB) the employment-to-population ratio decreases.
- CC) the employment-to-population rate rises
- DD) the labour force participation rate rises.
- EE) both A and B are correct
26In a recession, typically
- AA) the labour force participation rate increases
- BB) the employment-to-population ratio decreases
- CC) the employment-to-population ratio increases.
- DD) unemployment decreases.
- EE) none of the above.
27Complete the following sentence. In an expansion, typically
- AA) unemployment increases
- BB) the labour force participation rate increases.
- CC) the employment-to-population ratio decreases.
- DD) employment decreases
- EE) both B and D are correct.
28Which of the following pieces of information do you need to calculate the labor force participation rate?
I. the number of employed persons
II. the number of unemployed persons
III. the population
IV. the working age population- AA) I, II and IV
- BB) I and III
- CC) I and II
- DD) I, II and III
- EE) all of the above
29Since 1960, Canadian labor force participation rate has ________ and the unemployment rate has ________.
- AA) trended higher; trended lower
- BB) trended lower; varied over the business cycle
- CC) trended higher; varied over the business cycle
- DD) trended higher; trended higher
- EE) varied over the business cycle; trended higher
30If the people who take early retirement are not counted in the working -age population, then
- AA) the labor force participation rate would be higher.
- BB) the unemployment rate would be lower
- CC) the labor force participation rate would be less.
- DD) the unemployment rate would be higher.
- EE) none of the above.
31If the labor force participation rate is rising and the working -age population is not changing, then the
- AA) size of the labor force is falling.
- BB) size of the labor force is rising.
- CC) number of employed people must be increasing.
- DD) number of unemployed people is rising and the size of the labor force is falling.
- EE) number of unemployed people is falling and the size of the labor force is rising
32The largest source of unemployment is
- AA) re-entrants to the labour force.
- BB) job losers.
- CC) involuntary part-time workers.
- DD) job leavers
- EE) entrants to the labour force
33In a country with a working-age population of 22 million, 16 million are employed, 2 million are unemployed, and 1 million of the employed are working part-time, half of whom wish to work full-time. If 500,000 of those unemployed are cyclically unemployed, what is the natural unemployment rate?
- AA) 9.4 percent
- BB) 11.1 percent
- CC) 5.6 percent
- DD) 8.3 percent
- EE) none of the above
34In a country with a working-age population of 22 million, 16 million are employed, 2 million are unemployed, and 1 million of the employed are working part-time, half of whom wish to work full-time. If 500,000 of those unemployed are cyclically unemployed, what is the natural unemployment rate?
- AA) 8.3 percent
- BB) 5.6 percent
- CC) 11.1 percent
- DD) 9.4 percent
- EE) none of the above
35In a country with a working-age population of 30 million, 18 million are employed, 2 million are unemployed,
and 2 million of the employed are working part-time, half of whom wish to work full-time. If 1 million of
those unemployed are cyclically unemployed, what is the natural unemployment rate?- AA) 5 percent
- BB) 11.1 percent
- CC) 5.6 percent
- DD) 6.7 percent
- EE) none of the above
36 Which one of the following people is structurally unemployed?
- AA) a Saskatchewan welder who lost her job when her company relocated to B. C. and is currently looking for a job
- BB) a Nova Scotia fishery worker who is searching for a better job closer to home
- CC) an office worker who has lost her job because of a general slowdown in economic activity
- DD) a steel worker who is laid off but who expects to be called back soon
- EE) none of the above
37Unemployment caused by permanently decreased demand for horse -drawn carriages is an example of
- AA) frictional unemployment.
- BB) discouraged unemployment.
- CC) seasonal unemployment.
- DD) structural unemployment.
- EE) cyclical unemployment.
38 Which one of the following people is cyclically unemployed?
- AA) a Nova Scotia fishery worker who is searching for a better job closer to home
- BB) a Saskatchewan welder who lost her job when her company relocated to B. C. and is currently looking for a job
- CC) a steel worker who is laid off but who expects to be called back soon
- DD) an office worker who has lost her job because of a general slowdown in economic activity
- EE) none of the above
39Which one of the following people is frictionally unemployed? A steel worker who
- AA) decides to leave the labour force and become a full-time ballet student.
