(Download PDF) Macroeconomics A Contemporary Introduction 11th Edition McEachern Test Bank Full Chapter

Macroeconomics A Contemporary
Introduction 11th Edition McEachern

Test Bank
Go to download the full and correct content document:
https://testbankfan.com/product/macroeconomics-a-contemporary-introduction-11th-e
dition-mceachern-test-bank/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...
Macroeconomics A Contemporary Introduction 9th Edition

McEachern Test Bank
https://testbankfan.com/product/macroeconomics-a-contemporary-
introduction-9th-edition-mceachern-test-bank/
Microeconomics A Contemporary Introduction 11th Edition

McEachern Test Bank
https://testbankfan.com/product/microeconomics-a-contemporary-

McEachern Solutions Manual
introduction-11th-edition-mceachern-solutions-manual/
Macroeconomics A Contemporary Approach 10th Edition

McEachern Test Bank
approach-10th-edition-mceachern-test-bank/
Economics A Contemporary Introduction 10th Edition
McEachern Test Bank
https://testbankfan.com/product/economics-a-contemporary-

McEachern Test Bank
Macroeconomics A Contemporary Approach 10th Edition

approach-10th-edition-mceachern-solutions-manual/
Economics A Contemporary Introduction 10th Edition

https://testbankfan.com/product/economics-a-contemporary-

1. Which of the following is not a cost of unemployment?
a. A loss of income
b. Emotional or psychological problems
c. Loss of job skills
d. A decrease in production
e. Higher annual inflation rates
ANSWER: e
FEEDBACK: a. Incorrect. Inflation is a sustained increase in the economy’s price level; it results
from an increase in aggregate demand, a decrease in aggregate supply, or both.
See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. Inflation is a sustained increase in the economy’s price level; it results
c. Incorrect. Inflation is a sustained increase in the economy’s price level; it results
d. Incorrect. Inflation is a sustained increase in the economy’s price level; it results
e. Correct. Inflation is a sustained increase in the economy’s price level; it results
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: MACR.MCEACH.17.7.01 - Describe what the unemployment rate measures, and summarize
four sources of unemployment
NATIONAL STANDARDS: United States - BUSPROG: Analytic - Communication Abilities
TOPICS: Unemployment: Its Measure and Sources
KEYWORDS: Bloom's: Remember
2. The labor force in an economy consists of all:

a. the people in the economy who are not retired.
b. the people in the economy over 16 years of age.
c. the adults in the economy between 18 and 65 years old who are able to work.
d. the civilian noninstitutional adult population that is either working or looking for work.
e. the noninstitutional adult population who are graduates of high school.
ANSWER: d
FEEDBACK: a. Incorrect. The labor force consists of those in the adult population who are either
working or looking for work. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. The labor force consists of those in the adult population who are either
c. Incorrect. The labor force consists of those in the adult population who are either
d. Correct. The labor force consists of those in the adult population who are either
e. Incorrect. The labor force consists of those in the adult population who are either
POINTS: 1
DIFFICULTY: Easy
Copyright Cengage Learning. Powered by Cognero. Page 1

3. Consider an economy made up of 100 people sixteen years of age and older, 60 of whom hold jobs, 10 of whom are
looking for work, and 15 of whom are retired. The number of people in the labor force is _____.
a. 30
b. 60
c. 85
d. 90
e. 70
ANSWER: e
FEEDBACK: a. Incorrect. The labor force consists of the people in the adult population who are
either working or looking for work. See 7-1: Unemployment: Its Measure and
Sources
b. Incorrect. The labor force consists of the people in the adult population who are
Sources
c. Incorrect. The labor force consists of the people in the adult population who are
Sources
d. Incorrect. The labor force consists of the people in the adult population who are
Sources
e. Correct. The labor force consists of the people in the adult population who are
Sources
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking
KEYWORDS: Bloom's: Apply
4. Which of the following people would be counted in the labor force?

a. Chou, who lost his job and last looked for work three months ago
b. Stephanie, who holds a Ph.D. in history but can only find part-time employment at a fast food restaurant
c. Jordan, who would like to work as a stockbroker but is a stay-at-home father
d. Steffan, who is a patient in a mental hospital
e. Monique, age 90, who is enjoying her retirement in Montana
ANSWER: b
FEEDBACK: a. Incorrect. The labor force consists of all civilians 16 years of age and older who
are working or looking for work, except those in prison, in mental hospitals, or in
homes for the aged. See 7-1: Unemployment: Its Measure and Sources
b. Correct. The labor force consists of all civilians 16 years of age and older who are
working or looking for work, except those in prison, in mental hospitals, or in

c. Incorrect. The labor force consists of all civilians 16 years of age and older who
d. Incorrect. The labor force consists of all civilians 16 years of age and older who
e. Incorrect. The labor force consists of all civilians 16 years of age and older who
POINTS: 1
DIFFICULTY: Easy
5. People who are not currently employed but say they want a job are counted as unemployed only if they:
a. have previously held a job.
b. are actively seeking employment.
c. are discouraged workers.
d. are between 16 and 65 years of age.
e. are willing to accept any offer of employment.
ANSWER: b
FEEDBACK: a. Incorrect. Unemployment occurs when people are without work and actively
seeking work. See 7-1: Unemployment: Its Measure and Sources
b. Correct. Unemployment occurs when people are without work and actively
c. Incorrect. Unemployment occurs when people are without work and actively
d. Incorrect. Unemployment occurs when people are without work and actively
e. Incorrect. Unemployment occurs when people are without work and actively
POINTS: 1
DIFFICULTY: Easy
6. The unemployment rate measures the:

a. number of people in the labor force divided by the adult population.
b. percentage of people in the labor force who are unemployed.
c. percentage of people in an economy who have dropped out of the labor force.
d. number of people in the adult population who are looking for work.
e. number of people in the labor force who are not working.
ANSWER: b
FEEDBACK: a. Incorrect. The unemployment rate measures the percentage of those in the labor
force who are unemployed. See 7-1: Unemployment: Its Measure and Sources
b. Correct. The unemployment rate measures the percentage of those in the labor
c. Incorrect. The unemployment rate measures the percentage of those in the labor
d. Incorrect. The unemployment rate measures the percentage of those in the labor
e. Incorrect. The unemployment rate measures the percentage of those in the labor
POINTS: 1
DIFFICULTY: Easy
7. Consider an economy made up of 100 people, 60 of whom hold jobs, 10 of whom are looking for work, and 15 of
whom are retired. The number of unemployed persons is _____.
a. 10
b. 15
c. 40
d. 30
e. 90
ANSWER: a
FEEDBACK: a. Correct. Unemployment occurs when a person who is actively searching for
employment is unable to find work. See 7-1: Unemployment: Its Measure and
Sources
b. Incorrect. Unemployment occurs when a person who is actively searching for
Sources
c. Incorrect. Unemployment occurs when a person who is actively searching for
Sources
d. Incorrect. Unemployment occurs when a person who is actively searching for
Sources
e. Incorrect. Unemployment occurs when a person who is actively searching for
Sources
POINTS: 1
DIFFICULTY: Easy

8. The unemployment rate will increase whenever there is a(n):
a. increase in the number of unemployed persons.
b. increase in the number of unemployed persons relative to the size of the labor force.
c. increase in the size of the U.S. population but no change in the number of unemployed persons.
d. increase in the size of the labor force.
e. increase in the size of the U.S. population and a decrease in the number of unemployed persons.
ANSWER: b
force who are unemployed and looking for work. See 7-1: Unemployment: Its
Measure and Sources
Measure and Sources
Measure and Sources
Measure and Sources
Measure and Sources
POINTS: 1
DIFFICULTY: Easy
9. In an economy, U = the number of adults who are unemployed, E = the number of adults who are employed, and NLF =
the number of adults not in the labor force. The unemployment rate of the economy is equal to:
a. U/(E + NLF).
b. U/E.
c. U/(U + E).
d. U/(E + NLF).
e. U/(U + E − NLF).
ANSWER: c
Measure and Sources
b. Incorrect. The unemployment rate measures the percentage of those in the labor
Measure and Sources
c. Correct. The unemployment rate measures the percentage of those in the labor
Measure and Sources
Measure and Sources

Measure and Sources
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom's: Understand
10. Which of the following people would be counted as employed?

a. A retired naval officer
b. A high school student
c. A stay-at-home father
d. A teenager who has given up looking for work after a year of trying
e. A ski instructor who is working during the summer
ANSWER: e
FEEDBACK: a. Incorrect. The number of employed workers is the number of workers in the labor
force who are working. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. The number of employed workers is the number of workers in the labor
c. Incorrect. The number of employed workers is the number of workers in the labor
d. Incorrect. The number of employed workers is the number of workers in the labor
e. Correct. The number of employed workers is the number of workers in the labor
POINTS: 1
DIFFICULTY: Easy
11. If top government officials claim that more people are working now than ever before, then which of the following is
true?
a. The unemployment rate is lower now than ever before.
b. The number of people unemployed is lower now than ever before.
c. The employment rate is higher now than ever before.
d. The number of people in the labor force is higher now than ever before.
e. The number of people employed is higher now than ever before.
ANSWER: e
FEEDBACK: a. Incorrect. The number of employed workers is the number of workers in the labor
b. Incorrect. The number of employed workers is the number of workers in the labor

c. Incorrect. The number of employed workers is the number of workers in the labor
d. Incorrect. The number of employed workers is the number of workers in the labor
e. Correct. The number of employed workers is the number of workers in the labor
POINTS: 1
DIFFICULTY: Easy
12. A discouraged worker is one who:

a. is underqualified for his current job.
b. dislikes his current job but is afraid to quit.
c. drops out of the labor force because he cannot find a job.
d. quits his job because the possibility of advancement was very low.
e. is overqualified for his current job.
ANSWER: c
FEEDBACK: a. Incorrect. Discouraged workers are workers who have become so discouraged by
a long, unfruitful job search that they have dropped out of the labor force. See 7-
1: Unemployment: Its Measure and Sources
b. Incorrect. Discouraged workers are workers who have become so discouraged by
c. Correct. Discouraged workers are workers who have become so discouraged by
d. Incorrect. Discouraged workers are workers who have become so discouraged by
e. Incorrect. Discouraged workers are workers who have become so discouraged by
POINTS: 1
DIFFICULTY: Easy
13. “Discouraged workers” comprise the percentage of those in the:

a. labor force who are employed and are seeking employment.
b. labor force who have chosen early retirement because they dislike their work.
c. adult population who want to be employed but have given up the search for a job.
d. labor force who are looking for a job but cannot find one.
e. adult population who are in the labor force.
ANSWER: c
FEEDBACK: a. Incorrect. Discouraged workers are those who have dropped out of labor force as
they could not find a job. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. Discouraged workers are those who have dropped out of labor force as
c. Correct. Discouraged workers are those who have dropped out of labor force as
d. Incorrect. Discouraged workers are those who have dropped out of labor force as
e. Incorrect. Discouraged workers are those who have dropped out of labor force as
POINTS: 1
DIFFICULTY: Easy
14. Anne is an accountant who lost her job in the last recession and has given up looking for work after an unsuccessful
job search. Which of the following is true in this case?
a. She is a discouraged worker.
b. She is underemployed.
c. This is an example of cyclical unemployment.
d. This is an example of seasonal unemployment.
e. She is overemployed.
ANSWER: a
FEEDBACK: a. Correct. Discouraged workers are those who have dropped out of labor force as
b. Incorrect. Discouraged workers are those who have dropped out of labor force as
c. Incorrect. Discouraged workers are those who have dropped out of labor force as
d. Incorrect. Discouraged workers are those who have dropped out of labor force as
e. Incorrect. Discouraged workers are those who have dropped out of labor force as
POINTS: 1
DIFFICULTY: Easy
15. Suppose the total population of an economy is 150 million, the labor force is 100 million, and the unemployment is 94
million. The unemployment rate is _____.
a. 6 percent
b. 80 percent
c. 94 percent
d. 10 percent
e. 15 percent
ANSWER: c
FEEDBACK: a. Incorrect. The unemployment rate measures the percentage of the labor force
who are unemployed. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. The unemployment rate measures the percentage of the labor force
c. Correct. The unemployment rate measures the percentage of the labor force who
are unemployed. See 7-1: Unemployment: Its Measure and Sources
d. Incorrect. The unemployment rate measures the percentage of the labor force
e. Incorrect. The unemployment rate measures the percentage of the labor force
POINTS: 1
DIFFICULTY: Easy
16. Who among the following would not be considered officially unemployed?
a. Jones, who quit his job to look for a better job in another part of the country
b. Jason, who got fired from his job when the government cut spending
c. Bourne, who is looking for a job after being out of the labor force for five years
d. Sophie, who retired early because she disliked her current job
e. Annie, who dropped out of the labor force after a year of job search
ANSWER: d
FEEDBACK: a. Incorrect. The people who want a job but cannot find one are considered
unemployed. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. The people who want a job but cannot find one are considered
c. Incorrect. The people who want a job but cannot find one are considered
d. Correct. The people who want a job but cannot find one are considered
e. Incorrect. The people who want a job but cannot find one are considered
POINTS: 1
DIFFICULTY: Easy

17. Which of the following people would be counted among the unemployed?
a. A new college graduate selling newspaper advertisements part time while looking for other work
b. A new college graduate selling newspaper advertisements full time while looking for other work
c. A new college graduate selling newspaper advertisements part time and not looking for other work
d. A new college graduate who gets tired of selling newspaper advertisements and takes off on a motorcycle trip
to Alaska
e. A new college graduate not qualified for any of the jobs available in his small town
ANSWER: e
FEEDBACK: a. Incorrect. The number of unemployed workers represents the number of workers
in the labor force who are not working but looking for work. See 7-1:
Unemployment: Its Measure and Sources
b. Incorrect. The number of unemployed workers represents the number of workers
c. Incorrect. The number of unemployed workers represents the number of workers
d. Incorrect. The number of unemployed workers represents the number of workers
e. Correct. The number of unemployed workers represents the number of workers in
the labor force who are not working but looking for work. See 7-1: Unemployment:
Its Measure and Sources
POINTS: 1
DIFFICULTY: Easy
18. Which of the following people would be classified as unemployed?

a. A person who wants a job as a fashion model but cannot find work in that field
b. Someone who quits a part-time job to attend school full time
c. Someone who does not have a job and gives up looking for one
d. A person who works at a job that underutilizes his or her skills
e. A person who works part-time and would rather work full time
ANSWER: a
FEEDBACK: a. Correct. The number of unemployed workers is the number of workers in the
labor force who are not working but looking for work. See 7-1: Unemployment: Its
Measure and Sources
b. Incorrect. The number of unemployed workers is the number of workers in the
Measure and Sources
c. Incorrect. The number of unemployed workers is the number of workers in the
Measure and Sources
d. Incorrect. The number of unemployed workers is the number of workers in the
Measure and Sources

e. Incorrect. The number of unemployed workers is the number of workers in the
Measure and Sources
POINTS: 1
DIFFICULTY: Moderate
19. The unemployment rate will decrease whenever there is a(n) _____.
a. increase in the number of persons classified as unemployed
b. decrease in the number of unemployed persons relative to the size of the labor force
c. decrease in the size of the population and no change in the number of persons classified as employed
d. reduction in the size of the labor force
e. decrease in the number of unemployed persons and no change the population
ANSWER: b
force who are unemployed but looking for work. See 7-1: Unemployment: Its
Measure and Sources
Measure and Sources
Measure and Sources
Measure and Sources
Measure and Sources
POINTS: 1
DIFFICULTY: Easy
20. A recent college graduate who is looking for her first job would be considered _____.
a. a discouraged worker
b. underemployed
c. overemployed
d. unemployed
e. not in the labor force
ANSWER: d

