macro sheflin hwk 11
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macro sheflin hwk 11

Course Number: ECONOMICS 103, Spring 2008

College/University: Rutgers

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hw11 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The natural rate of unemployment is the a. unemployment rate that would prevail with zero inflation. b. rate associated with the highest possible level of GDP. c. difference between the long-run and short-run unemployment rates. d. amount of unemployment that the economy normally experiences. 2. Cyclical...

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Multiple hw11 Choice Identify the choice that best completes the statement or answers the question. 1. The natural rate of unemployment is the a. unemployment rate that would prevail with zero inflation. b. rate associated with the highest possible level of GDP. c. difference between the long-run and short-run unemployment rates. d. amount of unemployment that the economy normally experiences. 2. Cyclical unemployment refers to a. the relation between the probability of unemployment and a worker's changing level of experience. b. how often a worker is likely to be employed during her lifetime. c. year-to-year fluctuations of unemployment around its natural rate. d. long-term trends in unemployment. 3. The natural rate of unemployment is the economist's notion of a. full employment. b. cyclical employment. c. structural unemployment. d. frictional unemployment. 4. Which of the following is correct? a. Some degree of unemployment is inevitable. b. Other things the same an increase in the number of people who are unemployed is associated with a decrease in real GDP. c. Cyclical unemployment is inversely related to short-run economic fluctuations in GDP. d. All of the above are correct. 5. Data on unemployment is reported a. weekly. b. monthly. c. quarterly. d. yearly. 6. Unemployment data is collected a. from unemployment insurance claims. b. through a regular survey of about 60,000 households. c. through a regular survey of about 200,000 firms. d. Unemployment data is collected using all of the above. 7. The labor force equals the a. number of people who are employed. b. number of people who are unemployed. c. number of people employed plus the number of people unemployed. d. adult population. 8. Jack is a full-time unpaid homemaker not currently searching for other work. Jill is a full-time student who is not looking for a job. Who does the BLS count in the labor force? a. only Jack b. only Jill c. both Jack and Jill d. neither Jack nor Jill 9. Who would not be included in the labor force? a. Sally, who is on temporary layoff b. Sue, who has retired and is not looking for work c. Kylie, who does not have a job, but has applied for several in the last week d. None of the above is included in the labor force. 10. A person who is counted as unemployed by the BLS is a. also in the labor force. b. must have recently looked for work or be on temporary layoff. c. be age 16 or over. d. All of the above are correct. 11. The BLS defines the unemployment rate as the percentage of a. those unemployed relative to those employed. b. the labor force that is unemployed. c. the adult population that is unemployed. d. the labor force without fulltime employment. Labor Stats The Labor Market This table shows the 2003 data for males and females ages 16 and over in the imaginary country of Meditor. 1. Not in labor force a. male: 45 million b. female: 35 million 2. Unemployed a. male: 5 million b. female: 5 million 3. Employed a. male: 85 million b. female: 65 million 12. Refer to Labor Stats . What is the adult labor force in Meditor? a. 90 million b. 150 million c. 160 million d. 240 million 13. Refer to Labor Stats . What is the adult unemployment rate in Meditor? a. 4.12% b. 6.25% c. 11.11% d. 12.50% 14. Refer to Labor Stats . What is the adult labor-force participation rate in Meditor? a. 4.12% b. 12.50% c. 37.50% d. 66.67% 15. Suppose that in the small country of Sociopolis there are 6 million people in the adult population, that the labor-force participation rate is 70 percent, and that there are 3.8 million people employed. To the nearest tenth, what is the unemployment rate? a. 10.5% b. 9.5% c. 6.7% d. None of the above is correct. 16. Anna has just finished high school and started looking for her first job, but has not yet found one. As a result, the unemployment rate a. increases, and the labor-force participation rate is unaffected. b. increases, and the labor-force participation rate increases. c. is unaffected, and the labor-force participation rate increases. d. increases, and the labor-force participation rate decreases. 17. Since World War II, the labor-force participation rate a. has increased for both men and women. b. increased for women and decreased for men. c. has decreased for both men and women. d. decreased for women and increased for men. 18. In the BLS statistics, discouraged workers a. are included in the numerator of U-3 (the official unemployment rate). b. are not also counted as marginally attached workers. c. includes people working part time for economic reasons. d. have a job market reason for not looking for work. 19. The reported unemployment rate should be viewed as a. b. c. d. a useful but imperfect measure of joblessness. clearly smaller than the true unemployment rate. clearly larger than the true unemployment rate. being very close to the true unemployment rate. 20. Unemployment that exists because it takes time for workers to search for the job that suits them best is a. frictional unemployment, which partly accounts for the natural rate of unemployment. b. frictional unemployment, which does not help account for the natural rate of unemployment. c. structural unemployment, which partly accounts for the natural rate of unemployment. d. structural unemployment, which does not help account for the natural rate of unemployment. 