- BB) becomes discouraged and stops looking for a job.
- CC) is laid off but expects to be called back soon.
- DD) loses her job because of technological change.
- EE) gives up her job because she retires.
40If the economy is at full employment, then
- AA) the entire population is employed.
- BB) the only unemployment is frictional unemployment plus discouraged workers
- CC) the entire labour force is employed.
- DD) all unemployment arises from normal frictions and structural change
- EE) the unemployment rate is less than 3 percent.
41The natural unemployment rate is
- AA) equal to 0 percent.
- BB) the rate at which cyclical unemployment is equal to 0 percent
- CC) the same as the cyclical unemployment rate.
- DD) the rate at which cyclical unemployment is equal to 6 percent.
- EE) none of the above
42At full employment, there is no
- AA) cyclical unemployment.
- BB) structural unemployment
- CC) frictional unemployment
- DD) natural unemployment.
- EE) unemployment.
43A zero percent unemployment rate
- AA) is the only efficient unemployment rate.
- BB) is one of the economic goals of the Canadian government.
- CC) is not consistent with the notion of full employment
- DD) was last achieved during World War II when everyone was willing to work at the going wage rate to end the war
- EE) would alleviate scarcity.
44Complete the following sentence. Full employment
- AA) occurs when all unemployment is frictional and discouraged.
- BB) occurs when all unemployment is cyclical and structural.
- CC) occurs when there is zero unemployment
- DD) occurs when there is zero frictional unemployment.
- EE) occurs when there is zero cyclical unemployment.
45In Table 21.2.1, which person is frictionally unemployed?
- AA) A
- BB) B
- CC) C
- DD) E
- EE) none of them
46In Table 21.2.1, which person is structurally unemployed?
- AA) A
- BB) B
- CC) C
- DD) D
- EE) none of them
47In Table 21.2.1, which person is cyclically unemployed?
- AA) A
- BB) B
- CC) C
- DD) D and B
- EE) A and C
48In Table 21.2.1, which person is not included in the calculation of the natural unemployment rate?
- AA) A
- BB) B and E
- CC) C
- DD) D and B
- EE) A and C
49In Table 21.2.1, which person is a discouraged worker?
- AA) A
- BB) B
- CC) C
- DD) D
- EE) none of them
50Structural unemployment arises in part because
- AA) of unrealistic wage expectations
- BB) of technological change
- CC) people become discouraged when they cannot find jobs.
- DD) people will not quit their present jobs until they can find suitable employment elsewhere.
- EE) there are not enough jobs available
51Full employment does not mean that there is zero unemployment because
- AA) of unrealistic wage expectations.
- BB) some cyclical unemployment is always present.
- CC) of the existence of discouraged workers
- DD) business fluctuations are inevitable.
- EE) some frictional unemployment is always present
52 In a dynamic economy under ideal conditions, the unemployment rate
- AA) increases as the price level rises.
- BB) is greater than zero percent due to natural unemployment.
- CC) should be zero
- DD) averages 6 percent.
- EE) decreases as the price level falls.
53If the economy is operating at full employment, then
- AA) the unemployment rate is zero
- BB) everyone who wants a job has one
- CC) the entire labour force is employed
- DD) the unemployment rate is approximately 3 percent.
- EE) none of the above.
54 Jesse just graduated from university, and is looking for her first job. Jesse is
- AA) structurally unemployed.
- BB) cyclically unemployed.
- CC) frictionally unemployed
- DD) not unemployed.
- EE) not in the labour force.
55 Caitlin is working part-time at the Mr. G store, but wants to work full-time. She is
- AA) frictionally unemployed.
- BB) structurally unemployed.
- CC) cyclically unemployed.
- DD) not in the labour force.
- EE) none of the above
56Michael lost his job as a night security guard because he kept falling asleep at the job. Now he is looking for a
new job. Michael is- AA) frictionally unemployed.
- BB) not unemployed.
- CC) structurally unemployed.
- DD) cyclically unemployed.
- EE) none of the above.
57Rochelle lost her job as a salesperson when sales fell off during the recession. Now she is looking for a new job. Rochelle is
- AA) not unemployed.