FEEDBACK: a. Incorrect. The number of unemployed workers is the number of workers in the
Measure and Sources
b. Incorrect. The number of unemployed workers is the number of workers in the
Measure and Sources
c. Incorrect. The number of unemployed workers is the number of workers in the
Measure and Sources
d. Correct. The number of unemployed workers is the number of workers in the
Measure and Sources
e. Incorrect. The number of unemployed workers is the number of workers in the
Measure and Sources
POINTS: 1
DIFFICULTY: Easy
21. Consider an economy with an adult population of 100, 50 of whom hold jobs, 10 of whom are looking for work, and
15 of whom are retired. The labor force participation rate is _____.
a. 100 percent
b. 60 percent
c. 50 percent
d. 40 percent
e. 10 percent
ANSWER: b
FEEDBACK: a. Incorrect. The labor force participation rate equals the number in the labor force
divided by the adult population. See 7-1: Unemployment: Its Measure and
Sources
b. Correct. The labor force participation rate equals the number in the labor force
Sources
c. Incorrect. The labor force participation rate equals the number in the labor force
Sources
d. Incorrect. The labor force participation rate equals the number in the labor force
Sources
e. Incorrect. The labor force participation rate equals the number in the labor force
Sources
POINTS: 1
DIFFICULTY: Easy
22. In an economy, U = the number of adults who are unemployed, E = the number of adults who are employed, and NLF
= the number of adults not in the labor force. The labor force participation rate in the economy is equal to:
a. U/(U + E).
b. E/(U + E).
c. U/(U + E + NLF).
d. E/(U + E + NLF).
e. (U + E)/(U + E + NLF).
ANSWER: e
Sources
b. Incorrect. The labor force participation rate equals the number in the labor force
Sources
Sources
Sources
e. Correct. The labor force participation rate equals the number in the labor force
Sources
POINTS: 1
DIFFICULTY: Easy
23. Which of the following is true of the labor force participation rate?
a. When workers become unemployed, the labor force participation rate declines.
b. When the unemployed become discouraged workers, the labor force participation rate declines.
c. When workers do not fully use their skills, the labor force participation rate decreases.
d. Since the 1950s, the labor force participation rate of women has decreased in the United States.
e. The trend toward earlier retirement has increased the labor force participation rate in the United States.
ANSWER: b
Sources
b. Correct. The labor force participation rate equals the number in the labor force
Sources
Sources
Sources
e. Incorrect. The labor force participation rate equals the number in the labor force
Sources
POINTS: 1
24. The labor force participation rate for women in the United States has _____.
a. stayed the same over the last 30 years
b. increased significantly since the 1950s
c. decreased significantly since the 1950s
d. fluctuated substantially both upward and downward since the 1950s
e. increased only very slightly since the 1950s
ANSWER: b
FEEDBACK: a. Incorrect. In 1950, only 34 percent of adult women were in the labor force. In
2015, 58 percent are, with the greatest increase occurring among younger
women. See 7-1: Unemployment: Its Measure and Sources
b. Correct. In 1950, only 34 percent of adult women were in the labor force. In 2015,
58 percent are, with the greatest increase occurring among younger women. See
7-1: Unemployment: Its Measure and Sources
c. Incorrect. In 1950, only 34 percent of adult women were in the labor force. In
d. Incorrect. In 1950, only 34 percent of adult women were in the labor force. In
e. Incorrect. In 1950, only 34 percent of adult women were in the labor force. In
POINTS: 1
DIFFICULTY: Easy
25. Which of the following is true of labor force participation rates in the United States since the 1950s?
a. The rates for both men and women have risen.
b. The rate for women has fallen; the rate for men has risen.
c. The rate for men has fallen; the rate for women has increased.
d. The rates for both men and women have fallen.

e. The rates for both men and women have remained fairly constant.
ANSWER: c
FEEDBACK: a. Incorrect. One striking development since World War II has been the
convergence in the U.S. labor force participation rates of men and women. See 7-
b. Incorrect. One striking development since World War II has been the
c. Correct. One striking development since World War II has been the convergence
in the U.S. labor force participation rates of men and women. See 7-1:
d. Incorrect. One striking development since World War II has been the
e. Incorrect. One striking development since World War II has been the
POINTS: 1
DIFFICULTY: Easy
26. Which of the following groups tends to have the highest unemployment rate in the United States?
a. African American teenagers
b. Workers, age 25 or older, who are college graduates
c. White women
d. Workers, 25 years of age or older, who are high school dropouts
e. White teenagers
ANSWER: a
FEEDBACK: a. Correct. The African American workforce is on average younger, and younger
workers tend to have higher unemployment rates. See 7-1: Unemployment: Its
Measure and Sources
b. Incorrect. The African American workforce is on average younger, and younger
Measure and Sources
c. Incorrect. The African American workforce is on average younger, and younger
Measure and Sources
d. Incorrect. The African American workforce is on average younger, and younger
Measure and Sources
e. Incorrect. The African American workforce is on average younger, and younger
Measure and Sources
POINTS: 1
DIFFICULTY: Easy
27. Which of the following groups experiences high unemployment rates?

a. White-collar professionals
b. Attorneys
c. Technical workers
d. Blue-collar workers
e. Web page designers
ANSWER: d
FEEDBACK: a. Incorrect. Professional and technical workers experience lower unemployment
rates than blue-collar workers. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. Professional and technical workers experience lower unemployment
c. Incorrect. Professional and technical workers experience lower unemployment
d. Correct. Professional and technical workers experience lower unemployment
e. Incorrect. Professional and technical workers experience lower unemployment
POINTS: 1
DIFFICULTY: Easy
28. In April 2010, the U.S. economy added 290,000 jobs but the unemployment rate still increased from 9.7 percent to 9.9
percent. Which of the following best explains this situation?
a. The size of the labor force shrunk.
b. The number of unemployed workers also increased, but by a smaller percentage.
c. The number of illegal immigrants increased substantially.
d. The number of discouraged workers increased substantially.
e. The number of unemployed workers also increased, but by an even greater percentage.
ANSWER: e
FEEDBACK: a. Incorrect. The unemployment rate equals the number unemployed—that is,
people without jobs who are looking for work—divided by the number in the labor
force. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. The unemployment rate equals the number unemployed—that is,
c. Incorrect. The unemployment rate equals the number unemployed—that is,
d. Incorrect. The unemployment rate equals the number unemployed—that is,

e. Correct. The unemployment rate equals the number unemployed—that is, people
without jobs who are looking for work—divided by the number in the labor force.
POINTS: 1
DIFFICULTY: Easy
29. After graduating from Harvard Law School, Anne started looking for a job. She could not find a job after looking for
one week. Which of the following is true in this case?
a. This is an example of frictional unemployment.
b. This is an example of cyclical unemployment.
c. This is an example of seasonal unemployment.
d. She is underemployed.
e. She is a discouraged worker.
ANSWER: a
FEEDBACK: a. Correct. The time required to bring together employers and job seekers is the
source of frictional unemployment. See 7-1: Unemployment: Its Measure and
Sources
b. Incorrect. The time required to bring together employers and job seekers is the
Sources
c. Incorrect. The time required to bring together employers and job seekers is the
Sources
d. Incorrect. The time required to bring together employers and job seekers is the
Sources
e. Incorrect. The time required to bring together employers and job seekers is the
Sources
POINTS: 1
DIFFICULTY: Easy
30. Which of the following statements is true of unemployment?

a. Cyclical unemployment decreases during recessions and increases during expansions.
b. Some unemployment exists even when the economy is healthy and growing.
c. Unemployment and inflation are not related.
d. People who are willing and able to work but have given up the search for a job are considered unemployed.
e. Voluntary unemployment refers to a situation in which people who really do not want to work only pretend to
look for jobs.
ANSWER: b
FEEDBACK: a. Incorrect. Even in a healthy economy, some workers are retraining and updating
their skills and others are waiting for “the right job.” See 7-1: Unemployment: Its
Measure and Sources
b. Correct. Even in a healthy economy, some workers are retraining and updating
Measure and Sources
c. Incorrect. Even in a healthy economy, some workers are retraining and updating
Measure and Sources
d. Incorrect. Even in a healthy economy, some workers are retraining and updating
Measure and Sources
e. Incorrect. Even in a healthy economy, some workers are retraining and updating
Measure and Sources
POINTS: 1
31. Frictional unemployment refers to unemployment that is a result of:

a. a mismatch of skills.
b. being out of work 27 weeks or longer.
c. job search.
d. seasonal decreases in demand for labor.
e. a recession in the economy.
ANSWER: c
FEEDBACK: a. Incorrect. The time required to bring together employers and job seekers is the
Sources
Sources
c. Correct. The time required to bring together employers and job seekers is the
Sources
Sources
Sources
POINTS: 1
DIFFICULTY: Easy
32. Jacqueline has a Ph.D. in economics. She has turned down many job offers because she eventually hopes to teach at
one of the top ten universities in her field. The type of unemployment she is experiencing is:
a. frictional unemployment.
b. structural unemployment.
c. seasonal unemployment.
d. cyclical unemployment.
e. underemployment.
ANSWER: a
FEEDBACK: a. Correct. The time required to bring together employers and job seekers is the
Sources
Sources
c. Incorrect. The time required to bring together employers and job seekers is the
Sources
Sources
Sources
POINTS: 1
DIFFICULTY: Easy
33. Which type of unemployment is most likely to help an economy become more efficient?
a. Cyclical unemployment
b. Voluntary unemployment
c. Seasonal unemployment
d. Frictional unemployment
e. Underemployment
ANSWER: d
FEEDBACK: a. Incorrect. Frictional unemployment results in a better match between workers and
jobs. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. Frictional unemployment results in a better match between workers and
c. Incorrect. Frictional unemployment results in a better match between workers and
d. Correct. Frictional unemployment results in a better match between workers and

e. Incorrect. Frictional unemployment results in a better match between workers and
POINTS: 1
DIFFICULTY: Easy
34. The best example of a frictionally unemployed worker is one who:

a. has been looking for work for 27 weeks or longer.
b. is laid off during a recessionary period in the economy.
c. is in the process of voluntarily switching jobs.
d. is discouraged and not actively seeking work.
e. cannot find a job that matches with his skills.
ANSWER: c
FEEDBACK: a. Incorrect. Most frictional unemployment is short term and voluntary. See 7-1:
b. Incorrect. Most frictional unemployment is short term and voluntary. See 7-1:
c. Correct. Most frictional unemployment is short term and voluntary. See 7-1:
d. Incorrect. Most frictional unemployment is short term and voluntary. See 7-1:
e. Incorrect. Most frictional unemployment is short term and voluntary. See 7-1:
POINTS: 1
DIFFICULTY: Easy
35. The type of unemployment most likely to be experienced by a touring professional golfer is:
e. discouraged-worker unemployment.
ANSWER: c
FEEDBACK: a. Incorrect. Unemployment caused by seasonal changes in labor demand during
the year is called seasonal unemployment. See 7-1: Unemployment: Its Measure
and Sources
b. Incorrect. Unemployment caused by seasonal changes in labor demand during
and Sources

c. Correct. Unemployment caused by seasonal changes in labor demand during the
year is called seasonal unemployment. See 7-1: Unemployment: Its Measure and
Sources
d. Incorrect. Unemployment caused by seasonal changes in labor demand during
and Sources
e. Incorrect. Unemployment caused by seasonal changes in labor demand during
and Sources
POINTS: 1
DIFFICULTY: Easy
36. The impact of _____ unemployment is removed from official monthly unemployment figures.
a. cyclical
b. structural
c. seasonal
d. frictional
e. involuntary
ANSWER: c
FEEDBACK: a. Incorrect. Monthly employment data are seasonally adjusted to smooth out the
unemployment bulges that result from seasonal factors. See 7-1: Unemployment:
b. Incorrect. Monthly employment data are seasonally adjusted to smooth out the
c. Correct. Monthly employment data are seasonally adjusted to smooth out the
d. Incorrect. Monthly employment data are seasonally adjusted to smooth out the
e. Incorrect. Monthly employment data are seasonally adjusted to smooth out the
POINTS: 1
DIFFICULTY: Easy
37. If the official unemployment rate increases from December to January because the Christmas season is over, we can
conclude that _____ is responsible for the increase.
a. seasonal unemployment
b. cyclical unemployment
c. structural unemployment
d. frictional unemployment
e. underemployment
ANSWER: a
FEEDBACK: a. Correct. Unemployment caused by seasonal changes in labor demand during the
year is called seasonal unemployment. See 7-1: Unemployment: Its Measure and
Sources
b. Incorrect. Unemployment caused by seasonal changes in labor demand during
and Sources
c. Incorrect. Unemployment caused by seasonal changes in labor demand during
and Sources
d. Incorrect. Unemployment caused by seasonal changes in labor demand during
and Sources
e. Incorrect. Unemployment caused by seasonal changes in labor demand during
and Sources
POINTS: 1
DIFFICULTY: Easy
38. Structural unemployment refers to unemployment that results from:

a. inefficiencies in the market for labor that prolong the job search.
b. being in the wrong geographical location.
c. the specialization and division of labor.
e. a recession in the economy.
ANSWER: b
FEEDBACK: a. Incorrect. Structural unemployment can occur when workers live far from regions
where jobs are available but are unable to move there. See 7-1: Unemployment:
b. Correct. Structural unemployment can occur when workers live far from regions
c. Incorrect. Structural unemployment can occur when workers live far from regions
d. Incorrect. Structural unemployment can occur when workers live far from regions
e. Incorrect. Structural unemployment can occur when workers live far from regions

POINTS: 1
DIFFICULTY: Easy
39. Unemployment arising from a mismatch of skills is called:

e. underemployment.
ANSWER: b
FEEDBACK: a. Incorrect. Structural unemployment occurs when there is a serious mismatch
between what companies need and what workers can offer. See 7-1:
b. Correct. Structural unemployment occurs when there is a serious mismatch
c. Incorrect. Structural unemployment occurs when there is a serious mismatch
d. Incorrect. Structural unemployment occurs when there is a serious mismatch
e. Incorrect. Structural unemployment occurs when there is a serious mismatch
POINTS: 1
DIFFICULTY: Easy
40. Which of the following types of unemployment is the hardest to reduce?

a. Cyclical unemployment
b. Structural unemployment
c. Voluntary unemployment
d. Frictional unemployment
e. Seasonal unemployment
ANSWER: b
FEEDBACK: a. Incorrect. Policy makers and economists are most concerned about structural
unemployment. See 7-1: Unemployment: Its Measure and Sources
b. Correct. Policy makers and economists are most concerned about structural
c. Incorrect. Policy makers and economists are most concerned about structural
d. Incorrect. Policy makers and economists are most concerned about structural
e. Incorrect. Policy makers and economists are most concerned about structural
POINTS: 1
DIFFICULTY: Easy
41. In recent times, there has been a decline in the sale of newspapers in the U.S. as people prefer to read the news on the
internet. This has caused many newspaper journalists to lose their jobs. This is an example of:
a. structural unemployment.
b. frictional unemployment.
c. cyclical unemployment.
d. seasonal unemployment.
e. underemployment.
ANSWER: a
FEEDBACK: a. Correct. Structural unemployment may arise from a change in tastes and
preferences. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. Structural unemployment may arise from a change in tastes and
c. Incorrect. Structural unemployment may arise from a change in tastes and
d. Incorrect. Structural unemployment may arise from a change in tastes and
e. Incorrect. Structural unemployment may arise from a change in tastes and
POINTS: 1
DIFFICULTY: Easy
42. Juanita worked for a defense contractor in the United States. During the 2008 recession, the government cut spending
and Juanita and ninety-nine others were laid off. In such a case, the unemployment Juanita is experiencing is _____.
a. cyclical
b. structural
c. seasonal
d. frictional
e. voluntary
ANSWER: a
FEEDBACK: a. Correct. Cyclical unemployment increases during recessions. See 7-1:
b. Incorrect. Cyclical unemployment increases during recessions. See 7-1:
c. Incorrect. Cyclical unemployment increases during recessions. See 7-1:
d. Incorrect. Cyclical unemployment increases during recessions. See 7-1:
e. Incorrect. Cyclical unemployment increases during recessions. See 7-1:
POINTS: 1
DIFFICULTY: Easy
43. In 2004, Jamal lost his job as a shipbuilder. His shipyard never reopened, and his very specialized skills as a
shipbuilder were no longer in demand. Jamal's unemployment is best classified as _____.
a. cyclical
b. structural
c. seasonal
d. frictional
e. voluntary
ANSWER: b
FEEDBACK: a. Incorrect. Structural unemployment occurs because changes in tastes,
technology, taxes, and competition reduce the demand for certain skills and
increase the demand for other skills. See 7-1: Unemployment: Its Measure and
Sources
b. Correct. Structural unemployment occurs because changes in tastes, technology,
taxes, and competition reduce the demand for certain skills and increase the
demand for other skills. See 7-1: Unemployment: Its Measure and Sources
c. Incorrect. Structural unemployment occurs because changes in tastes,
Sources
d. Incorrect. Structural unemployment occurs because changes in tastes,
Sources
e. Incorrect. Structural unemployment occurs because changes in tastes,
Sources
POINTS: 1
DIFFICULTY: Easy
44. _____ unemployment is experienced by a customer service representative who is laid off from a job because new
technology reduces the need for people to handle customer service inquiries.
a. Seasonal
b. Cyclical
c. Voluntary
d. Structural
e. Frictional
ANSWER: d
FEEDBACK: a. Incorrect. Structural unemployment occurs because changes in tastes,
Sources
b. Incorrect. Structural unemployment occurs because changes in tastes,
Sources
c. Incorrect. Structural unemployment occurs because changes in tastes,
Sources
d. Correct. Structural unemployment occurs because changes in tastes, technology,
taxes, and competition reduce the demand for certain skills and increase the
demand for other skills. See 7-1: Unemployment: Its Measure and Sources
e. Incorrect. Structural unemployment occurs because changes in tastes,
Sources
POINTS: 1
DIFFICULTY: Easy
45. Which of the following is most likely to reduce structural unemployment?

