University College at TTU  Lesson Four Assignments

Introduction -- Reading Assignment -- Discussion -- Lesson Assignments -- Answer Sheet -- Assignment Submission Directions

Questions

Save the answer sheet to your computer and type your answers into it. Complete all parts of this assignment before submitting your assignment for grading.

Multiple-Choice
Based on your understanding, select the most accurate answer for each of the following questions.

  1. During periods of poor economic performance, real GDP
    1. declines and unemployment rises sharply.
    2. declines and unemployment rises moderately.
    3. declines but unemployment typically does not change.
    4. is unchanged but unemployment rises sharply.
    5. is unchanged but unemployment rises moderately.

  2. Economists define the unemployed as individuals who are
    1. not currently working.
    2. not currently working but are actively looking for work.
    3. working but looking for a different job.
    4. working less than their desired amount of time.
    5. All of the above.

  3. Economists define the labor force to include
    1. only people who are working full-time.
    2. people who are working.
    3. people who are not working but are actively looking for a job, and people who are working.
    4. all individuals of work age, regardless of whether they are working or looking for a job.
    5. all individuals, regardless of age.

  4. The unemployment rate is the number of unemployed people
    1. divided by the number of people who are working.
    2. divided by the total working-age population.
    3. divided by the number of people who are working or looking for work.
    4. and the number of people working fewer than their desired number of hours, divided by the number of people who are working or looking for work.
    5. None of the above is correct.

  5. If Sam does not have a job and is actively looking for work, he is considered
    1. unemployed and in the labor force.
    2. unemployed and not in the labor force.
    3. not in the labor force only.
    4. unemployed only.
    5. underemployed.

  6. People who were looking for work sometime in the recent past but not currently actively looking for work are classified as
    1. unemployed and in the labor force.
    2. unemployed and out of the labor force.
    3. employed and in the labor force.
    4. employed and out of the labor force.
    5. None of the above.

  7. People who are working only part-time, but want to be working full-time, are classified officially as
    1. unemployed and in the labor force.
    2. unemployed and out of the labor force.
    3. employed and in the labor force.
    4. employed and out of the labor force.
    5. None of the above.

  8. Suppose an economy consists of 200,000 individuals 16 years and older--120,000 are employed and 8,000 are unemployed but actively seeking work. In this example, the labor force is
    1. 120,000.
    2. 128,000.
    3. 80,000.
    4. 200,000.
    5. The labor force cannot be determined from the information given.

  9. Suppose an economy consists of 200,000 individuals 16 years and older--120,000 are employed and 8,000 are unemployed but actively seeking work. In this example, the labor force participation rate is
    1. 4%.
    2. 60%.
    3. 64%.
    4. 90%.
    5. The labor force participation rate cannot be determined from the information given.

  10. People who stopped looking for work because they could not find jobs are called
    1. employed.
    2. unemployed.
    3. discouraged workers.
    4. empowered.
    5. underemployed.

  11. The existence of persons working in the underground economy and not counted in the workforce will lead to an official unemployment rate that is
    1. overstated.
    2. understated.
    3. either overstated or understated.
    4. unbiased.
    5. correctly calculated.

  12. If a large number of workers are classified as being out of the labor force when they are really looking for work, this will lead to an official unemployment rate that is
    1. overstated.
    2. understated.
    3. either overstated or understated.
    4. unbiased.
    5. correctly calculated.

  13. Which of the following groups has the highest unemployment rates in the U.S.?
    1. males over age 20
    2. females over age 20
    3. whites under age 20
    4. African-Americans under age 20
    5. married men

Use the following information to answer questions 14 and 15.

Employment status of the working age population of Anywhere
Employed full-time:    2500
Employed part-time: 250
Unemployed and looking for work: 500
Unemployed and not looking for work: 250
  1. Given the data in the table, the labor force participation rate of Anywhere is
    1. 19%.
    2. 93%.
    3. 21%.
    4. 15%.
    5. 23%.

  2. Given the data in the table, the unemployment rate of Anywhere is
    1. 19%.
    2. 93%.
    3. 21%.
    4. 15%.
    5. 23%.

  3. The unemployment rate
    1. rises during booms and falls during recessions.
    2. rises during recessions and falls during booms.
    3. rises during times of rapid economic growth and falls during times of slow economic growth.
    4. is unrelated to economic growth.
    5. tends to remain the same in booms and recessions.

  4. Unemployment that naturally occurs during the normal workings of an economy as people change jobs and move across the country is called
    1. functional unemployment.
    2. natural unemployment.
    3. frictional unemployment.
    4. structural unemployment.
    5. cyclical unemployment.

  5. Structural unemployment occurs
    1. naturally during the normal workings of an economy as people change jobs, move across the country, etc.
    2. with economic fluctuations; it increases during bad times and decreases during good times.
    3. because of a mismatch between the jobs that are available in the economy and the skills of workers seeking jobs.
    4. because the government labels some people unemployed who aren't really in the labor force.
    5. None of the above are correct.