- BB) frictionally unemployed.
- CC) cyclically unemployed
- DD) structurally unemployed.
- EE) none of the above.
58 Henelyn lost her job as a factory worker when she was replaced by a robotic machine. Now she is looking for a new job. Henelyn is
- AA) cyclically unemployed.
- BB) structurally unemployed.
- CC) not unemployed.
- DD) frictionally unemployed.
- EE) none of the above.
59People become unemployed when they
- AA) leave university and start seeking work
- BB) retire
- CC) are on maternity leave.
- DD) quit working to go to university
- EE) all of the above.
60People end unemployment when they
- AA) are laid off.
- BB) quit work to go to school.
- CC) retire from a job.
- DD) are recalled from a layoff.
- EE) quit work to raise a family.
61Counting discouraged workers as unemployed would
- AA) lower the measured unemployment rate
- BB) raise the measured unemployment rate.
- CC) raise the natural unemployment rate.
- DD) raise the full employment rate
- EE) not change the measured unemployment rate.
62 If the number of discouraged workers increases, everything else remaining the same, then the
- AA) unemployment rate will increase.
- BB) employment-to-population ratio will decrease.
- CC) employment-to-population ratio will increase.
- DD) labour force participation rate will increase.
- EE) labour force participation rate will decrease.
63If the number of discouraged workers decreases because many of them start to look for work, everything else
remaining the same, then the- AA) unemployment rate will increase
- BB) employment-to-population ratio will decrease.
- CC) labour force participation rate will increase
- DD) labour force participation rate will decrease.
- EE) both A and C.
64Suppose the economy is experiencing frictional unemployment of 1 percent, structural unemployment of 3
percent and cyclical unemployment of 4 percent. What is the natural unemployment rate?- AA) 5 percent
- BB) 3 percent
- CC) 8 percent
- DD) 7 percent
- EE) 4 percent
65Suppose that the natural unemployment rate is 4.5 percent and the actual unemployment rate is 3.5 percent.
Then cyclical unemployment is- AA) 1 percent.
- BB) 3.5 percent
- CC) 8 percent.
- DD) 0 percent
- EE) -1 percent.
66Suppose that the unemployment rate equals 4.5 percent and that the natural unemployment rate is 5.5 percent. We can conclude that
- AA) potential GDP is greater than real GDP
- BB) real GDP is greater than nominal GDP.
- CC) potential GDP equals real GDP.
- DD) potential GDP is less than real GDP.
- EE) we have mismeasured the natural unemployment rate.
67If the economy is at full employment
- AA) the only unemployment is frictional unemployment plus discouraged workers
- BB) all unemployment is cyclical and structural.
- CC) real GDP equals potential GDP.
- DD) the entire labor force is employed.
- EE) the entire population is employed.
68When the unemployment rate is less than the natural unemployment rate, real GDP is ________ than potential
GDP and the output gap is ________.- AA) smaller; negative
- BB) smaller; positive
- CC) greater; positive
- DD) greater; equal to zero
- EE) greater; negative
69When the unemployment rate ________ the natural unemployment rate, real GDP ________ potential GDP
- AA) is greater than; is less than
- BB) equals; is greater than
- CC) is less than; is less than
- DD) equal; is less than
- EE) is greater than; equals
70In August 2006, the Canadian unemployment rate was 6.4 percent. In August 2008, the Canadian
unemployment rate was 6.1 percent. Between August 2006 and August 2008, the number of job losers ________, the number of job leavers ________, and the number of entrants and reentrants ________.- AA) decreased; did not change much; decreased
- BB) decreased; increased; increased
- CC) decreased; decreased; increased
- DD) decreased; increased; decreased
- EE) did not change much; increased; increased
71Some unemployment is unavoidable because ________.
- AA) many people in the working-age population attend school and are unemployed
- BB) people are making transitions through the stages of life and businesses are making transitions
- CC) often people become discouraged workers
- DD) there is always some cyclical unemployment
- EE) many part-time workers would like to have full-time work
72The official unemployment rate might underestimate the underutilization of labour resources for all of the
following reasons except ________.- AA) it excludes people who are waiting to be called back to jobs from which they have been laid off
- BB) it excludes marginally attached workers
- CC) it excludes discouraged workers
- DD) it excludes part-time workers who want full-time jobs
- EE) the official unemployment rate excludes all of the above
73The unemployment rate is supposed to measure ________. It is an imperfect measure because ________.