a. A reduction in wage rates
b. Access to better information on local job openings
c. Retraining workers in marketable skills
d. Promotion of full employment through government stabilization policies
e. Reducing the cost of job loss through enhanced unemployment benefits
ANSWER: c
FEEDBACK: a. Incorrect. Federal retraining programs aim to reduce structural unemployment.
b. Incorrect. Federal retraining programs aim to reduce structural unemployment.
c. Correct. Federal retraining programs aim to reduce structural unemployment. See
7-1: Unemployment: Its Measure and Sources

d. Incorrect. Federal retraining programs aim to reduce structural unemployment.
e. Incorrect. Federal retraining programs aim to reduce structural unemployment.
POINTS: 1
DIFFICULTY: Easy
46. Which type of unemployment is likely to decrease the most during an economy’s boom?
a. Frictional unemployment
b. Seasonal unemployment
c. Structural unemployment
d. Cyclical unemployment
e. Underemployment
ANSWER: d
FEEDBACK: a. Incorrect. Cyclical unemployment is likely to decrease the most when an
economy expands. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. Cyclical unemployment is likely to decrease the most when an
c. Incorrect. Cyclical unemployment is likely to decrease the most when an
d. Correct. Cyclical unemployment is likely to decrease the most when an economy
expands. See 7-1: Unemployment: Its Measure and Sources
e. Incorrect. Cyclical unemployment is likely to decrease the most when an
POINTS: 1
DIFFICULTY: Easy
47. Which type of unemployment is likely to increase the most during an economy’s recession?
a. Frictional unemployment
e. Underemployment
ANSWER: d
FEEDBACK: a. Incorrect. Cyclical unemployment is likely to increase during recessions. See 7-1:
b. Incorrect. Cyclical unemployment is likely to increase during recessions. See 7-1:
c. Incorrect. Cyclical unemployment is likely to increase during recessions. See 7-1:
d. Correct. Cyclical unemployment is likely to increase during recessions. See 7-1:
e. Incorrect. Cyclical unemployment is likely to increase during recessions. See 7-1:
POINTS: 1
DIFFICULTY: Easy
48. Recently, banking has become easier with automated teller machines replacing bank tellers. The loss of tellers’ jobs is
an example of _____.
a. cyclical unemployment
b. structural unemployment
c. frictional unemployment
d. underemployment
e. voluntary unemployment
ANSWER: b
FEEDBACK: a. Incorrect. Unemployment arising from a mismatch of skills or geographic location
is called structural unemployment. See 7-1: Unemployment: Its Measure and
Sources
b. Correct. Unemployment arising from a mismatch of skills or geographic location is
called structural unemployment. See 7-1: Unemployment: Its Measure and
Sources
c. Incorrect. Unemployment arising from a mismatch of skills or geographic location
Sources
d. Incorrect. Unemployment arising from a mismatch of skills or geographic location
Sources
e. Incorrect. Unemployment arising from a mismatch of skills or geographic location
Sources
POINTS: 1
DIFFICULTY: Easy
49. In which of the following industries are workers least likely to suffer from cyclical unemployment?
a. Construction industry
b. Automobile manufacturing
c. Apparel industry

d. Education
e. Tourism
ANSWER: d
FEEDBACK: a. Incorrect. Cyclical unemployment increases during recessions and decreases
during expansions. See 7-1: Unemployment: Its Measure and Sources
b. Incorrect. Cyclical unemployment increases during recessions and decreases
c. Incorrect. Cyclical unemployment increases during recessions and decreases
d. Correct. Cyclical unemployment increases during recessions and decreases
e. Incorrect. Cyclical unemployment increases during recessions and decreases
POINTS: 1
DIFFICULTY: Easy
50. Cyclical unemployment results from:

a. a mismatch of skills.
b. being in the wrong geographical location.
c. monetary cost and the time it takes to find the best job.
e. prolonged declines in business activity.
ANSWER: e
FEEDBACK: a. Incorrect. Cyclical unemployment means that the economy is operating inside its
production possibilities frontier. See 7-1: Unemployment: Its Measure and
Sources
b. Incorrect. Cyclical unemployment means that the economy is operating inside its
Sources
c. Incorrect. Cyclical unemployment means that the economy is operating inside its
Sources
d. Incorrect. Cyclical unemployment means that the economy is operating inside its
Sources
e. Correct. Cyclical unemployment means that the economy is operating inside its
Sources
POINTS: 1
DIFFICULTY: Easy

51. If the official unemployment rate increases from February to March because of sluggish sales in the automobile
industry, then the increase can be blamed on:
a. seasonal unemployment.
b. cyclical unemployment.
c. structural unemployment.
d. frictional unemployment.
e. underemployment.
ANSWER: b
FEEDBACK: a. Incorrect. Cyclical unemployment occurs when there is not enough aggregate
demand in the economy to provide jobs for everyone who wants to work. See 7-1:
b. Correct. Cyclical unemployment occurs when there is not enough aggregate
c. Incorrect. Cyclical unemployment occurs when there is not enough aggregate
d. Incorrect. Cyclical unemployment occurs when there is not enough aggregate
e. Incorrect. Cyclical unemployment occurs when there is not enough aggregate
POINTS: 1
DIFFICULTY: Easy
52. When an economy is operating at full employment, _____.

a. structural unemployment does not exist
b. cyclical unemployment does not exist
c. the unemployment rate is zero
d. seasonal unemployment does not exist
e. the number of discouraged workers is zero
ANSWER: b
FEEDBACK: a. Incorrect. An economy is viewed as operating at full employment if there is no
demand-deficient unemployment. See 7-2: Other Unemployment Issues
b. Correct. An economy is viewed as operating at full employment if there is no
c. Incorrect. An economy is viewed as operating at full employment if there is no
d. Incorrect. An economy is viewed as operating at full employment if there is no
e. Incorrect. An economy is viewed as operating at full employment if there is no
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: MACR.MCEACH.17.7.02 - Outline the pros and cons of unemployment insurance
TOPICS: Other Unemployment Issues
53. Full employment:

a. exists when, on average, nearly two out of three adults in the labor force are employed.
b. exists when everyone who wants a job has one.
c. exists when the unemployment rate is zero.
d. exists when everyone in the labor force has a job.
e. will always include some unemployment.
ANSWER: e
FEEDBACK: a. Incorrect. When the economy is at full employment, there is some frictional,
structural, and seasonal unemployment. See 7-2: Other Unemployment Issues
b. Incorrect. When the economy is at full employment, there is some frictional,
c. Incorrect. When the economy is at full employment, there is some frictional,
d. Incorrect. When the economy is at full employment, there is some frictional,
e. Correct. When the economy is at full employment, there is some frictional,
POINTS: 1
DIFFICULTY: Easy
54. Which of the following does not exist when an economy is operating at full employment?
a. An unemployment rate of 5 percent or 6 percent
e. Frictional unemployment
ANSWER: d
FEEDBACK: a. Incorrect. An economy is viewed as operating at full employment if there is no
b. Incorrect. An economy is viewed as operating at full employment if there is no
c. Incorrect. An economy is viewed as operating at full employment if there is no
d. Correct. An economy is viewed as operating at full employment if there is no
e. Incorrect. An economy is viewed as operating at full employment if there is no

POINTS: 1
DIFFICULTY: Easy
55. Full employment is considered a major economic goal because:

a. specialization is not possible without full employment.
b. economic growth can only occur when there is full employment.
c. the opportunity cost of unemployment is lost production.
d. profit maximization of firms can only occur when there is full employment.
e. inflation will be lower when full employment is achieved.
ANSWER: c
FEEDBACK: a. Incorrect. Unemployment imposes a cost on the economy as a whole because
fewer goods and services are produced. See 7-2: Other Unemployment Issues
b. Incorrect. Unemployment imposes a cost on the economy as a whole because
c. Correct. Unemployment imposes a cost on the economy as a whole because
d. Incorrect. Unemployment imposes a cost on the economy as a whole because
e. Incorrect. Unemployment imposes a cost on the economy as a whole because
POINTS: 1
DIFFICULTY: Easy
56. An individual with a Ph.D. in physics who can find employment only in a pizza parlor would be considered:
a. discouraged.
b. underemployed.
c. overemployed.
d. voluntarily unemployed.
e. long-term unemployed.
ANSWER: b
FEEDBACK: a. Incorrect. The problem of underemployment arises because people are counted
as employed even if they can find only part-time work or are overqualified for their
jobs. See 7-2: Other Unemployment Issues
b. Correct. The problem of underemployment arises because people are counted as
employed even if they can find only part-time work or are overqualified for their
c. Incorrect. The problem of underemployment arises because people are counted
d. Incorrect. The problem of underemployment arises because people are counted
e. Incorrect. The problem of underemployment arises because people are counted
POINTS: 1
DIFFICULTY: Easy
57. An increase in unemployment benefits is likely to:

a. reduce a person's incentive to look for work.
b. reduce the opportunity cost of remaining employed.
c. provide a better safety net for employed families.
d. decrease the tax imposed on consumers.
e. increase the need to accept the first job available after becoming unemployed.
ANSWER: a
FEEDBACK: a. Correct. Although unemployment insurance provides a safety net, it may reduce
the urgency of finding work. See 7-2: Other Unemployment Issues
b. Incorrect. Although unemployment insurance provides a safety net, it may reduce
c. Incorrect. Although unemployment insurance provides a safety net, it may reduce
d. Incorrect. Although unemployment insurance provides a safety net, it may reduce
e. Incorrect. Although unemployment insurance provides a safety net, it may reduce
POINTS: 1
DIFFICULTY: Easy
58. Which of the following will most likely qualify for unemployment compensation benefits?
a. A new college graduate who cannot find work despite a desperate job search
b. An unemployed coal miner who has been receiving benefits for the past six months
c. A former retail clerk who quit her job because the boss was too demanding
d. A spot welder who has just gotten his first "pink slip" in the mail after ten years of continuous employment
e. An accountant who was fired from his last position for drinking alcohol on the job
ANSWER: d
FEEDBACK: a. Incorrect. Unemployment compensation benefits go primarily to people who have
involuntarily lost jobs. See 7-2: Other Unemployment Issues
b. Incorrect. Unemployment compensation benefits go primarily to people who have
c. Incorrect. Unemployment compensation benefits go primarily to people who have
d. Correct. Unemployment compensation benefits go primarily to people who have
e. Incorrect. Unemployment compensation benefits go primarily to people who have
POINTS: 1
DIFFICULTY: Easy
59. The official unemployment rate disguises the extent of the unemployment problem because:
a. children are not counted as unemployed.
b. retired persons are not counted as unemployed.
c. full-time students are not counted as unemployed.
d. discouraged workers are counted as unemployed.
e. people overqualified for their current job are not considered unemployed.
ANSWER: e
FEEDBACK: a. Incorrect. Official employment data ignores the problem of underemployment,
which arises when people are counted as employed even if they can find only
part-time work or are overqualified for their full-time jobs. See 7-2: Other
Unemployment Issues
b. Incorrect. Official employment data ignores the problem of underemployment,
Unemployment Issues
c. Incorrect. Official employment data ignores the problem of underemployment,
Unemployment Issues
d. Incorrect. Official employment data ignores the problem of underemployment,
Unemployment Issues
e. Correct. Official employment data ignores the problem of underemployment,
Unemployment Issues
POINTS: 1
DIFFICULTY: Easy
60. Not counting _____ as unemployed understates unemployment.

a. children
b. retired persons
c. students
d. people who do not want to work
e. discouraged workers
ANSWER: e
FEEDBACK: a. Incorrect. Workers who have dropped out of the labor force of an economy
because of frustration are not included in the calculation of the unemployment
figures. See 7-2: Other Unemployment Issues
b. Incorrect. Workers who have dropped out of the labor force of an economy
c. Incorrect. Workers who have dropped out of the labor force of an economy
d. Incorrect. Workers who have dropped out of the labor force of an economy
e. Correct. Workers who have dropped out of the labor force of an economy
POINTS: 1
DIFFICULTY: Easy
61. Underemployment refers to:

a. seasonal unemployment.
b. people working full time though they would rather work part time.
c. the unemployment that occurs when the actual level of employment is less than the full employment level.
d. people working in jobs that do not fully use their skills.
e. people working part time.
ANSWER: d
FEEDBACK: a. Incorrect. The problem of underemployment arises because people are counted
full-time jobs. See 7-2: Other Unemployment Issues
b. Incorrect. The problem of underemployment arises because people are counted
c. Incorrect. The problem of underemployment arises because people are counted
d. Correct. The problem of underemployment arises because people are counted as
employed even if they can find only part-time work or are overqualified for their
e. Incorrect. The problem of underemployment arises because people are counted
POINTS: 1
DIFFICULTY: Easy

62. The unemployment rate does not reflect the true extent of the unemployment problem. Which of the following groups
is not counted as unemployed in the official unemployment statistics?
a. The underemployed and the cyclically unemployed
b. The underemployed and discouraged workers
c. Discouraged workers and the frictionally unemployed
d. The frictionally unemployed and the structurally unemployed
e. The cyclically unemployed and the frictionally unemployed
ANSWER: b
FEEDBACK: a. Incorrect. Official unemployment data ignores discouraged workers and the
workers who can find only part-time work or are overqualified for their full-time
b. Correct. Official unemployment data ignores discouraged workers and the
c. Incorrect. Official unemployment data ignores discouraged workers and the
d. Incorrect. Official unemployment data ignores discouraged workers and the
e. Incorrect. Official unemployment data ignores discouraged workers and the
POINTS: 1
63. The official unemployment rate would be higher if it included the existence of hidden unemployment or individuals
who are:
a. on unemployment compensation.
b. not working.
c. working part time but prefer full-time work.
d. voluntarily retired.
e. unemployed and looking for work.
ANSWER: c
FEEDBACK: a. Incorrect. Counting overqualified and part-time workers as employed tends to
understate the actual amount of unemployment. See 7-2: Other Unemployment
Issues
b. Incorrect. Counting overqualified and part-time workers as employed tends to
Issues
c. Correct. Counting overqualified and part-time workers as employed tends to
Issues
d. Incorrect. Counting overqualified and part-time workers as employed tends to
Issues
e. Incorrect. Counting overqualified and part-time workers as employed tends to
Issues
POINTS: 1
64. Which of the following factors makes the official unemployment rate an overstatement of the actual level of
unemployment in the economy?
a. Inclusion of discouraged workers
b. Inclusion of those only working part time
c. Inclusion of those who are overqualified for their current jobs
d. Inclusion of those who are marginally attached to the labor force
e. Inclusion of those who pretend to look for work in order to qualify for welfare programs
ANSWER: e
FEEDBACK: a. Incorrect. Because unemployment insurance benefits and most welfare programs
require recipients to seek work, some people may go through the motions of
looking for a job just to qualify for these benefits. See 7-2: Other Unemployment
Issues
b. Incorrect. Because unemployment insurance benefits and most welfare programs
Issues
c. Incorrect. Because unemployment insurance benefits and most welfare programs
Issues
d. Incorrect. Because unemployment insurance benefits and most welfare programs
Issues
e. Correct. Because unemployment insurance benefits and most welfare programs
Issues
POINTS: 1
DIFFICULTY: Easy
65. Inflation is:

a. a reduction in everyone's standard of living.

b. a rise in the real prices of all goods and services.
c. a general and continuing rise in the money prices of goods and services.
d. a continuing rise in everyone's standard of living.
e. an increase in the value of money compared to the value of goods.
ANSWER: c
FEEDBACK: a. Incorrect. The annual inflation rate is the percentage increase in the average
price level from one year to the next. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. The annual inflation rate is the percentage increase in the average
c. Correct. The annual inflation rate is the percentage increase in the average price
level from one year to the next. See 7-3: Inflation: Its Measure and Sources
d. Incorrect. The annual inflation rate is the percentage increase in the average
e. Incorrect. The annual inflation rate is the percentage increase in the average
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: MACR.MCEACH.17.7.03 - Define inflation and describe the two sources of inflation
TOPICS: Inflation: Its Measure and Sources
66. Which of the following periods was not characterized by inflation in the U.S. economic history?
a. 1917–1920
b. 1929–1933
c. 1947
d. 1978–1980
e. 1980–1989
ANSWER: b
FEEDBACK: a. Incorrect. Deflation occurred in the United States during the Great Depression.
See 7-3: Inflation: Its Measure and Sources
b. Correct. Deflation occurred in the United States during the Great Depression. See
7-3: Inflation: Its Measure and Sources
c. Incorrect. Deflation occurred in the United States during the Great Depression.
d. Incorrect. Deflation occurred in the United States during the Great Depression.
e. Incorrect. Deflation occurred in the United States during the Great Depression.
POINTS: 1
DIFFICULTY: Easy
67. Suppose the price levels in an economy in four successive years are 100, 120, 133, and 140. Which of the following is
true in such a case?
a. The economy is experiencing hyperinflation.
b. The economy is experiencing deflation.
c. The economy is experiencing inflation.
d. The economy is experiencing increasing inflation.
e. The economy is experiencing disinflation.
ANSWER: c
FEEDBACK: a. Incorrect. Inflation is a sustained increase in an economy’s average price level.
b. Incorrect. Inflation is a sustained increase in an economy’s average price level.
c. Correct. Inflation is a sustained increase in an economy’s average price level.
d. Incorrect. Inflation is a sustained increase in an economy’s average price level.
e. Incorrect. Inflation is a sustained increase in an economy’s average price level.
POINTS: 1
DIFFICULTY: Easy
68. The inflation experienced in the United States during the late 1960s as a result of the spending on the Vietnam War is
an example of:
a. hyperinflation.
b. demand-pull inflation.
c. disinflation.
d. cost-push inflation.
e. cyclical inflation.
ANSWER: b
FEEDBACK: a. Incorrect. The U.S. inflation during the late 1960s was a result of increase in
federal spending for the Vietnam War that boosted aggregate demand in the
economy. See 7-3: Inflation: Its Measure and Sources
b. Correct. The U.S. inflation during the late 1960s was a result of increase in
c. Incorrect. The U.S. inflation during the late 1960s was a result of increase in
d. Incorrect. The U.S. inflation during the late 1960s was a result of increase in
e. Incorrect. The U.S. inflation during the late 1960s was a result of increase in
POINTS: 1
DIFFICULTY: Easy