21. The natural unemployment rate includes a. both frictional and structural unemployment. b. neither frictional nor structural unemployment. c. structural, but not frictional unemployment. d. frictional, but not structural unemployment. 22. Providing training for unemployed individuals is primarily intended to reduce a. frictional unemployment. b. seasonal unemployment. c. structural unemployment. d. cyclical unemployment. 23. Economists would predict that, other things the same, the more generous unemployment compensation a country has, a. the shorter the duration of each spell of unemployment, and the higher the unemployment rate. b. the shorter the duration of each spell of unemployment, and the lower the unemployment rate. c. the longer the duration of each spell of unemployment, and the higher the unemployment rate. d. the longer the duration of each spell of unemployment, and the lower the unemployment rate. 24. In the long run, the inflation rate depends primarily on a. the ability of unions to raise wages. b. government spending. c. the money supply growth rate. d. the monopoly power of firms. 25. In the long run, a. the natural rate of unemployment depends primarily on the level of aggregate demand. b. inflation depends primarily upon the money supply growth rate. c. there is a tradeoff between the inflation rate and the natural rate of unemployment. d. All of the above are correct. 26. If policymakers decrease aggregate demand, the price level a. falls, but unemployment rises. b. and unemployment fall. c. and unemployment rise. d. rises, but unemployment falls. 27. If the central bank increases the money supply, in the short run, prices a. rise and unemployment falls. b. fall and unemployment rises. c. and unemployment rise. d. and unemployment fall. 28. In the long run, policy that changes aggregate demand changes a. both unemployment and the price level. b. neither unemployment nor the price level. c. only unemployment. d. only the price level. 29. The short-run relationship between inflation and unemployment is often called a. the Classical Dichotomy. b. Money Neutrality. c. the Phillips curve. d. the Keynesian cross. 30. In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that a. it seemed to work for wages but not for inflation. b. monetary policy was ineffective in combating inflation. c. the Phillips curve did not apply in the long run. d. Phillips had made errors in collecting his data. 31. In the late 1960s, economist Edmund Phelps published a paper that a. argued that there was no long-run tradeoff between inflation and unemployment. b. disproved Friedman's claim that monetary policy was ineffective in controlling inflation. c. showed the optimal point on the Phillips curve was at an unemployment rate of 5 percent and an inflation rate of 2 percent. d. argued that the Phillips curve was stable and that it would not shift. 32. According to classical macroeconomic theory, in the long run a. monetary growth affects both real and nominal variables. b. the only real variable affected by monetary growth is the unemployment rate. c. a number of factors that affect unemployment are influenced by monetary growth. d. monetary growth affects nominal but not real variables. 33. In the long run, if the Fed increases the rate which at it increases the money supply, a. inflation will be higher. b. unemployment will be lower. c. real GDP will be higher. d. All of the above are correct. 34. For a number of years Canada and many European countries have had higher average unemployment rates than the United States. This suggests that these countries a. have higher average inflation rates than the United States. b. have long-run Phillips curves to the right of the United States. c. may have less generous unemployment compensation or lower minimum wages. d. All of the above are consistent with the evidence on unemployment rates. Use the graph below to answer the following questions. Figure 35-2 35. Refer to Figure 35-2. Curve 1 is the a. long-run aggregate supply curve. b. short-run aggregate supply curve. c. long-run Phillips curve. d. short-run Phillips curve. 36. Refer to Figure 35-2. Curve 2 is the a. long-run Phillips curve. b. short-run Phillips curve. c. long-run aggregate demand curve. d. short-run aggregate demand curve. 37. Refer to Figure 35-2. If the economy starts at c and the money supply growth rate decreases, in the short run the economy a. moves to b. b. stays at c. c. moves to e. d. None of the above is correct. Figure 35-4 inf % 12 11 10 9 8 7 6 5 4 3 2 1 unemp % 1 2 3 4 5 6 7 8 9 10 11 38. Refer to figure 35-4. Suppose the economy starts at 5% unemployment and 3% inflation and expected inflation remains at 3%. Which one of the following points could the economy move to in the short run if the Federal Reserve pursues a more expansionary monetary policy? a. 7% unemployment and 1% inflation b. 7% unemployment and 3% inflation c. 3% unemployment and 5% inflation d. 3% unemployment and 7% inflation 39. On a given short-run Phillips curve which of the following is held constant? a. the level of GDP b. actual inflation c. expected inflation d. employment 40. An increase in expected inflation shifts a. the long-run Phillips curve right. b. the short-run Phillips curve right. c. neither the short-run nor long-run Phillips curve right. d. both the short-run and long-run Phillips curve right. 