- AA) the percentage of the working-age population who are unemployed; it is impossible to count everyone in the working-age population
- BB) the underutilization of labour resources; it excludes some underutilized labour and some unemployment is unavoidable
- CC) the percentage of the labour force who are unemployed; it is impossible to count everyone in the labour force
- DD) the number of unemployed plus the number of marginally attached workers expressed as a percentage of the labour force; it excludes the marginally attached workers because Statistics Canada considers them as employed
- EE) the underutilization of labour resources; it includes part-time workers and excludes discouraged workers
74The reference base period is 2002. A consumer price index of 122 in 2009 means that
- AA) the average of the prices paid by urban consumers for a fixed market basket of consumer goods and services was 22 percent higher in 2009 than it was on average during 2002.
- BB) prices of consumer goods have gone up by a factor of 12.2
- CC) if the price of a good was $100 in 2002, its price in 2009 is $122
- DD) the market basket of consumer goods that cost $122 in 2002 can be purchased for $100 in 2009.
- EE) prices of consumer goods have more than doubled.
75If the CPI was 128 at the end of 2007 and 136 and the end of 2008, what was the inflation rate in 2008?
- AA) 8 percent
- BB) 5.9 percent
- CC) 9.4 percent
- DD) 4.2 percent
- EE) 6.25 percent
76 If the CPI was 95 at the end of 2007 and 105 at the end of 2008, what was the inflation rate in 2008?
- AA) 105 percent
- BB) 10.5 percent
- CC) 9.5 percent
- DD) 5 percent
- EE) 10 percent
77If the CPI was 228 at the end of 2007 and 236 at the end of 2008, what was the inflation rate in 2008?
- AA) 236 percent
- BB) 3.5 percent
- CC) 8 percent
- DD) 4 percent
- EE) 3.4 percent
78If the CPI was 1If the CPI was 140 at the end of 2007 and 150 at the end of 2008, what was the inflation rate in 2008?
- AA) 10 percent
- BB) 6.67 percent
- CC) 6.25 percent
- DD) 7.14 percent
- EE) 8 percent
79If the CPI was 180 at the end of 2007, and 216 at the end of 2008, the inflation rate in 2008 was
- AA) 216 percent.
- BB) 36 percent.
- CC) 18 percent.
- DD) 20 percent
- EE) 16.67 percent
80 The cost of the CPI basket in base-period prices is $200 and the cost of the CPI basket in current-period prices
is $450. The CPI in the current year is- AA) 300
- BB) 250
- CC) 225.
- DD) 44.44
- EE) 450.
81The consumer price index is a measure of
- AA) the lowest prices paid by urban consumers for a fixed basket of consumer goods and services.
- BB) the commodity prices paid by urban consumers for a fixed basket of consumer goods and services
- CC) the average of the prices paid by urban consumers for a fixed basket of consumer goods and services.
- DD) the consumer prices paid by average households for a fixed basket of goods and services
- EE) the average of the prices paid by rural consumers for a fixed basket of consumer goods and services.
82The inflation rate measures
- AA) the annual percentage change in the price level.
- BB) the annual change in the price level.
- CC) the average price level.
- DD) the annual percentage change in the wage rate.
- EE) none of the above
83Refer to Table 21.3.1. The reference base period is 1998. The CPI in 2008 is
- AA) 158.
- BB) 1,340.
- CC) 100
- DD) 63.
- EE) 96
84 Refer to Table 21.3.1. The reference base period is 1998. Which one of the following statements is true?
- AA) All prices have risen by the same amount.
- BB) From 1998 to 2008, the cost of the market basket rose by 58 percent.
- CC) The inflation rate in 1998 is greater than the inflation rate in 2008.
- DD) It costs 158 times more in 2008 than it does in 1998 to buy the same market basket
- EE) The inflation rate in 2008 is greater than the inflation rate in 1998.