69. The inflation experienced in the United States during the 1970s as a result of OPEC oil price increases is an example
of:
a. demand-pull inflation.
b. hyperinflation.
c. cost-push inflation.
d. cyclical inflation.
e. disinflation.
ANSWER: c
FEEDBACK: a. Incorrect. Inflation stemming from increases in the cost of production that push up
the price level is called cost-push inflation. See 7-3: Inflation: Its Measure and
Sources
b. Incorrect. Inflation stemming from increases in the cost of production that push up
Sources
c. Correct. Inflation stemming from increases in the cost of production that push up
Sources
d. Incorrect. Inflation stemming from increases in the cost of production that push up
Sources
e. Incorrect. Inflation stemming from increases in the cost of production that push up
Sources
POINTS: 1
DIFFICULTY: Easy
70. If the aggregate demand curve shifts rightward, then _____.

a. the price level increases and output decreases
b. the resulting increase in the price level is usually called cost-push inflation
c. the resulting increase in the price level is usually called demand-pull inflation
d. the price level increases as long as the aggregate supply curve shifts leftward
e. the price level decreases and output decreases
ANSWER: c
FEEDBACK: a. Incorrect. Inflation resulting from increases in aggregate demand is called
demand-pull inflation. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. Inflation resulting from increases in aggregate demand is called
c. Correct. Inflation resulting from increases in aggregate demand is called demand-
pull inflation. See 7-3: Inflation: Its Measure and Sources
d. Incorrect. Inflation resulting from increases in aggregate demand is called

e. Incorrect. Inflation resulting from increases in aggregate demand is called
POINTS: 1
DIFFICULTY: Easy
71. If the aggregate supply curve shifts leftward, then _____.

a. the price level increases and output increases
b. the resulting increase in the price level is usually called cost-push inflation
c. the resulting increase in the price level is usually called demand-pull inflation
d. the price level increases as long as the aggregate demand curve shifts rightward
e. the price level decreases and output increases
ANSWER: b
FEEDBACK: a. Incorrect. Inflation stemming from decreases in aggregate supply is called cost-
push inflation. See 7-3: Inflation: Its Measure and Sources
b. Correct. Inflation stemming from decreases in aggregate supply is called cost-
c. Incorrect. Inflation stemming from decreases in aggregate supply is called cost-
d. Incorrect. Inflation stemming from decreases in aggregate supply is called cost-
e. Incorrect. Inflation stemming from decreases in aggregate supply is called cost-
POINTS: 1
DIFFICULTY: Easy
72. Inflation can be caused:

a. only by increases in aggregate demand.
b. only by increases in aggregate supply.
c. only by decreases in aggregate supply.
d. by increases in aggregate supply or decreases in aggregate demand.
e. by increases in aggregate demand or decreases in aggregate supply.
ANSWER: e
FEEDBACK: a. Incorrect. Inflation can be caused by increases in aggregate demand or
decreases in aggregate supply. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. Inflation can be caused by increases in aggregate demand or
c. Incorrect. Inflation can be caused by increases in aggregate demand or
d. Incorrect. Inflation can be caused by increases in aggregate demand or
e. Correct. Inflation can be caused by increases in aggregate demand or decreases
in aggregate supply. See 7-3: Inflation: Its Measure and Sources
POINTS: 1
DIFFICULTY: Easy
73. The following image shows the aggregate demand and aggregate supply curves of an economy. In the graph below,
the rise in the price levels from P1 to P2 is a result of:
a. cost-pull inflation.
b. cost-push inflation.
c. demand-push inflation.
d. demand-pull inflation.
e. induced inflation.
ANSWER: d
FEEDBACK: a. Incorrect. Inflation resulting from increases in aggregate demand is called
b. Incorrect. Inflation resulting from increases in aggregate demand is called
c. Incorrect. Inflation resulting from increases in aggregate demand is called
d. Correct. Inflation resulting from increases in aggregate demand is called demand-
pull inflation. See 7-3: Inflation: Its Measure and Sources
e. Incorrect. Inflation resulting from increases in aggregate demand is called
POINTS: 1
DIFFICULTY: Easy

74. Cost-push inflation:
a. occurs when the aggregate demand curve shifts rightward.
b. occurs when the aggregate supply curve shifts rightward.
c. results in a decrease in the unemployment rate.
d. results in a movement along the aggregate demand curve.
e. is caused by the same factors that lead to demand-pull inflation.
ANSWER: d
FEEDBACK: a. Incorrect. To generate sustained and continuous cost-push inflation, the
aggregate supply curve would have to keep shifting left along a given aggregate
demand curve. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. To generate sustained and continuous cost-push inflation, the
c. Incorrect. To generate sustained and continuous cost-push inflation, the
d. Correct. To generate sustained and continuous cost-push inflation, the aggregate
supply curve would have to keep shifting left along a given aggregate demand
curve. See 7-3: Inflation: Its Measure and Sources
e. Incorrect. To generate sustained and continuous cost-push inflation, the
POINTS: 1
DIFFICULTY: Easy
75. One of the most widely reported measures of inflation is the:

a. consumer price index.
b. producer price index.
c. GDP deflator.
d. Gini coefficient.
e. real interest rate.
ANSWER: a
FEEDBACK: a. Correct. One of the most widely reported measures of inflation is the consumer
price index. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. One of the most widely reported measures of inflation is the consumer
c. Incorrect. One of the most widely reported measures of inflation is the consumer
d. Incorrect. One of the most widely reported measures of inflation is the consumer
e. Incorrect. One of the most widely reported measures of inflation is the consumer
POINTS: 1
DIFFICULTY: Easy

76. The consumer price index measures:

a. the cost of all goods and services produced in the U.S. economy.
b. the average change over time in the selling prices received by domestic producers for their output.
c. the cost of a fixed market basket of consumer goods and services produced in the U.S. economy.
d. the ratio of an economy’s nominal GDP to its real GDP.
e. the income distribution of an economy.
ANSWER: c
FEEDBACK: a. Incorrect. The consumer price index measures changes in the price level of a
market basket of consumer goods and services purchased by households over
time. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. The consumer price index measures changes in the price level of a
c. Correct. The consumer price index measures changes in the price level of a
d. Incorrect. The consumer price index measures changes in the price level of a
e. Incorrect. The consumer price index measures changes in the price level of a
POINTS: 1
DIFFICULTY: Easy
77. If the CPI in the United States was 150 in 2003 and 160 in 2004, the inflation rate over the year is _____.
a. 10 percent
b. 20 percent
c. 7 percent
d. 30 percent
e. 50 percent
ANSWER: c
FEEDBACK: a. Incorrect. The annual rate of inflation is the annual rate of change in the CPI. See
b. Incorrect. The annual rate of inflation is the annual rate of change in the CPI. See
c. Correct. The annual rate of inflation is the annual rate of change in the CPI. See
d. Incorrect. The annual rate of inflation is the annual rate of change in the CPI. See
e. Incorrect. The annual rate of inflation is the annual rate of change in the CPI. See
POINTS: 1
DIFFICULTY: Easy
78. If the CPI is 200, then the price level has _____ since the base year.
a. doubled
b. quadrupled
c. tripled
d. increased five times
e. increased six times
ANSWER: a
FEEDBACK: a. Correct. The annual rate of inflation is the annual rate of change in the CPI. See
b. Incorrect. The annual rate of inflation is the annual rate of change in the CPI. See
c. Incorrect. The annual rate of inflation is the annual rate of change in the CPI. See
d. Incorrect. The annual rate of inflation is the annual rate of change in the CPI. See
e. Incorrect. The annual rate of inflation is the annual rate of change in the CPI. See
POINTS: 1
DIFFICULTY: Easy
79. Which of the following is true about U.S. history prior to the 1950s?
a. The inflation rate remained constant during this period.
b. Cost-push inflation led to depressions, which were followed by slowly-rising price levels.
c. The price level remained constant during this period.
d. Major wars resulted in high inflation rates, after which the inflation rate tapered off.
e. Major wars resulted in high inflation rates that were usually followed by deflation.
ANSWER: e
FEEDBACK: a. Incorrect. Prior to the 1950s, high inflation was war-related and was usually
followed by deflation. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. Prior to the 1950s, high inflation was war-related and was usually
c. Incorrect. Prior to the 1950s, high inflation was war-related and was usually
d. Incorrect. Prior to the 1950s, high inflation was war-related and was usually
e. Correct. Prior to the 1950s, high inflation was war-related and was usually
POINTS: 1
DIFFICULTY: Easy
80. Which of the following decades was characterized by the highest inflation rate in the U.S.?
a. 1920s
b. 1930s
c. 1950s
d. 1970s
e. 1960s
ANSWER: d
FEEDBACK: a. Incorrect. Since 1940, the price level in the U.S. economy has risen steadily,
especially during the 1970s. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. Since 1940, the price level in the U.S. economy has risen steadily,
c. Incorrect. Since 1940, the price level in the U.S. economy has risen steadily,
d. Correct. Since 1940, the price level in the U.S. economy has risen steadily,
e. Incorrect. Since 1940, the price level in the U.S. economy has risen steadily,
POINTS: 1
DIFFICULTY: Easy
81. Since the end of World War II, the U.S. price level has:
a. increased tenfold.
b. increased by an average of 10 percent each year.
c. increased and decreased with equal regularity, leaving the price level almost constant.
d. increased by 50 percent.
e. doubled.
ANSWER: a
FEEDBACK: a. Correct. Since the end of World War II, the CPI in the U.S. economy has
increased tenfold. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. Since the end of World War II, the CPI in the U.S. economy has
c. Incorrect. Since the end of World War II, the CPI in the U.S. economy has
d. Incorrect. Since the end of World War II, the CPI in the U.S. economy has
e. Incorrect. Since the end of World War II, the CPI in the U.S. economy has
POINTS: 1
DIFFICULTY: Easy
82. Since 1980, _____ has experienced deflation.

a. the U.S.
b. France
c. Germany
d. Japan
e. Italy
ANSWER: d
FEEDBACK: a. Incorrect. Inflation rates in Japan were consistently lower, even dipping into
deflation from 2005 to 2011. See 7-3: Inflation: Its Measure and Sources
b. Incorrect. Inflation rates in Japan were consistently lower, even dipping into
c. Incorrect. Inflation rates in Japan were consistently lower, even dipping into
d. Correct. Inflation rates in Japan were consistently lower, even dipping into
e. Incorrect. Inflation rates in Japan were consistently lower, even dipping into
POINTS: 1
DIFFICULTY: Easy
83. Since World War II, the consumer price index has increased by an average of _____.
a. 1.4 percent per year
b. 2.1 percent per year
c. 6.4 percent per year
d. 5.6 percent per year
e. 3.5 percent per year
ANSWER: e
FEEDBACK: a. Incorrect. Since the end of World War II, the CPI in the U.S. economy has
increased by an average of 3.5 percent per year. See 7-3: Inflation: Its Measure
and Sources
b. Incorrect. Since the end of World War II, the CPI in the U.S. economy has
and Sources
c. Incorrect. Since the end of World War II, the CPI in the U.S. economy has
and Sources

d. Incorrect. Since the end of World War II, the CPI in the U.S. economy has
and Sources
e. Correct. Since the end of World War II, the CPI in the U.S. economy has
and Sources
POINTS: 1
DIFFICULTY: Easy
84. Which of the following is likely to be an effect of inflation?

a. An increase in the willingness of lenders to lend money for longer periods
b. A decrease in the willingness of borrowers to borrow money for longer periods
c. A decrease in the purchasing power of lenders in the economy
d. An increase in the willingness of people to buy bonds as a hedge against rising prices
e. An increase in the willingness of people to buy physical assets as a hedge against rising prices
ANSWER: c
FEEDBACK: a. Incorrect. If inflation is unexpectedly high—higher than the nominal interest rate—
then the real interest rate would be negative. In this case, the nominal interest
earned for lending money would not even cover the loss of spending power
caused by inflation. See 7-4: Effects of Inflation
b. Incorrect. If inflation is unexpectedly high—higher than the nominal interest rate—
c. Correct. If inflation is unexpectedly high—higher than the nominal interest rate—
d. Incorrect. If inflation is unexpectedly high—higher than the nominal interest rate—
e. Incorrect. If inflation is unexpectedly high—higher than the nominal interest rate—
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: MACR.MCEACH.17.7.04 - Explain how unanticipated inflation harms some individuals and
harms the economy as a whole
TOPICS: Effects of Inflation
85. Suppose the nominal wages of workers in an economy increase by 7 percent while the price level rises by 5 percent.
The real wages:
a. would increase by about 2 percent.
b. would decrease by about 5 percent.
c. would increase by about 50 percent.
d. would increase by about 10 percent.
e. would decrease by about 25 percent.
ANSWER: a
FEEDBACK: a. Correct. Real wages are defined as nominal wages adjusted for the price level.
See 7-4: Effects of Inflation
b. Incorrect. Real wages are defined as nominal wages adjusted for the price level.
c. Incorrect. Real wages are defined as nominal wages adjusted for the price level.
d. Incorrect. Real wages are defined as nominal wages adjusted for the price level.
e. Incorrect. Real wages are defined as nominal wages adjusted for the price level.
POINTS: 1
DIFFICULTY: Easy
86. Suppose there is a 3 percent increase in the nominal wages of workers in an economy. The annual rate of inflation in
the economy is about 6 percent. Which of the following is true in this case?
a. Real wages would fall by about 3 percent.
b. Real wages would increase by about 20 percent.
c. Real wages would fall by about 25 percent.
d. Real wages would increase by about 50 percent.
e. Real wages would increase by about 10 percent.
ANSWER: a
FEEDBACK: a. Correct. Real wages refer to wages in terms of the amount of goods and services
that can be bought. See 7-4: Effects of Inflation
b. Incorrect. Real wages refer to wages in terms of the amount of goods and
services that can be bought. See 7-4: Effects of Inflation
c. Incorrect. Real wages refer to wages in terms of the amount of goods and
d. Incorrect. Real wages refer to wages in terms of the amount of goods and
e. Incorrect. Real wages refer to wages in terms of the amount of goods and
POINTS: 1
DIFFICULTY: Easy

87. Suppose there is a 5 percent increase in the nominal wages of workers in an economy. The annual rate of inflation in
the economy is about 2 percent. Which of the following is true in this case?
a. Real wage would fall by about 10 percent.
b. Real wage would increase by about 20 percent.
c. Real wage would fall by about 25 percent.
d. Real wage would increase by about 50 percent.
e. Real wage would increase by about 3 percent.
ANSWER: e
FEEDBACK: a. Incorrect. Real wages refer to wages that have been adjusted for inflation. See 7-
4: Effects of Inflation
b. Incorrect. Real wages refer to wages that have been adjusted for inflation. See 7-
c. Incorrect. Real wages refer to wages that have been adjusted for inflation. See 7-
d. Incorrect. Real wages refer to wages that have been adjusted for inflation. See 7-
e. Correct. Real wages refers to wages that have been adjusted for inflation. See 7-
POINTS: 1
DIFFICULTY: Easy
88. A decrease in a person's real wage necessarily means:

a. lower purchasing power.
b. a lower nominal wage.
c. a lower personal disposable income.
d. a higher nominal wage.
e. a higher personal disposable income.
ANSWER: a
FEEDBACK: a. Correct. Real wage is wage measured in dollars of constant purchasing power.
b. Incorrect. Real wage is wage measured in dollars of constant purchasing power.
c. Incorrect. Real wage is wage measured in dollars of constant purchasing power.
d. Incorrect. Real wage is wage measured in dollars of constant purchasing power.
e. Incorrect. Real wage is wage measured in dollars of constant purchasing power.
POINTS: 1
DIFFICULTY: Easy

