Chap007

# Chap007 - Chapter 07 Inflation and Unemployment Chapter 07...

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Chapter 07 - Inflation and Unemployment Chapter 07 Inflation and Unemployment Multiple Choice Questions 1. Based on what we know about the average annual unemployment and inflation rates since 1981, which of the following is true? a. Inflation decreased steadily, while unemployment varied widely b. Unemployment decreased steadily since 1982 while inflation varied c. On average, both inflation and unemployment were lower in the 1980s than in the 1990s D . Unemployment was considered a bigger problem than inflation in almost every year e. None of the above Difficulty: Easy 2. The sacrifice ratio is defined as a. The percentage increase in the inflation rate for every 1 percent reduction in the unemployment rate B . The percentage of output lost for each 1 percent reduction in the rate of inflation c. The percentage increase in the unemployment rate for every 1 percent reduction in GDP d. The inflation rate plus the unemployment rate e. The inflation rate divided by the unemployment rate Difficulty: Easy 3. Which of these people could officially be counted as unemployed? A . A garage attendant who got fired from his old job two months ago but will start a new job in two weeks b. A busboy who works only four hours a day, five days a week, but would prefer to work full-time as a waiter c. An accountant who quit her job when she had a baby two months ago d. A woman who joined the babysitters' union several months ago and averages about five customers a week at her \$10/hour rate e. None of the above Difficulty: Easy 7-1

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Chapter 07 - Inflation and Unemployment 4. If we look at the sacrifice ratios across countries, we find that a. All industrial nations have approximately the same ratio b. Japan has a smaller ratio than Germany, France, or the U.S. C . Germany has a higher ratio than Italy, Australia, or the U.S. d. No country has a ratio below 1 e. No country has a ratio above 1 Difficulty: Medium 5. Okun's law states that one extra percentage point in unemployment causes A . A 2 percent fall in GDP b. A 0.5 percent fall in GDP c. A 2 percent fall in the rate of inflation d. A 0.5 percent fall in the rate of inflation e. A 2 percent increase in the sacrifice ratio Difficulty: Easy 6. An employed person is defined as a person who during a reference week a. Had a job but was not working due to family or personal reasons b. Had a job but was not working due to maternity or paternity leave c. Did at least one hour of work as a paid employee D . All of the above e. None of the above Difficulty: Easy 7. Which of the following people is in the unemployment pool? a. Chris, who quit her job to look for other employment b. Jack, who has been temporarily laid off by his employer, but who expects to be called back after one or two months c. Lesley, who lost her job because her firm had to shut down D . All of the above e. Only A and C Difficulty: Easy 7-2
Chapter 07 - Inflation and Unemployment 8. Which of the following people has moved out of the pool of unemployment?

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Chap007 - Chapter 07 Inflation and Unemployment Chapter 07...

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