41. According to Friedman and Phelps, the unemployment rate is above the natural rate when actual inflation a. is greater than expected inflation. b. is less than expected inflation. c. equals expected inflation. d. low whether its greater than or less than expected. 42. Policymakers a. can not exploit a tradeoff between inflation and unemployment in either the short or long run. b. can exploit a tradeoff between inflation and unemployment in the short run but not in the long run. c. can exploit a tradeoff between inflation and unemployment in both the short run and the long run. d. can exploit a tradeoff between inflation and unemployment in the long run, but not the short run. 43. In the long run, an increase in the money supply a. leaves prices and unemployment unchanged. b. raises prices and unemployment. c. raises prices and leaves unemployment unchanged. d. leaves prices unchanged and reduces unemployment. 44. Which of the following explains the time -inconsistency of policy explained by Kydland and Prescott? a. A contractionary monetary policy will lead to higher unemployment in the short-run but not the long -run. b. An expansionary monetary policy will lead to higher unemployment in the short-run but not the long -run. c. Expected inflation is higher than otherwise if the public believes that policymakers will be tempted to raise inflation to reduce unemployment. d. Expected inflation is lower than otherwise if the public believes that policymakers will be tempted to lower inflation to re duce unemployment. 45. Which of the following is an adverse supply shock? a. a decrease in the money supply b. a tax cut c. a worldwide drought d. decreased government spending 46. An adverse supply shock will shift short-run aggregate supply a. right, making prices rise. b. left, making prices rise. c. right, making prices fall. d. left, making prices fall. 47. When there is an adverse supply shock a. unemployment rises and the short-run Phillips curve shifts right. b. unemployment rises and the short-run Phillips curve shifts left. c. unemployment falls and the short-run Phillips curve shifts right. d. unemployment falls and the short-run Phillips curve shifts left. 48. If policymakers accommodate an adverse supply shock, the unemployment rate a. and the inflation rate will rise. b. and the inflation rate will fall. c. will rise and the inflation rate will fall. d. will fall and the inflation rate will rise. 49. A favorable supply shock will cause the price level a. and output to rise. b. and output to fall. c. to rise and output to fall. d. to fall and output to rise. 50. During 1999 and 2000 the Federal Open Market Committee of the Federal Reserve System noted that productivity increases had caused aggregate supply to shift to the right. Other things the same, this should have a. shifted the short-run Phillips curve to the left. So, by increasing the money supply the Fed could have reduced unemployment further while returning inflation to its former level. b. shifted the short-run Phillips curve to the left. So, by increasing the money supply the Fed could have reduced une mployment further only by raising the inflation rate above its former level. c. shifted the short-run Phillips curve to the right. So, by increasing the money supply the Fed could have reduced unemployment further while returning inflation to its former level. d. None of the above is correct. 51. In the 1970s, the Fed accommodated a(n) a. adverse supply shock and so contributed to higher inflation. b. adverse supply shock and so contributed to lower inflation. c. favorable supply shock and so contributed to higher inflation. d. favorable supply shock and so contributed to lower inflation. 52. In 1979, Fed chair Paul Volcker decided to pursue a policy a. that would lead to disinflation. b. that would create falling prices. c. to accommodate continuing adverse supply shocks. d. that maintained money growth at its current level. 53. Which of the following would tend to shorten recessions associated with anti-inflation policies of the Federal Reserve? a. People adjust their expectations of inflation slowly. b. People believe policy announcements made by Fed officials. c. The short-run Phillips curve does not shift immediately. d. All of the above are correct. 54. Proponents of rational expectations theory argued that, in the most extreme case, if policymakers are credibly committed to reducing inflation and rational people understand that commitment and quickly lower their inflation expectation, the sacrifice ratio could be as small as a. 0. b. 1. c. 4. d. 5. hw11 Answer Section MULTIPLE CHOICE 1. Register to View Answer2. Register to View Answer3. Register to View Answer4. Register to View Answer5. Register to View Answer6. Register to View Answer7. Register to View Answer8. Register to View Answer9. Register to View Answer10. Register to View Answer11. Register to View Answer12. Register to View Answer13. 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Register to View Answer PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 MSC: Definitional MSC: Interpretive MSC: Analytical MSC: Analytical MSC: Analytical MSC: Definitional MSC: Definitional MSC: Definitional MSC: Interpretive MSC: Definitional MSC: Analytical MSC: Definitional MSC: Definitional MSC: Analytical MSC: Analytical MSC: Analytical MSC: Applicative MSC: Interpretive MSC: Interpretive MSC: Analytical MSC: Analytical | Interpretive MSC: Definitional MSC: Analytical MSC: Analytical MSC: Analytical MSC: Analytical 50. Register to View Answer51. Register to View Answer52. Register to View Answer53. Register to View Answer54. Register to View Answer PTS: 2 PTS: 2 PTS: 2 PTS: 2 PTS: 2 MSC: Analytical MSC: Definitional MSC: Definitional MSC: Analytical MSC: Analytical
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