89. If the inflation rate in an economy is 5 percent and the income earned by workers increases by 5 percent, then _____.
a. nominal income declines and real income increases
b. both nominal income and real income increase by 5 percent
c. nominal income increases and real income declines
d. both nominal income and real income decrease by 5 percent
e. nominal income increases by 5 percent and real income is unchanged
ANSWER: e
FEEDBACK: a. Incorrect. Real wage is the ratio of nominal wage to the price level in the
economy. See 7-4: Effects of Inflation
b. Incorrect. Real wage is the ratio of nominal wage to the price level in the
c. Incorrect. Real wage is the ratio of nominal wage to the price level in the
d. Incorrect. Real wage is the ratio of nominal wage to the price level in the
e. Correct. Real wage is the ratio of nominal wage to the price level in the economy.
POINTS: 1
DIFFICULTY: Easy
90. Suppose an economy had an inflation rate of 7 percent last year. This has decreased to 6 percent this year. This means
that the economy is:
a. suffering from hyperinflation.
b. experiencing deflation.
c. experiencing disinflation.
d. experiencing a wage-price spiral.
e. experiencing a decrease in real wage.
ANSWER: c
FEEDBACK: a. Incorrect. A decrease in the rate of inflation over the years is referred to as
disinflation. See 7-4: Effects of Inflation
b. Incorrect. A decrease in the rate of inflation over the years is referred to as
c. Correct. A decrease in the rate of inflation over the years is referred to as
d. Incorrect. A decrease in the rate of inflation over the years is referred to as
e. Incorrect. A decrease in the rate of inflation over the years is referred to as
POINTS: 1
DIFFICULTY: Easy

91. If the inflation rate in an economy is higher than expected, which of the following groups in the society would be most
likely to gain?
a. Borrowers
b. Lenders
c. Persons holding large amounts of money
d. Persons on fixed incomes
e. Workers under contract without a cost of living adjustment
ANSWER: a
FEEDBACK: a. Correct. If inflation is higher than expected, the winners are those who agreed to
pay the previous price. See 7-4: Effects of Inflation
b. Incorrect. If inflation is higher than expected, the winners are those who agreed to
c. Incorrect. If inflation is higher than expected, the winners are those who agreed to
d. Incorrect. If inflation is higher than expected, the winners are those who agreed to
e. Incorrect. If inflation is higher than expected, the winners are those who agreed to
POINTS: 1
DIFFICULTY: Easy
92. Which of the following is true about inflation?

a. Inflation promotes social harmony by uniting people against the government.
b. Inflation is more damaging if it is unanticipated.
c. Accurate anticipation of inflation is possible for everyone who is well informed about economic events.
d. Those who lend money at a rate above the rate of inflation suffer economic losses.
e. If people accurately anticipate inflation, their actions will prevent it.
ANSWER: b
FEEDBACK: a. Incorrect. Unanticipated inflation creates more problems than anticipated inflation.
b. Correct. Unanticipated inflation creates more problems than anticipated inflation.
c. Incorrect. Unanticipated inflation creates more problems than anticipated inflation.
d. Incorrect. Unanticipated inflation creates more problems than anticipated inflation.
e. Incorrect. Unanticipated inflation creates more problems than anticipated inflation.
POINTS: 1
DIFFICULTY: Easy
93. The higher the expected inflation, _____.

a. the higher the nominal rate of interest that lenders require and that borrowers are willing to pay
b. the lower the nominal rate of interest that lenders require and that borrowers are willing to pay
c. the higher the nominal rate of interest that lenders require and the lower the nominal rate of interest that
borrowers are willing to pay
d. the higher the real interest rate that lenders require
e. the higher the real interest rate that borrowers are willing to pay
ANSWER: a
FEEDBACK: a. Correct. The higher the expected inflation, the higher the nominal rate of interest
that lenders require to cover the expected inflation. Further, the higher the
expected inflation, the higher the nominal rate of interest that borrowers are
willing to pay because the nominal interest rate will be compensated for by the
expected reduction in the amount of real goods that will have to be paid back to
discharge the loan. See 7-4: Effects of Inflation
b. Incorrect. The higher the expected inflation, the higher the nominal rate of interest
c. Incorrect. The higher the expected inflation, the higher the nominal rate of interest
d. Incorrect. The higher the expected inflation, the higher the nominal rate of interest
e. Incorrect. The higher the expected inflation, the higher the nominal rate of interest
POINTS: 1
94. If inflation is much higher than originally anticipated, _____ are better off and _____ are worse off.
a. lenders who extended loans at fixed interest rates; people who borrowed at fixed interest rates
b. people who borrowed at fixed interest rates; banks that extended loans at fixed interest rates
c. retired people living on a fixed income; people who had borrowed fixed interest rate loans
d. people who deposited their savings at fixed interest rates; banks that accepted deposits at fixed interest rates
e. oil refiners who signed labor contracts agreeing to pay their workers the cost-of-living wage; workers who
receive that cost-of-living wage
ANSWER: b
FEEDBACK: a. Incorrect. If inflation is much higher than originally anticipated, people who had
borrowed at fixed interest rates are better off and banks that had extended loans
at fixed interest rates are worse off. See 7-4: Effects of Inflation
b. Correct. If inflation is much higher than originally anticipated, people who had
c. Incorrect. If inflation is much higher than originally anticipated, people who had
d. Incorrect. If inflation is much higher than originally anticipated, people who had
e. Incorrect. If inflation is much higher than originally anticipated, people who had
POINTS: 1
95. The higher the anticipated inflation rate, _____.

a. the more workers will ask for in wages and the more firms will agree to pay
b. the more workers will ask for in wages and the less firms will agree to pay
c. the less workers will ask for in wages and the less firms will agree to pay
d. the higher the real wage increases offered by firms
e. the higher the real wage increases asked for by workers
ANSWER: a
FEEDBACK: a. Correct. The higher the expected inflation, the higher the nominal wage that
workers will require and the higher the nominal wage that firms are willing to pay.
b. Incorrect. The higher the expected inflation, the higher the nominal wage that
c. Incorrect. The higher the expected inflation, the higher the nominal wage that
d. Incorrect. The higher the expected inflation, the higher the nominal wage that
e. Incorrect. The higher the expected inflation, the higher the nominal wage that
POINTS: 1
96. During periods when the inflation rate fluctuates widely, _____.
a. the nominal interest rate and the real interest rate are identical
b. all money prices rise at the same rate, causing relative prices to increase
c. suppliers link the selling prices of their goods to the overall inflation rate
d. uncertainty about changes in relative prices causes a decrease in economic efficiency
e. all money prices increase at the same rate, leaving relative prices constant
ANSWER: d
FEEDBACK: a. Incorrect. During periods of volatile inflation, there is greater uncertainty about the
price of one good relative to another—that is, about relative prices. See 7-4:
Effects of Inflation
b. Incorrect. During periods of volatile inflation, there is greater uncertainty about the
c. Incorrect. During periods of volatile inflation, there is greater uncertainty about the
d. Correct. During periods of volatile inflation, there is greater uncertainty about the
e. Incorrect. During periods of volatile inflation, there is greater uncertainty about the
POINTS: 1
DIFFICULTY: Easy
97. If the expected inflation rate is 4 percent and the nominal interest rate is 9 percent, the expected real interest rate is
_____.
a. 13 percent
b. −5 percent
c. 9 percent
d. −13 percent

e. 5 percent
ANSWER: e
FEEDBACK: a. Incorrect. Expected real interest rate = nominal interest rate – expected inflation
rate. See 7-4: Effects of Inflation
b. Incorrect. Expected real interest rate = nominal interest rate – expected inflation
c. Incorrect. Expected real interest rate = nominal interest rate – expected inflation
d. Incorrect. Expected real interest rate = nominal interest rate – expected inflation
e. Correct. Expected real interest rate = nominal interest rate – expected inflation
POINTS: 1
DIFFICULTY: Easy
98. If future price changes were perfectly anticipated by both borrowers and lenders, then _____.
a. the expected real interest rate would be higher than the actual rate
b. the expected real interest rate would lower than the actual rate
c. the real interest rate in the future would decrease by the amount of the price increase
d. the real interest rate in the future would increase by the amount of the price increase
e. the real interest rate in the future would remain unchanged
ANSWER: e
FEEDBACK: a. Incorrect. When inflation is perfectly anticipated, expected real interest rate
equals actual real interest rate. See 7-4: Effects of Inflation
b. Incorrect. When inflation is perfectly anticipated, expected real interest rate
c. Incorrect. When inflation is perfectly anticipated, expected real interest rate
d. Incorrect. When inflation is perfectly anticipated, expected real interest rate
e. Correct. When inflation is perfectly anticipated, expected real interest rate equals
actual real interest rate. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy
99. In periods of high inflation, _____.

a. people want to hold as much money as possible
b. the purchasing power of money decreases

c. the real interest rate exceeds the nominal interest rate
d. the nominal interest rates are likely to be low
e. the nominal interest rate equals the real interest rate
ANSWER: b
FEEDBACK: a. Incorrect. Higher inflation causes the purchasing power of money to erode. See
7-4: Effects of Inflation
b. Correct. Higher inflation causes the purchasing power of money to erode. See 7-
c. Incorrect. Higher inflation causes the purchasing power of money to erode. See
d. Incorrect. Higher inflation causes the purchasing power of money to erode. See
e. Incorrect. Higher inflation causes the purchasing power of money to erode. See
POINTS: 1
DIFFICULTY: Easy
100. The nominal interest rate:

a. varies directly with the rate of expected inflation in an economy.
b. is the interest rate expressed in dollars of constant purchasing power.
c. equals the difference between the real interest rate and the inflation rate.
d. is the basis for decisions taken by the lenders and the borrowers in an economy.
e. is the percentage increase in the average price level from one year to the next.
ANSWER: a
FEEDBACK: a. Correct. The higher the expected inflation rate, the higher the nominal rate of
interest that lenders require and that borrowers are willing to pay. See 7-4: Effects
of Inflation
b. Incorrect. The higher the expected inflation rate, the higher the nominal rate of
of Inflation
c. Incorrect. The higher the expected inflation rate, the higher the nominal rate of
of Inflation
d. Incorrect. The higher the expected inflation rate, the higher the nominal rate of
of Inflation
e. Incorrect. The higher the expected inflation rate, the higher the nominal rate of
of Inflation
POINTS: 1
DIFFICULTY: Easy

101. A worker would be hurt least by inflation when the:

a. worker anticipates inflation and increases savings at the bank.
b. worker is protected by a cost-of-living adjustment clause in an employment contract.
c. the price level increases but at a decreasing rate.
d. worker is protected by fixed annual increases in wages and benefits in an employment contract.
e. government increases the level of social security retirement benefits to correct for the effects of unanticipated
inflation.
ANSWER: b
FEEDBACK: a. Incorrect. An employer who signs labor contracts agreeing to pay their workers
cost-of-living wage increases have to increase wages based on changes in
inflation. See 7-4: Effects of Inflation
b. Correct. An employer who signs labor contracts agreeing to pay their workers
c. Incorrect. An employer who signs labor contracts agreeing to pay their workers
d. Incorrect. An employer who signs labor contracts agreeing to pay their workers
e. Incorrect. An employer who signs labor contracts agreeing to pay their workers
POINTS: 1
DIFFICULTY: Easy
102. Uncertainty about inflation:

a. shifts the attention of business managers away from exchange rate movements and toward concerns about
productivity.
b. reduces the difficulty of making international business decisions.
c. make suppliers link the selling prices of their goods to the overall inflation rate.
d. undermines money's importance as a link between the present and the future.
e. makes contracts easier to negotiate.
ANSWER: d
FEEDBACK: a. Incorrect. If inflation changes unexpectedly, the future is cloudier. Thus, planning
gets harder. See 7-4: Effects of Inflation
b. Incorrect. If inflation changes unexpectedly, the future is cloudier. Thus, planning
c. Incorrect. If inflation changes unexpectedly, the future is cloudier. Thus, planning
d. Correct. If inflation changes unexpectedly, the future is cloudier. Thus, planning
e. Incorrect. If inflation changes unexpectedly, the future is cloudier. Thus, planning
POINTS: 1
DIFFICULTY: Easy
103. Unanticipated inflation penalizes:

a. those who are saving.
b. those who are borrowing.
c. governments.
d. those who are in high-growth industries where wages are growing faster than prices.
e. those who can't find jobs at any wage rate.
ANSWER: a
FEEDBACK: a. Correct. If inflation is higher than expected, the losers are those who agreed to
sell at a price that anticipated lower inflation and the winners are those who
agreed to pay that price. See 7-4: Effects of Inflation
b. Incorrect. If inflation is higher than expected, the losers are those who agreed to
c. Incorrect. If inflation is higher than expected, the losers are those who agreed to
d. Incorrect. If inflation is higher than expected, the losers are those who agreed to
e. Incorrect. If inflation is higher than expected, the losers are those who agreed to
POINTS: 1
DIFFICULTY: Easy
104. The problems of inflation are caused primarily by:

a. greed on the part of sellers.
b. uncertainty about inflation.
c. too much incentive to lend money.
d. greed on the part of union leaders.
e. governments' actions to reduce the effects of inflation.
ANSWER: b
FEEDBACK: a. Incorrect. Uncertainty is the major problem created by inflation. See 7-4: Effects
of Inflation
b. Correct. Uncertainty is the major problem created by inflation. See 7-4: Effects of
Inflation
c. Incorrect. Uncertainty is the major problem created by inflation. See 7-4: Effects
of Inflation
d. Incorrect. Uncertainty is the major problem created by inflation. See 7-4: Effects
of Inflation
e. Incorrect. Uncertainty is the major problem created by inflation. See 7-4: Effects
of Inflation
POINTS: 1
DIFFICULTY: Easy
105. In the market for loanable funds, the equilibrium interest rate is determined by the intersection of:
a. the downward-sloping supply curve for loanable funds and the upward-sloping demand curve for loanable
funds.
b. the upward-sloping supply curve for loanable funds and the downward-sloping demand curve for loanable
funds.
c. the downward-sloping supply curve of loanable funds and the horizontal demand curve for loanable funds.
d. the downward-sloping supply curve of loanable funds and the vertical demand curve for loanable funds.
e. the upward-sloping supply curve for loanable funds and the horizontal demand curve for loanable funds.
ANSWER: b
FEEDBACK: a. Incorrect. The upward-sloping supply of the loanable funds curve and the
downward-sloping demand for the loanable funds curve intersect to yield the
equilibrium nominal interest rate in the market for loanable funds. See 7-4: Effects
of Inflation
b. Correct. The upward-sloping supply of the loanable funds curve and the
of Inflation
c. Incorrect. The upward-sloping supply of the loanable funds curve and the
of Inflation
d. Incorrect. The upward-sloping supply of the loanable funds curve and the
of Inflation
e. Incorrect. The upward-sloping supply of the loanable funds curve and the
of Inflation
POINTS: 1
DIFFICULTY: Easy
106. If the nominal interest rate is 5 percent and there is no inflation, _____.
a. the real interest rate exceeds 5 percent
b. the real interest rate is less than 5 percent
c. the real interest rate is 5 percent
d. there is not enough information to determine the real interest rate
e. the real interest rate is zero
ANSWER: c
FEEDBACK: a. Incorrect. Real interest rate = nominal interest rate − inflation rate. See 7-4:
b. Incorrect. Real interest rate = nominal interest rate − inflation rate. See 7-4:
c. Correct. Real interest rate = nominal interest rate − inflation rate. See 7-4: Effects
of Inflation
d. Incorrect. Real interest rate = nominal interest rate − inflation rate. See 7-4:
e. Incorrect. Real interest rate = nominal interest rate − inflation rate. See 7-4:
POINTS: 1
DIFFICULTY: Easy
107. If two parties to a loan contract agree that the lender should earn an 8 percent increase in purchasing power as a
result of a loan and if the inflation rate is 5 percent, the nominal interest rate is _____.
a. 13 percent
b. 8 percent
c. 5 percent
d. 3 percent
e. 1 percent
ANSWER: a
FEEDBACK: a. Correct. Nominal interest rate = real interest rate + inflation rate. See 7-4: Effects
of Inflation
b. Incorrect. Nominal interest rate = real interest rate + inflation rate. See 7-4:
c. Incorrect. Nominal interest rate = real interest rate + inflation rate. See 7-4:
d. Incorrect. Nominal interest rate = real interest rate + inflation rate. See 7-4:
e. Incorrect. Nominal interest rate = real interest rate + inflation rate. See 7-4:
POINTS: 1
DIFFICULTY: Easy
108. An increase in the interest rate, other things constant, will:

a. shift the supply of loanable funds curve to the left.
b. shift the supply of loanable funds curve to the right.
c. increase the quantity of loanable funds supplied.
d. shift the demand for loanable funds curve to the left.
e. increase the quantity of loanable funds demanded.
ANSWER: c
FEEDBACK: a. Incorrect. The greater the interest rate, other things constant, the greater the
reward for lending money. See 7-4: Effects of Inflation
b. Incorrect. The greater the interest rate, other things constant, the greater the
c. Correct. The greater the interest rate, other things constant, the greater the
d. Incorrect. The greater the interest rate, other things constant, the greater the
e. Incorrect. The greater the interest rate, other things constant, the greater the
POINTS: 1
DIFFICULTY: Easy
109. A decrease in the interest rate, other things constant, will:

a. shift the supply of loanable funds curve to the left.
b. shift the supply of loanable funds curve to the right.
c. decrease the quantity of loanable funds demanded.
d. decrease the quantity of loanable funds supplied.
e. shift the demand for loanable funds curve to the right.
ANSWER: d
FEEDBACK: a. Incorrect. The lower the interest rate, other things constant, the lower the reward
for lending money. See 7-4: Effects of Inflation
b. Incorrect. The lower the interest rate, other things constant, the lower the reward
c. Incorrect. The lower the interest rate, other things constant, the lower the reward
d. Correct. The lower the interest rate, other things constant, the lower the reward
e. Incorrect. The lower the interest rate, other things constant, the lower the reward
POINTS: 1
DIFFICULTY: Easy