  6. If Jane quits her job voluntarily, she is considered
    1. structurally unemployed.
    2. cyclically unemployed.
    3. frictionally unemployed.
    4. not to be unemployed.
    5. None of the above is correct.

  7. Autoworkers laid off from Hot-Rod Autoworks as the result of a recession are considered
    1. structurally unemployed.
    2. cyclically unemployed.
    3. frictionally unemployed.
    4. Either A or B.
    5. None of the above.

  8. Steelworkers laid off from their jobs as the result of foreign competition are considered
    1. structurally unemployed.
    2. cyclically unemployed.
    3. frictionally unemployed.
    4. Either A or B.
    5. None of the above.

  9. Telephone operators who have lost their jobs as a result of computerized switchboards are an example of
    1. structural unemployment.
    2. cyclical unemployment.
    3. frictional unemployment.
    4. voluntary unemployment.
    5. None of the above.

  10. Unemployment that is not associated with economic fluctuations is
    1. structural unemployment.
    2. cyclical unemployment.
    3. frictional unemployment.
    4. Both A and C.
    5. None of the above; all are associated with economic fluctuations.

  11. Cyclical unemployment occurs
    1. because the government labels some people unemployed who aren't really in the labor force.
    2. with economic fluctuations; it increases during bad times and decreases during good times.
    3. naturally during the normal workings of an economy as people change jobs, move across the country, etc.
    4. because of a mismatch between the jobs that are available in the economy and the skills of workers seeking jobs.
    5. None of the above.

  12. Economists say that the economy is at "full employment" when the
    1. structural unemployment rate is zero.
    2. total unemployment rate is zero.
    3. frictional unemployment rate is zero.
    4. natural unemployment rate is zero.
    5. None of the above.

  13. Economic expansions might lead to inflation because an expansion leads to
    1. a decrease in the unemployment rate, which increases wages.
    2. an increase in the unemployment rate, which increases wages.
    3. a decrease in the unemployment rate, which decreases wages.
    4. an increase in the unemployment rate, which decreases wages.
    5. None of the above.

  14. The __________ is the most widely used by the government and the private sector to measure changes in the cost of living.
    1. producer price index
    2. consumer price index
    3. GDP deflator
    4. chain-type price index
    5. core index

Use the following information to answer questions 28 through 30.

The following table lists the basket of goods in the Vegetarian Price Index.

Assume 1993 is the base year.
  Quantity 1993 Price
in dollars
1994 Price
in dollars
1995 Price
in dollars
Apples 10 1 1.5 2
Cabbages 5 2 3 2.5
Oranges 5 2 2.5 3
  1. Using the information in the table, the Vegetarian Price Index for 1993 is
    1. 142.
    2. 100.
    3. 48.
    4. 158.
    5. 43.

  2. Using the information in the table, the inflation rate from 1993 to 1994 is
    1. 142%.
    2. 42%.
    3. 58%.
    4. 11%.
    5. 158%.

  3. Using the information in the table, the inflation rate from 1993 to 1995 is about
    1. 142%.
    2. 42%.
    3. 58%.
    4. 11%.
    5. 158%.

  4. A chain index
    1. is used to understate the rate of inflation.
    2. uses data from neighboring base years to calculate changes in nominal GDP.
    3. uses a fixed basket of goods.
    4. uses growth factors from neighboring years to obtain a more accurate measure of real GDP growth.
    5. None of the above.

  5. The consumer price index (CPI) differs from a chain-type price index in that the CPI
    1. requires calculation of GDP, while the chain-type index does not.
    2. measures the costs of a typical basket of goods over time, while the chain-type index does not.
    3. allows for the goods consumed in an economy to change over time, while the chain-type index does not.
    4. compares the prices of all goods in one year to the prices of all goods in other years.
    5. does not include used or imported goods, while the chain-type index does.

  6. Most economists believe that all price indexes
    1. overstate inflation and understate growth in nominal GDP.
    2. overstate inflation and understate growth in real GDP.
    3. understate inflation and understate growth in nominal GDP.
    4. understate inflation and understate growth in real GDP.
    5. understate inflation and overstate growth in real GDP.

  7. Cost-of-living adjustments are
    1. automatic wage changes based on the CPI which are included in some union contracts.
    2. changes in the basket of goods used in calculating the CPI.
    3. averages of neighboring years' base prices used in constructing the CPI.
    4. quality measurements included in the calculation of the CPI.
    5. None of the above.

  8. Suppose that a price index in a country was 200 in 1998 and 210 in 1999. The inflation rate between those two years was
    1. 10%.
    2. 5%.
    3. 2.5%.
    4. 4.76%.
    5. The inflation rate cannot be determined from the information provided.

Essay
Answer each of the following essay questions on the answer sheet provided.

  1. In what sense is frictional unemployment "good" for the economy?

  2. Critically evaluate the statement: "Little Rock is an inexpensive place to live. Therefore, they must have low inflation in Little Rock."

  Back

Continue