85Refer to Table 21.3.1. The reference base period is 1998. the CPI in 1998 is
- AA) 158
- BB) 100
- CC) 63.
- DD) 1,340.
- EE) 96
86Refer to Table 21.3.1. The reference base period is 2008. The CPI in 1998 is
- AA) 157.
- BB) 129.
- CC) 64.
- DD) 100.
- EE) 152
87Refer to Table 21.3.1. The reference base period is 2008. The CPI in 2008 is
- AA) 129.
- BB) 153.
- CC) 64.
- DD) 157.
- EE) 100
88If the CPI in 2008 was 100 and the CPI in 2006 was 115, then the inflation rate in 2006 is
- AA) 100 percent.
- BB) 11.5 percent.
- CC) 115 percent.
- DD) 1.5 percent
- EE) none of the above
89The fixed basket of Econoland consists of 10 units of A, 20 units of B, and 30 units of C. Current prices are $1 per unit of A, $2 per unit of B, and $3 per unit of C. Base year prices are $1 for each unit of A, B, and C. What is the CPI in the current year?
- AA) 140
- BB) 43
- CC) 233
- DD) 430
- EE) 100
90The Consumer Price Index measures inflation by using
- AA) only consumption goods and services purchased using a current -year basket.
- BB) only consumption goods and services purchased using a base -year basket.
- CC) all goods and services that are produced using a base -year basket.
- DD) all goods and services that are produced using a current-year basket.
- EE) A and D.
91The technique used to calculate the CPI implicitly assumes that consumers buy
- AA) relatively more of goods with relative prices that are increasing.
- BB) goods and services whose quality improves at the rate of growth of real GDP.
- CC) relatively less of goods with relative prices that are decreasing.
- DD) more computers and CD players and fewer black -and-white TVs.
- EE) the same relative quantities of goods as in a base year
92If there is a 5 percent increase in the CPI, then there will most likely be
- AA) a more than 5 percent rise in the cost of living because of the introduction of new goods.
- BB) a 5 percent rise in the cost of living.
- CC) a less than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods.
- DD) a more than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods.
- EE) a less than 5 percent rise in the cost of living because of falling quality of goods over time.
93All of the following are possible sources of bias in using the Consumer Price Index to measure inflation except
- AA) an increase in the cost of living
- BB) commodity substitution.
- CC) an improvement in the quality of goods.
- DD) the introduction of new goods.
- EE) Both C and D are exceptions
94When prices at Wendy's rise, more consumers buy their meals at McDonald's and fewer consumers buy their
meals at Wendy's. This is an example of- AA) commodity substitution.
- BB) outlet substitution.
- CC) consumers' action to boycott Wendy's.
- DD) both A and B.
- EE) both B and C.
95Suppose a trade union and a firm agree to increase the wage rate by the same percentage as the increase in the Consumer Price Index. If the CPI increases by 5 percent, then the real income of workers will
- AA) increase by less than 5 percent, accounting for bias in the calculation of the CPI.
- BB) remain unchanged, accounting for bias in the calculation of the CPI.
- CC) increase by more than 5 percent, accounting for bias in the calculation of the CPI.
- DD) increase by 5 percent as well.
- EE) decrease by 5 percent, accounting for bias in the calculation of the CPI.
96Refer to Table 21.3.2. From the data in Table 21.3.2, what is Southton's consumer price index for the current
year?- AA) 105.6
- BB) 100.5
- CC) 100
- DD) 112
- EE) 94.7
97Comparing the core inflation rate to the Consumer Price Index, the core inflation rate
- AA) controls for the biases of the CPI.
- BB) uses current period quantities, not base period quantities.
- CC) measures all goods produced, not just consumer goods.
- DD) includes volatile elements not in the CPI.
- EE) excludes the volatile elements of the CPI.
98If the inflation rate is positive, the price level in an economy is
- AA) zero.
- BB) falling rapidly.
- CC) constant.
- DD) falling slowly.
- EE) rising.
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- Quiz on Macroeconomic 2, created by Gabriel Saunders on 05/04/2018.
- Author
- Gabriel Saunders
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