110. A decrease in the interest rate, other things constant, will:

a. shift the demand for loanable funds curve to the right.
b. shift the demand for loanable funds curve to the left.
c. increase the quantity of loanable funds demanded.
d. increase the quantity of loanable funds supplied.
e. shift the supply of loanable funds curve to the right.
ANSWER: c
FEEDBACK: a. Incorrect. The lower the interest rate, other things constant, the cheaper the cost
of borrowing. See 7-4: Effects of Inflation
b. Incorrect. The lower the interest rate, other things constant, the cheaper the cost
c. Correct. The lower the interest rate, other things constant, the cheaper the cost of
borrowing. See 7-4: Effects of Inflation
d. Incorrect. The lower the interest rate, other things constant, the cheaper the cost
e. Incorrect. The lower the interest rate, other things constant, the cheaper the cost
POINTS: 1
DIFFICULTY: Easy
111. An increase in the interest rate, other things constant, will:

a. shift the demand for loanable funds curve to the right.
b. shift the demand for loanable funds curve to the left.
c. decrease the quantity of loanable funds supplied.
d. decrease the quantity of loanable funds demanded.
e. shift the supply of loanable funds curve to the right.
ANSWER: d
FEEDBACK: a. Incorrect. The higher the interest rate, other things constant, the dearer the cost
b. Incorrect. The higher the interest rate, other things constant, the dearer the cost
c. Incorrect. The higher the interest rate, other things constant, the dearer the cost
d. Correct. The higher the interest rate, other things constant, the dearer the cost of
borrowing. See 7-4: Effects of Inflation
e. Incorrect. The higher the interest rate, other things constant, the dearer the cost

POINTS: 1
DIFFICULTY: Easy
112. Which of the following is likely to happen if people suddenly become more willing to lend money?
a. An increase in demand for loanable funds will increase the interest rate.
b. An increase in the supply of loanable funds will increase the interest rate.
c. An increase in the supply of loanable funds will decrease the interest rate.
d. An increase in demand for loanable funds will decrease the interest rate.
e. A simultaneous increase in both the supply of and demand for loanable funds makes it impossible to predict
what will happen to the rate of interest.
ANSWER: c
FEEDBACK: a. Incorrect. As the supply of loanable funds increases, the supply curve of loanable
funds shifts rightward, resulting in a decrease in the nominal interest rate. See 7-
b. Incorrect. As the supply of loanable funds increases, the supply curve of loanable
c. Correct. As the supply of loanable funds increases, the supply curve of loanable
d. Incorrect. As the supply of loanable funds increases, the supply curve of loanable
e. Incorrect. As the supply of loanable funds increases, the supply curve of loanable
POINTS: 1
DIFFICULTY: Easy
113. Raul borrowed $1,000 from Marta for a year and agreed to repay her $1,050 at the end of the year. If the inflation
rate was 3 percent, which of the following is the real rate of interest Marta received?
a. 10 percent
b. 5 percent
c. 3 percent
d. 2 percent
e. −2 percent
ANSWER: d
FEEDBACK: a. Incorrect. The real interest rate equals the difference between the nominal
interest rate and the inflation rate. See 7-4: Effects of Inflation
b. Incorrect. The real interest rate equals the difference between the nominal
c. Incorrect. The real interest rate equals the difference between the nominal
d. Correct. The real interest rate equals the difference between the nominal interest
rate and the inflation rate. See 7-4: Effects of Inflation
e. Incorrect. The real interest rate equals the difference between the nominal
POINTS: 1
DIFFICULTY: Easy
114. Tony lent Dave $1,000 for one year with the understanding that Dave would repay $1,070. If the actual inflation rate
was 7 percent, then the real rate of interest Tony received is _____.
a. 14 percent
b. 7 percent
c. 4 percent
d. 0 percent
e. −7 percent
ANSWER: d
FEEDBACK: a. Incorrect. The real interest rate equals the difference between the nominal
b. Incorrect. The real interest rate equals the difference between the nominal
c. Incorrect. The real interest rate equals the difference between the nominal
d. Correct. The real interest rate equals the difference between the nominal interest
rate and the inflation rate. See 7-4: Effects of Inflation
e. Incorrect. The real interest rate equals the difference between the nominal
POINTS: 1
DIFFICULTY: Easy
115. Which of the following events would most likely cause the nominal interest rate to fall?
a. A decrease in the supply of loanable funds
b. An increase in the demand for loanable funds
c. An increase in the supply of loanable funds and an increase in the demand for loanable funds
d. An increase in the supply of loanable funds and a decrease in the demand for loanable funds
e. A decrease in the supply of loanable funds and an increase in the demand for loanable funds

ANSWER: d
FEEDBACK: a. Incorrect. As the supply of loanable funds increases, the supply curve of loanable
funds shifts rightward, and as the demand for loanable funds decreases, the
demand curve for loanable funds shifts leftward. These adjustments lead to a
lower equilibrium interest rate. See 7-4: Effects of Inflation
b. Incorrect. As the supply of loanable funds increases, the supply curve of loanable
c. Incorrect. As the supply of loanable funds increases, the supply curve of loanable
d. Correct. As the supply of loanable funds increases, the supply curve of loanable
e. Incorrect. As the supply of loanable funds increases, the supply curve of loanable
POINTS: 1
DIFFICULTY: Easy
116. Inflation:
a. always reduces real income.
b. never reduces real income.
c. reduces the real income of workers when wages increase more than prices do.
d. reduces the real income of workers when wages increase less than prices do.
e. increases the real income of workers only when wages increase less than prices do.
ANSWER: d
FEEDBACK: a. Incorrect. Inflation reduces the real income of workers when wages increase less
than prices. See 7-4: Effects of Inflation
b. Incorrect. Inflation reduces the real income of workers when wages increase less
c. Incorrect. Inflation reduces the real income of workers when wages increase less
d. Correct. Inflation reduces the real income of workers when wages increase less
e. Incorrect. Inflation reduces the real income of workers when wages increase less
POINTS: 1
DIFFICULTY: Easy
117. Which of the following people is least likely to be hurt by inflation?

a. A salesperson who works on commission
b. A retired couple living on a pension
c. An individual who enters into a fixed-wage contract for the next three years
d. An individual who agrees to lend money at a fixed rate of interest for the next three years
e. An individual working at the minimum wage which seldom changes
ANSWER: a
FEEDBACK: a. Correct. Inflation hits hardest those whose incomes are fixed in nominal terms.
b. Incorrect. Inflation hits hardest those whose incomes are fixed in nominal terms.
c. Incorrect. Inflation hits hardest those whose incomes are fixed in nominal terms.
d. Incorrect. Inflation hits hardest those whose incomes are fixed in nominal terms.
e. Incorrect. Inflation hits hardest those whose incomes are fixed in nominal terms.
POINTS: 1
118. The benefits paid by the largest pension program in the United States are:
a. not adjusted for changes in the price level.
b. adjusted for changes in the price level.
c. revised every five years.
d. adjusted for changes in the nominal rate of interest.
e. adjusted for changes in the real rate of interest.
ANSWER: b
FEEDBACK: a. Incorrect. Social Security payments are adjusted for changes in the price level.
b. Correct. Social Security payments are adjusted for changes in the price level. See
c. Incorrect. Social Security payments are adjusted for changes in the price level.
d. Incorrect. Social Security payments are adjusted for changes in the price level.
e. Incorrect. Social Security payments are adjusted for changes in the price level.
POINTS: 1
DIFFICULTY: Easy

119. A major cost of unemployment is lost production.

a. True
b. False
ANSWER: True
FEEDBACK: Correct Unemployment imposes a cost on the economy as a whole because fewer goods
and services are produced. See 7-1: Unemployment: Its Measure and Sources
Incorrect Unemployment imposes a cost on the economy as a whole because fewer goods
and services are produced. See 7-1: Unemployment: Its Measure and Sources
POINTS: 1
DIFFICULTY: Easy
120. The unemployment rate rises any time there is an increase in the number of unemployed persons.
a. True
b. False
ANSWER: False
FEEDBACK: Correct The unemployment rate equals the ratio of the number of unemployed persons to
the total number in the labor force. See 7-1: Unemployment: Its Measure and
Sources
Incorrect The unemployment rate equals the ratio of the number of unemployed persons to
the total number in the labor force. See 7-1: Unemployment: Its Measure and
Sources
POINTS: 1
DIFFICULTY: Easy
121. The labor force consists of all adults who are currently employed.
a. True
b. False
ANSWER: False
FEEDBACK: Correct The labor force consists of the people in the adult population who are either
Incorrect The labor force consists of the people in the adult population who are either
POINTS: 1
DIFFICULTY: Easy
122. Inmates from the county prison who are on work release are counted as part of the labor force.
a. True
b. False
ANSWER: False
FEEDBACK: Correct The labor force consists of all civilians 16 years of age and older, except those in
prison, in mental hospitals, or in homes for the aged. See 7-1: Unemployment: Its
Measure and Sources
Incorrect The labor force consists of all civilians 16 years of age and older, except those in
prison, in mental hospitals, or in homes for the aged. See 7-1: Unemployment: Its
Measure and Sources
POINTS: 1
DIFFICULTY: Easy
123. Discouraged workers are included in labor force figures, but not in unemployment figures.
a. True
b. False
ANSWER: False
FEEDBACK: Correct Discouraged workers have dropped themselves out of the labor force. Thus, they
are not counted as unemployed. See 7-1: Unemployment: Its Measure and
Sources
Incorrect Discouraged workers have dropped themselves out of the labor force. Thus, they
are not counted as unemployed. See 7-1: Unemployment: Its Measure and
Sources
POINTS: 1
DIFFICULTY: Easy
124. The unemployment rate among African American workers in the United States is higher than that among white
workers.
a. True
b. False
ANSWER: True

FEEDBACK: Correct Unemployment differs across race and ethnicity; in April 2012, the unemployment
rate was 7.4 percent among white workers and 13.0 percent among African
Americans. See 7-1: Unemployment: Its Measure and Sources
Incorrect Unemployment differs across race and ethnicity; in April 2012, the unemployment
rate was 7.4 percent among white workers and 13.0 percent among African
Americans. See 7-1: Unemployment: Its Measure and Sources
POINTS: 1
DIFFICULTY: Easy
125. Construction workers at times face high rates of unemployment because their work is both seasonal and subject to
wide swings over the business cycle.
a. True
b. False
ANSWER: True
FEEDBACK: Correct Construction workers may face high rates of unemployment because that
occupation is both seasonal and cyclical. See 7-1: Unemployment: Its Measure and
Sources
Incorrect Construction workers may face high rates of unemployment because that
occupation is both seasonal and cyclical. See 7-1: Unemployment: Its Measure and
Sources
POINTS: 1
DIFFICULTY: Easy
126. Ginger quits her job as personal secretary to the Vice President of HR Technologies because she cannot handle the
stress. It takes her three weeks to find a job as a receptionist at Mariam Hotels and Resorts. Over these three weeks, she
would be considered frictionally unemployed.
a. True
b. False
ANSWER: True
FEEDBACK: Correct The time required to bring together employers and job seekers is the source of
frictional unemployment. See 7-1: Unemployment: Its Measure and Sources
Incorrect The time required to bring together employers and job seekers is the source of
frictional unemployment. See 7-1: Unemployment: Its Measure and Sources
POINTS: 1
DIFFICULTY: Easy
127. A person whose skills do not match available job openings is considered frictionally unemployed.
a. True
b. False
ANSWER: False
FEEDBACK: Correct Structural unemployment results from a mismatched set of skills. See 7-1:
Incorrect Structural unemployment results from a mismatched set of skills. See 7-1:
POINTS: 1
DIFFICULTY: Easy
128. Most of the unemployment during the Great Depression was cyclical unemployment.
a. True
b. False
ANSWER: True
FEEDBACK: Correct Cyclical unemployment increases during recessions. See 7-1: Unemployment: Its
Measure and Sources
Incorrect Cyclical unemployment increases during recessions. See 7-1: Unemployment: Its
Measure and Sources
POINTS: 1
DIFFICULTY: Easy
129. Government fiscal policies that attempt to stimulate aggregate demand are often aimed at reducing cyclical
unemployment.
a. True
b. False
ANSWER: True
FEEDBACK: Correct Policy makers and economists worry about cyclical unemployment. See 7-1:
Incorrect Policy makers and economists worry about cyclical unemployment. See 7-1:
POINTS: 1
DIFFICULTY: Easy
130. If someone with a Ph.D. in philosophy finds work as a taxi driver, but continues to look for a college teaching
position, he is counted as being employed.
a. True
b. False
ANSWER: True
FEEDBACK: Correct When someone with a Ph.D. can find only a taxi driver’s job, it understates the
actual amount of unemployment. See 7-2: Other Unemployment Issues
Incorrect When someone with a Ph.D. can find only a taxi driver’s job, it understates the
actual amount of unemployment. See 7-2: Other Unemployment Issues
POINTS: 1
DIFFICULTY: Easy
131. Inflation is defined as a sustained increase in an economy’s price level.

a. True
b. False
ANSWER: True
FEEDBACK: Correct The annual inflation rate is the percentage increase in the average price level from
one year to the next. See 7-3: Inflation: Its Measure and Sources
Incorrect The annual inflation rate is the percentage increase in the average price level from
POINTS: 1
DIFFICULTY: Easy
132. A sustained decrease in an economy’s price level is known as deflation.

a. True
b. False
ANSWER: True
FEEDBACK: Correct Deflation is a decrease in the general price level of goods and services in an
Incorrect Deflation is a decrease in the general price level of goods and services in an
POINTS: 1
DIFFICULTY: Easy
133. If the price level increases by 2 percent each year, the inflation rate is increasing.
a. True
b. False
ANSWER: True
FEEDBACK: Correct The annual inflation rate is the percentage increase in the average price level from
Incorrect The annual inflation rate is the percentage increase in the average price level from
POINTS: 1
DIFFICULTY: Easy
134. During periods of high inflation, people want to hold as much money as possible.
a. True
b. False
ANSWER: False
FEEDBACK: Correct High inflation increases the opportunity cost of holding cash balances. See 7-3:
Inflation: Its Measure and Sources
Incorrect High inflation increases the opportunity cost of holding cash balances. See 7-3:
Inflation: Its Measure and Sources
POINTS: 1
DIFFICULTY: Easy
135. Hyperinflation refers to a period of extremely erratic inflation rates.

a. True
b. False
ANSWER: False
FEEDBACK: Correct Extremely high inflation is called hyperinflation. See 7-3: Inflation: Its Measure and
Sources
Incorrect Extremely high inflation is called hyperinflation. See 7-3: Inflation: Its Measure and
Sources
POINTS: 1
DIFFICULTY: Easy

136. The view that union wage demands may be a source of inflation would be best associated with cost-push inflation.
a. True
b. False
ANSWER: True
FEEDBACK: Correct Increases in the cost of production push the aggregate supply curve to the left and
raise the price level. See 7-3: Inflation: Its Measure and Sources
Incorrect Increases in the cost of production push the aggregate supply curve to the left and
raise the price level. See 7-3: Inflation: Its Measure and Sources
POINTS: 1
DIFFICULTY: Easy
137. Demand-pull inflation is worse than cost-push inflation because, in addition to higher prices, demand-pull inflation
also reduces employment.
a. True
b. False
ANSWER: False
FEEDBACK: Correct In cost-push inflation, a reduction in aggregate supply in the economy causes a
leftward shift of the aggregate supply curve. This raises the economy’s price level
and decreases its real GDP. See 7-3: Inflation: Its Measure and Sources
Incorrect In cost-push inflation, a reduction in aggregate supply in the economy causes a
leftward shift of the aggregate supply curve. This raises the economy’s price level
and decreases its real GDP. See 7-3: Inflation: Its Measure and Sources
POINTS: 1
DIFFICULTY: Easy
138. Inflation can only be caused by an increase in aggregate demand.

a. True
b. False
ANSWER: False
FEEDBACK: Correct Inflation results from an increase in aggregate demand, a decrease in aggregate
supply, or both. See 7-3: Inflation: Its Measure and Sources
Incorrect Inflation results from an increase in aggregate demand, a decrease in aggregate
supply, or both. See 7-3: Inflation: Its Measure and Sources
POINTS: 1
DIFFICULTY: Easy

139. Anticipated inflation causes more problems in the economy than unanticipated inflation.
a. True
b. False
ANSWER: False
FEEDBACK: Correct The arbitrary gains and losses arising from unanticipated inflation are partly why
inflation is so unpopular. See 7-4: Effects of Inflation
Incorrect The arbitrary gains and losses arising from unanticipated inflation are partly why
inflation is so unpopular. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy
140. The nominal interest rate is equal to the real interest rate minus the anticipated inflation rate.
a. True
b. False
ANSWER: False
FEEDBACK: Correct The nominal interest rate is the sum of the real interest rate and the anticipated
inflation rate. See 7-4: Effects of Inflation
Incorrect The nominal interest rate is the sum of the real interest rate and the anticipated
inflation rate. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy
141. Unanticipated inflation generally hurts borrowers and benefits lenders.

a. True
b. False
ANSWER: False
FEEDBACK: Correct If inflation is higher than expected, the losers are those who agreed to sell at a
price that anticipated lower inflation and the winners are those who agreed to pay
that price. See 7-4: Effects of Inflation
Incorrect If inflation is higher than expected, the losers are those who agreed to sell at a
price that anticipated lower inflation and the winners are those who agreed to pay
that price. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy
142. Inflation is the hardest on those living on fixed incomes.

a. True
b. False
ANSWER: True
FEEDBACK: Correct Although inflation affects everyone to some extent, it hits hardest those whose
incomes are fixed in nominal terms. See 7-4: Effects of Inflation
Incorrect Although inflation affects everyone to some extent, it hits hardest those whose
incomes are fixed in nominal terms. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy
143. Relative prices describe the terms at which individual goods are exchanged for one another.
a. True
b. False
ANSWER: True
FEEDBACK: Correct A relative price is the price of a commodity such as a good or service stated in
terms of another. See 7-4: Effects of Inflation
Incorrect A relative price is the price of a commodity such as a good or service stated in
terms of another. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy
144. During periods of inflation, all prices increase.

a. True
b. False
ANSWER: True
FEEDBACK: Correct Even with no inflation, some prices would increase and some would decrease,
reflecting normal activity in particular markets. See 7-4: Effects of Inflation
Incorrect Even with no inflation, some prices would increase and some would decrease,
reflecting normal activity in particular markets. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy

145. An increase in the interest rate will increase the demand for loanable funds.
a. True
b. False
ANSWER: False
FEEDBACK: Correct An increase in the interest rate will increase the quantity supplied of loanable funds
and will decrease the quantity demanded of loanable funds. See 7-4: Effects of
Inflation
Incorrect An increase in the interest rate will increase the quantity supplied of loanable funds
and will decrease the quantity demanded of loanable funds. See 7-4: Effects of
Inflation
POINTS: 1
DIFFICULTY: Easy
146. An increase in the demand for loanable funds, other things constant, will increase the interest rate.
a. True
b. False
ANSWER: True
FEEDBACK: Correct Other things constant, the interest rate and the quantity of loanable funds
demanded are inversely related. See 7-4: Effects of Inflation
Incorrect Other things constant, the interest rate and the quantity of loanable funds
demanded are inversely related. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy
147. An increase in the supply of loanable funds, other things constant, will increase the interest rate.
a. True
b. False
ANSWER: False
FEEDBACK: Correct Given the downward-sloping demand curve for loanable funds, an increase in the
supply of loanable funds will decrease the nominal interest rate. See 7-4: Effects of
Inflation
Incorrect Given the downward-sloping demand curve for loanable funds, an increase in the
supply of loanable funds will decrease the nominal interest rate. See 7-4: Effects of
Inflation
POINTS: 1

DIFFICULTY: Easy
148. The nominal interest rate is determined in the market for loanable funds.
a. True
b. False
ANSWER: True
FEEDBACK: Correct The amount of money people are willing to lend increases as the interest rate rises,
other things constant. See 7-4: Effects of Inflation
Incorrect The amount of money people are willing to lend increases as the interest rate rises,
other things constant. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy
149. The real interest rate can be negative.

a. True
b. False
ANSWER: True
FEEDBACK: Correct If inflation is higher than the nominal interest rate, then the real interest rate would
be negative. See 7-4: Effects of Inflation
Incorrect If inflation is higher than the nominal interest rate, then the real interest rate would
be negative. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy
150. During periods of inflation, the real value of a given amount of nominal dollars decreases.
a. True
b. False
ANSWER: True
FEEDBACK: Correct Inflation erodes the real value of dollars. See 7-4: Effects of Inflation
Incorrect Inflation erodes the real value of dollars. See 7-4: Effects of Inflation
POINTS: 1
DIFFICULTY: Easy

Another random document with
no related content on Scribd:
“Take a look up-stairs.”
This time, the other boy offered no objection, and, with Aleck in the
lead, they started up. The rickety steps creaked and groaned
dismally beneath their feet, and a cloud of dust arose. It was dark in
the passageway and both moved with great caution, each instant
expecting to hear the sound of flapping wings above their heads.
But the upper rooms were deserted, and the two breathed a sigh of
relief as they entered the largest, their footsteps echoing strangely
throughout the house.
“Well,” remarked Aleck.
“Well,” said George.
They looked at each other and laughed.
“Roughing it with a vengeance,” said George, walking toward the
window. “A bit more than I bargained for; still, I guess we’ll have to
stand it.”
“Just what we don’t want to do,” said Aleck, with a grin. “If we only
had some straw, and a blanket, and——”
“Why not say a feather bed, nice, clean sheets, wash-stand and
electric lights?”
“That’s so,” laughed Aleck. “What we can’t get, there’s no use kicking
about, eh? Philosophy with a big P, old boy.”
Using their coats as pillows, the boys finally lay down.
It was a long, uncomfortable night, and never had they so welcomed
the glimmer of early dawn. When George arose and looked out of
the window, he saw in the eastern sky a line of purplish clouds
edged underneath with a rosy glow, but all else was gray and
cheerless.
“Aleck!” he called. “Wake up! I declare, how can that chap sleep so
well?”
The other aroused with a start.
“Hello,” he cried. “Oh, my, but I’m sore and stiff,” and, as he arose,
Aleck groaned and grumbled, and rubbed his aching bones.
“So am I,” said George, cheerfully. “But let’s be off. We’ll have
breakfast at some farmhouse, and then for the ‘Gray Gull’ again.”
The day promised to be warm. As the sun rose higher and higher
and the birds caroled and chirped, and squirrels scrambled frantically
to places of safety and peered down with their bright, beady eyes,
the boys forgot their pains and aches, in the enjoyment of nature.
A good-hearted farmer gave the two a ride, and, on turning off at a
fork, told them where a meal could be had.
The people at the farmhouse welcomed them heartily, and the boys
enjoyed a bountiful repast with some of the “men folks.”
An hour later, Aleck and George were lying in the shade of some fine
old willows, watching eagerly for the house-boat.
The heat gradually increased; scarcely a breath of air seemed
stirring.
Another hour passed, and George, who was lazily fanning his face
with his handkerchief, started up.
“Hello, I’ll bet the ‘Gray Gull’ is coming,” he said. “See it?”
“Believe you’re right,” said Aleck, gleefully. “Won’t I be glad to see
those chaps again?”
Eagerly, the two watched the dark spot gradually growing larger. It
seemed to the boys as if the “Gray Gull” had never moved so slowly.
Impatiently they ran along the beach toward it, giving several lusty
yells and waving their arms.
“Hello, hello!” came faintly over the air, in Jack Lyons’ familiar voice.
Aleck put his fingers to his lips and whistled shrilly, while George
shouted again.
The figures on the boat began to assume definite shape; then she
was headed inshore. Enthusiastic greetings flew back and forth over
the water, as though the boys had not seen each other for a month;
and the boat had scarcely come to a stop before Jack Lyons leaped
to the shore.
“Hello, Jack! Hello, Bob Somers!”
“Hello, George!”
“There’s Aleck!”
For several moments, questions flew from one to another, with
bewildering rapidity, and George Clayton presently heard a piece of
news which made him whistle and open his eyes wide with
astonishment.
“What!” he gasped, scarcely believing his ears, “you saw Uncle Dan
—he was on that automobile? Jehoshophat! Well, well!” and George
thrust his hands deep in his pockets and whistled again.
“Big surprise, eh?” laughed Bob Somers.
“Surprise?” echoed George. “Surprise is no name for it. Whew! I
don’t wonder he was angry. Sailed into you, Norman—of course?”
“It was an unfortunate combination of circumstances that led you to
run away with the machine,” said Redfern. “I am sorry you were so
thoughtless.”
George studied the ground an instant before replying.
“So am I, Norman,” he said, frankly. “But it can’t be helped now.”
“For goodness’ sake, tell us about that chase,” interrupted Aleck.
“Must have had an exciting time, all right.”
Jack Lyons quickly gratified his curiosity, and both listeners smiled
broadly at the recital.
“Those school chaps are still having lively times, aren’t they?” said
George. “Mighty glad the Ripleys won out. I certainly should like to
know where the other crowd landed Uncle Dan.”
“Maybe ‘Pouf’ wasn’t wild,” said Joe; “ha, ha!”
The rich boy soon completed his tale, and many “oh’s” and “ah’s”
escaped from the lips of his deeply interested listeners.
“Yes, we saw the two Bill Hollbacks—father and son,” laughed Jack.
“Great fellows, eh?”
Then, in a few words, he told how the “Gray Gull” had been visited
by the authorities in response to a telegram sent by Colonel Ellison.
“And I know well enough that it was watched all night,” he went on,
with a laugh. “But Bill Hollback Junior managed to tell us your plans
—a regular brick—that fellow. So you slept in a deserted house, eh?”
“Yes, we did,” and Aleck rubbed the back of his head, reflectively.
Redfern again tried to induce his former pupil to return home.
But George shook his head.
“No, Redfern,” he said, quietly, “I won’t give that silly Pierre the least
satisfaction. Unless Captain Jack puts me ashore, and it would be a
mighty big scrap while it lasted, I’m going to keep on.”
“I give it up, then,” said Redfern, with a sigh.
“If a fleet o’ war vessels doesn’t come after us before I get started, I’ll
put that remark in my history,” said Joe. “It will have to be a work in
two volumes, quarto size, illustrated from life and otherwise by old
Cap Lyons.”
“How I wish you’d begin. I do like to read funny things,” remarked
Fred, with a very solemn face.
“It will be full of wit and pathos, also ginger, kind sir,” said Joe.
Jack kept the “Gray Gull” about fifty yards from shore. The
atmosphere seemed to quiver with heat. The landscape was bathed
in a yellow light, and the glare in the water was hard to look upon.
Jack tied the steering gear, and they retired within, each taking a turn
at the window to see that the way was clear.
During the afternoon, the heat increased, the faint breeze entirely
disappeared, and not a cloud spotted the sky.
Poor Confuse-us lay panting in a corner, gazing pitifully from one to
another, scarcely able to enjoy his customary nap.
And so the day passed, and night came on.
Close inshore, the boys were attacked by an army of mosquitoes
and flies, and, Joe declared, by every species of insect that ever
existed. They swarmed around the lanterns, and filled the interior,
and buzzed around their heads, and the more they fought and
slapped the worse the marauders seemed to become.
“Awful,” said George. “Let’s go straight across the river. We never
could get a look at the stars over here.” And this piece of advice was
acted upon.
The boys found conditions much better on the other side. No sooner
was the “Gray Gull” anchored than Fred brought out the telescope
and stand. The former tutor’s handiwork was much admired. The
three legs were fastened by means of hinges to an upright piece of
wood supporting another that turned horizontally; to the latter was
fastened a V-shaped trough capable of a vertical motion, and in this
the telescope was secured by means of a strap.
The boys spent an enjoyable evening, studying the stars, even Joe
becoming quite enthusiastic as he took his turn at the glass.
Aleck and George were very tired; so they decided to retire rather
early. All were good sleepers, and before long quietness reigned in
the house-boat.
Bob Somers dreamed that Confuse-us, grown into a great big dog,
had seized the fly-wheel in his teeth and set the engine in motion.
And the pulsation had a strangely double sound; and he vaguely
puzzled over it in his sleep, and seemed to hear the water gurgling
against the side of the boat.
Finally Bob awoke with a start, sat bolt upright, and uttered an
exclamation of wonder.
The dream was only half a dream. The “Gray Gull’s” engine was
silent; but the strange sound of double pulsations reached his ears
plainly; and the boat actually seemed to be in motion.
“Gracious goodness! What does this mean?” he murmured.
Then, still scarcely believing that he heard aright, he jumped up
hastily.
Yes, there was no doubt about it now.
With a loud, “Wake up, fellows!” Bob Somers was at the door.
CHAPTER XXI
A MIDNIGHT TOW
Bob’s yell and the sound of the opening door caused the utmost
confusion. Jack, half-awakened, almost fell out of his bunk; Dave
Brandon and Tommy were up in an instant, while the others
scrambled to a standing position almost in unison. Then, their
senses taking in the extraordinary situation, all followed Bob, Joe
stumbling over the terrified Confuse-us and going down on hands
and knees.
The “Gray Gull,” without any effort on its own part, was cutting
through the water at a speed which it had never before attained.
Jack Lyons and Bob had disappeared around the side of the boat.
“Well, well!” exclaimed the latter. “Did you ever! The Ripley and
Thornton boys again—and—and towing us to beat the band!”
A terrific din suddenly filled the air; above the shrill blasts from a horn
rose a chorus of loud yells. It was quite the most inharmonious
combination of sounds they had ever heard, and Owen Andrews and
his tin horn, as a sound producer, were voted an enormous success.
The “Reindeer” and “Dart” could be plainly seen in the moonlight.
The house-boat boys, having groped their way around to the front of
the boat, responded to the others’ shouts with loud cheers.
“Rah, rah—boom!
Oh, we’re on the way to Albany,
The prettiest town you’ll ever see.
Rah, rah—boom!
And we’re going to have a rush
That won’t do a thing but hush
Poor Ripley. Rah, rah—boom!”
After about two seconds of silence, the Ripleys were heard voicing a
refrain that ran as follows:
“And they’ll know there’s been a muss,

And they’ll try to make a fuss;
But you’ll never hear of Thornton any more.”
The rival students sang these lines with the greatest gusto, Owen
Andrews and his tin horn again taking a prominent part.
Bill Stiles yelled to Lon Bates, and, in a moment, the “Reindeer” and
“Dart” had come to a stop. Then the two skippers brought their boats
alongside the “Gray Gull.”
“Well,” said Lon Bates, “guess you fellows had a frightful scare, all
right.”
“Scare?” answered Jack. “Scare?—what does that word mean?”
“I see,” chuckled Bates, “you are just as chipper as ever.”
“Oh, yes; it doesn’t wear off,” laughed Jack.
“You’re mighty good sleepers,” went on Bates. “Never even heard us
pull up the anchor, and didn’t awake till we’d towed you about five
miles.”
“I suppose you boys are going back now, and are ready for a
winter’s grind?” said Redfern.
“Right—about the first part,” said Roy Pinger. “Just now, we’re
showing these Thornton chaps the way home. They might stray off
the river.”
“Ha, ha!” laughed Lon Bates. “They keep close to us because they’re
afraid of the dark. We feel so sorry for ’em.”
“How we wonder what’s the matter

When those children make a clatter!
Poor, poor Ripley.”
“Do you hear them tremble?” inquired Owen Andrews.
“Want to know how to get the best of them?” shouted Joe.
“We have a hundred rules for it, but you may add one more.”
“Stay up all night and bail out the river.”
“At last we have met some one who knows how to talk sense,”
exclaimed Bill Stiles, amidst a ripple of laughter. “It’s me for the
shore now, and a bit of sleep.”
And this sentiment met with unanimous approval.
So Jack Lyons anchored the “Gray Gull” once more, while the
“Reindeer” and “Dart” slowly moved toward the shore.
The house-boat boys lay down again, and when they awoke in the
morning their midnight visitors had gone.
The heat was somewhat less oppressive, and a pleasant air rippled
the water.
About noon they caught a glimpse of the Catskill Mountains to the
west, a faint gray line against a pile of whitish clouds. But the
telescope brought this wooded range into closer view and the charm
and beauty of the scenery appealed to all.
Later in the afternoon, the “Gray Gull” was approaching a section of
the river in which there are a number of islands. As they slowly
continued along, some of these were found to be small, wooded
hills, while others were flat and marshy.
“Fellows,” remarked Jack Lyons, “let’s camp out to-night for a
change.”
“Select your island, cap,” said Joe.
“That one with rocks and trees suits me. Plenty of shade—just the
place for a camp.”
“And must be a lot of nice plants to study,” added Dave. “Let’s go
there by all means.”
To this sentiment Fred Winter heartily agreed.
The house-boat was soon anchored in the shade of the island, its
pleasant wooded heights rising above them. One by one they
scrambled ashore and began to explore it with interest.
In portions it was rocky and barren, while in others masses of
underbrush grew in a wild tangle which effectually prevented their
passage.
But the boys quickly found a way to the top, although in some places
they risked a fall over the steep, rocky ledges.
Bob Somers climbed a tree, and, perched comfortably among the
branches, had a good view of the landscape. When he came down,
the eight, for Redfern had stayed by the shore, took seats on a
grassy knoll on the other side of the island, and idly watched one of
the powerful Albany steamers passing on its way to that city.
After supper a fire was kindled, and, as the boys piled on brush and
the flames mounted higher and higher, they cast a bright glow on the
sturdy form of the “Gray Gull” and far out over the dark water.
Confuse-us, too, joined the circle, and seemed quite mystified and
uneasy.
A steady breeze made the tree tops rustle with a soft, musical
whispering. The woods outside the flaring glare looked black and
forbidding. The New York boys were surprised to find how far the
firelight carried. An island some distance off sprang into view against
the blackness, its rocks and trees weirdly illuminated.
That night the boys rested on beds made of fragrant cedar boughs,
and although the insects were quite annoying, managed to sleep
most of the time.
Bright and early next morning the voyage was resumed.
Had they so desired, Albany might have been reached late that
night. But Jack and his chums decided to halt and wait for daylight.
“Besides,” said Tom, “we might give the whole city an awful scare if
we took ’em unaware in the night.”
Once more, at dusk, the “Gray Gull” was anchored near shore. An
uneventful night was passed, and about 9 a. m. on the following day
the “Gray Gull,” Jack Lyons, master, had actually reached its
destination—the city of Albany.
The capital of New York State is built on a succession of hills, and in
the clear, bright sunlight presented a beautiful sight. The imposing
capitol building loomed up prominently, and several other handsome
edifices were pointed out by Redfern.
“Bet the governor is looking at us through a spy-glass right now,”
said Joe.
Boats of all description crowded the water-front. There were saucy
little skiffs, excursion steamers, and clumsy barges, some of them
just in from their long trip through the Erie Canal. Puffing, panting
tugs were going up and down the river. It was a picturesque and
lively scene, and the boys crowding the deck of the house-boat
gazed at the sights with much enjoyment.
All of Jack Lyons’ faculties were on the alert. Out in mid-stream, he
was obliged to navigate with the greatest care, and often the “Gray
Gull” wobbled violently on the swells sent forth by passing boats.
Norman Redfern looked rather grave. His trip on the house-boat had
only placed him in a worse light than ever in Colonel Ellison’s eyes;
and now that the journey was about over, and he thought of leaving
the jolly company of boys, he could not shake off a feeling of
sadness.
“It’s fine around here,” remarked Tom Clifton, his eyes sparkling with
pleasure.
“There’s a good place to tie up,” declared Bob Somers, presently.
He pointed toward an old pier close at hand.
Quite a crowd collected, as the “Gray Gull” swung slowly in. A boy
with a fishing pole kindly seized the rope that Jack Lyons threw him,
and wrapped it around a post.
Within a few minutes, the house-boat boys were ashore. Jack
answered questions from the curious in his usual free and easy
manner; then all began moving away from the wharf.
“I certainly feel pleased,” declared George Clayton, with a sigh of
satisfaction. “Got to Albany, in spite of Pierre; and now I don’t care if
Uncle Dan orders me right back home.”
“Yes, you won out, old boy,” said Bob, slapping him on the back.
“And—— Good gracious alive!”
From behind a small shanty, a slight figure suddenly stepped into
view and confronted the runaway.
One glance into the excited face that looked into his own, and
George Clayton gave a start.
“Pierre Dufour!” he exclaimed, in astonishment.
CHAPTER XXII
THE PUSH-BALL CONTEST
“Ah, ha, Monsieur George, I would speak with you von leetle
minute!” exclaimed the chauffeur, in a voice that trembled. “Ah, you
have not know what you do—ma foi. No! Monsieur the Colonel, he
—— Saire, I speak not to you,” and Pierre’s black eyes flashed with
anger, as Norman Redfern stepped forward.
“Keep cool, ‘Pouf,’” said Joe, with a grin. “It pays.”
“Von leetle minute, Monsieur George. I stay here last night; I stay
here this morning; and ma foi, you come! You leave these scamps
now—you——”
“Cut it out, Pierre,” broke in George, with an amused glance at the
others. “Is my uncle in town?”
“Yes, Monsieur George—at a hotel. You come?”
“Better go,” counseled Redfern.
“Saire, you say nothing to him. I call you von scamp. I no afraid of
you. In la belle France, I would my glove throw in your face—so!”
And Pierre waved his arm threateningly.
“Cool off,” advised Joe.
“Listen, Pierre”—George spoke in an emphatic tone—“you have
made a mess of things by your stupid meddling. Not another word.
We’re all of us going to see Uncle Dan right now.”
George abruptly turned on his heel, and started off in the direction of
the hotel, while Pierre, with a look of amazement, promptly fell in the
rear of the little group.
When they arrived at the hotel they found that Colonel Ellison was
out.
“Let’s go over to Ripley Academy,” proposed George, paying no
heed to the chauffeur’s earnest efforts to attract his attention.
“That’s my idea,” agreed Jack.
“Take my advice, and wait for your uncle,” said Norman.
“No use, when I can see him to-night,” answered George, with a
shake of his head. “I’m going.”
“Wait—wait,” pleaded Pierre Dufour. “Monsieur the Colonel, he say
——”
But George pushed promptly by, and, in a moment, was on the
street.
Redfern and George both knew the city well, and soon they were
standing before the capitol. It is a very massive building of
handsome design.
Joe’s proposition to go in and see the governor was promptly vetoed.
“Don’t see why not,” grumbled Joe. “He has to go to New York once
in a while, and might like to take the trip with us.”
Up one street and down another they went, admiring the neat
houses surrounded by pretty lawns and the rows of substantial
dwellings; then back to the business section, where Jack sent off a
dozen picture postals to little Bobby.
After lunch, it was decided to visit Ripley Academy at once.
Norman Redfern explained that the schools were separated by only
half a mile, and that Ripley, the nearer, was about a mile from town.
The day was pleasant, with a sky full of flying clouds, the country
charming, and the boys, in spite of the thought of meeting the fiery
Colonel, were in high spirits.
Ripley was an older institution than its rival. The building was a plain,
almost austere structure, with a columned entrance and a portico
from which the Hudson was seen between stately elms.
The building occupied by Thornton Preparatory School was of a
graceful modern design, from the polished knob on the front door to
the high, battlemented tower.
Almost midway between the schools was a level field. And it was on
this that many exciting contests for athletic supremacy took place.
When the boys arrived on the Ripley campus, they found it occupied
by a lively crowd of students. An air of excitement prevailed;
evidently some event of great importance was about to take place.
Groups had collected; songs were being sung; and most of these
referred to the unfortunate Thorntons.
“Well, well—my gracious! All the Bills together!” cried a hearty voice.
Bill Stiles, his face flushed with excitement, rushed forward, shook
each of their hands in turn, slapped “Bill number three,” otherwise
Fred Winter, on the back, and called loudly for Roy Pinger.
“Gee whiz! You’re just in time,” cried the latter. “There’s going to be
something doing. Poor Thornton—don’t laugh too hard at ’em. Come
on, Bill; it’s time to skip.” And the two Ripley seniors were off.
“Hello, what are you chaps going to do?” yelled Bob.
“Follow us, and see,” answered Bill.
Crowds of students were now leaving the grounds, and the nine
followed in the rear. As they walked along a wide, shady road,
glimpses of the river and hills beyond were here and there seen.
The Ripley students continued to sing their lively songs, varying the
performance by occasional yells and blasts from Andrews’ tin horn.
And it was not long before other sounds, which they recognized as
coming from the Thorntons, reached their ears.
When the boys arrived at the athletic field, a great crowd had
assembled. In the center was a huge, leather-covered ball.
“Gee whiz!” said Jack. “A push ball.”
“And a Jim-dandy, too; must be six feet high,” put in Aleck Hunt.
“Now I see the scheme. Great, isn’t it?”
“This must be something new,” laughed Redfern. “There goes a
signal—probably the first. They are lining up now—listen to Lon
Bates.”
“You could hear his voice a mile off,” said Bob. “Wonder where the
goal lines are. Ought to be a nice, lively tussle. Wish to goodness we
were in it, eh, Redfern?”
But the latter shook his head.
“Not in my line, Bob,” he answered, dryly.
The boys surveyed the rival groups with interest. The motor boat
crews were apparently the leaders in their respective schools, and
each had a crowd of sturdy followers anxious for the fray.
“All ready, you chaps?” sang out Bates.
“Ready, here!” shouted the Ripleys, in chorus.
The referee raised his megaphone.
“One—two”—it was a tense moment—“three—go!”
“They’re at it,” breathed Jack. “Yell for the Ripleys, fellows!”
The two groups brought up against the huge push ball at the same
instant. It wobbled and shook, and ambled sideways, while defiant
shouts were hurled from camp to camp.
It was a battle full of interest and humor. The erratic movements of
the ball, which was sometimes raised high off the ground, brought
forth peals of laughter.
Suddenly the Thorntons made a combined onslaught, and the ball
was pushed several yards toward the Ripley line.
“There’s nothing back of it,” yelled Bates.
“Oh, my, but this is easy!” cried Ralph Chickers. “Once more!”
“We’ll run ’em right through their own front door!” shouted another.
But the Ripleys hurled themselves against the sphere, pushed,
struggled and panted, a compact mass of determined lads.
Lon Bates, in his eagerness, stumbled, and the huge ball rose
awkwardly over his prostrate form, amidst a storm of laughter from
the onlookers.
“Shove it sideways, Bill Stiles,” yelled Bob Somers.
“Strategy versus strength,” remarked Dave Brandon. “Great Scott!”
The Ripleys had followed Bob’s advice with a suddenness that took
their opponents literally off their feet. Before the Thorntons could
recover themselves, the Ripleys had carried the ball five yards to the
side, then pushed it forward and regained all they had lost.
“Hooray!” yelled Jack. “Keep it up, Ripley!”
Cheers, shouts, blasts from the tin horn and megaphone raised a
terrific din, and while the excitement was at its height, George
Clayton touched Bob Somers lightly on the arm.
“See who’s coming,” he said.
Bob turned quickly, murmured, “Well, well,” and nudged Norman
Redfern.
In a moment, all were staring at two figures rapidly approaching. One
was Colonel Ellison, and close by his side trotted his faithful
chauffeur.
“Think how this affair must look to your guardian,” observed Redfern,
with an air of great regret.
“SEE WHO’S COMING”
“Ha, ha!” laughed Joe. “The storm’s coming. Hello! Those Ripley
chaps are gaining again. Hi, hi! Push it right over ’em! Flatten out the
whole crowd, you fellows!”
“Hold on, Joe Preston,” remonstrated Fred Winter. “The Colonel will
have a fine opinion of you.”
Colonel Ellison had never appeared more dignified and stern. His
brow was wrinkled; and he glared over the rim of his glasses at his
ward and nephew in a truly terrible manner.
“Ah, ha, young man!” he began; “so I see you at last, eh? What have
you to say for yourself?”
“Plenty, Uncle Dan,” answered George, calmly and in a respectful
manner. “But I would prefer to talk somewhere else, sir.”
“Ma foi, what sang froid,” murmured Pierre.
“Norman Redfern,” exclaimed the Colonel, paying no heed to the
attention his appearance and words attracted, “you and I must have
an accounting. You deliberately defied me. Through you, my
nephew’s name has appeared in the papers as a scapegrace. Your
misguided influence has made him recklessly disregard my wishes
and actually defy the authorities; and yet you still seek to——”
“Stop, Colonel Ellison!” interrupted Redfern. His look of
embarrassment was succeeded by a flush of anger; his voice
trembled, but not from nervousness. “Stop—you are going too far.”
“Sir?” thundered Colonel Ellison.
“Ma foi, ma foi! I hope it is not the fight that has come,” muttered
Pierre.
“You must hear me,” went on Redfern, resolutely. “I shall stand no
further accusations. George Clayton,” he added, turning toward the
rich boy, “did I ever influence you——”
“Look out—look out!”
So absorbed had the participants in this conversation become that
they failed to notice how events were going on the battle-field.
Up to this time, neither side had gained any especial advantage; but
Thornton, by clever strategy, suddenly sent the ball off at an angle.
The crowd melted away, but the Colonel and Redfern heard the
warning cry too late.
A mass of struggling boys bore furiously down upon them, and Uncle
Dan, taken altogether by surprise, toppled unceremoniously over,
while the lighter Redfern sprawled full length on the sward.
“The young scamps—the——”
But the remainder of the Colonel’s sentence was lost in a roar of
sound. A wave of shouts had arisen; the boy with the megaphone
used it with the utmost abandon; and Owen Andrews again
succeeded in proving the superior nature of his treasured tin horn.
In the general excitement, the Colonel’s mishap had attracted but
little attention. Bob Somers and the astounded chauffeur jumped to
his assistance, but were waved unceremoniously aside.
When the others again looked around, they saw Colonel Ellison
standing erect, his tall form towering above Redfern, who had also
regained his feet. Close to him stood the excited Pierre and George
Clayton.
The latter seemed more interested in the finish of the game than
anything else, and the boys didn’t wonder at it. They saw
immediately that the Colonel and Redfern had not been hurt.
It was a moment of the utmost confusion, and the Ripleys, quick as a
flash, saw their advantage. The push ball, like a thing of life, whirled
off at right angles, then forward again. Ralph Chickers slipped, and
several other Thornton lads fell over him.
With an irresistible rush, the Ripleys once more hurled themselves
upon the ball.
The Thorntons fought desperately, but the attempt was as useless
as trying to stop the tides. Lon Bates frantically commanded and
stormed, only to find that his followers could not be rallied.

(Download PDF) Macroeconomics A Contemporary Introduction 11th Edition McEachern Test Bank Full Chapter

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

(Download PDF) Macroeconomics A Contemporary Introduction 11th Edition McEachern Test Bank Full Chapter

Uploaded by

Copyright:

Available Formats

Macroeconomics A Contemporary

Introduction 11th Edition McEachern

Macroeconomics A Contemporary Introduction 9th Edition

Microeconomics A Contemporary Introduction 11th Edition

Microeconomics A Contemporary Introduction 11th Edition

Macroeconomics A Contemporary Approach 10th Edition

Microeconomics A Contemporary Introduction 10th Edition

Macroeconomics A Contemporary Approach 10th Edition

Economics A Contemporary Introduction 10th Edition

Microeconomics A Contemporary Introduction 10th Edition

2. The labor force in an economy consists of all:

Copyright Cengage Learning. Powered by Cognero. Page 1

4. Which of the following people would be counted in the labor force?

Copyright Cengage Learning. Powered by Cognero. Page 2

6. The unemployment rate measures the:

Copyright Cengage Learning. Powered by Cognero. Page 4

Copyright Cengage Learning. Powered by Cognero. Page 5

10. Which of the following people would be counted as employed?

Copyright Cengage Learning. Powered by Cognero. Page 6

12. A discouraged worker is one who:

13. “Discouraged workers” comprise the percentage of those in the:

Copyright Cengage Learning. Powered by Cognero. Page 9

18. Which of the following people would be classified as unemployed?

Copyright Cengage Learning. Powered by Cognero. Page 10

Copyright Cengage Learning. Powered by Cognero. Page 11

Copyright Cengage Learning. Powered by Cognero. Page 14

27. Which of the following groups experiences high unemployment rates?

Copyright Cengage Learning. Powered by Cognero. Page 16

30. Which of the following statements is true of unemployment?

31. Frictional unemployment refers to unemployment that is a result of:

Copyright Cengage Learning. Powered by Cognero. Page 19

34. The best example of a frictionally unemployed worker is one who:

Copyright Cengage Learning. Powered by Cognero. Page 20

38. Structural unemployment refers to unemployment that results from:

Copyright Cengage Learning. Powered by Cognero. Page 22

39. Unemployment arising from a mismatch of skills is called:

40. Which of the following types of unemployment is the hardest to reduce?

45. Which of the following is most likely to reduce structural unemployment?

Copyright Cengage Learning. Powered by Cognero. Page 26

Copyright Cengage Learning. Powered by Cognero. Page 28

50. Cyclical unemployment results from:

Copyright Cengage Learning. Powered by Cognero. Page 29

52. When an economy is operating at full employment, _____.

53. Full employment:

Copyright Cengage Learning. Powered by Cognero. Page 31

55. Full employment is considered a major economic goal because:

57. An increase in unemployment benefits is likely to:

60. Not counting _____ as unemployed understates unemployment.

61. Underemployment refers to:

Copyright Cengage Learning. Powered by Cognero. Page 35

65. Inflation is:

Copyright Cengage Learning. Powered by Cognero. Page 37

Copyright Cengage Learning. Powered by Cognero. Page 39

70. If the aggregate demand curve shifts rightward, then _____.

Copyright Cengage Learning. Powered by Cognero. Page 40

71. If the aggregate supply curve shifts leftward, then _____.

72. Inflation can be caused:

Copyright Cengage Learning. Powered by Cognero. Page 42

75. One of the most widely reported measures of inflation is the:

Copyright Cengage Learning. Powered by Cognero. Page 43

76. The consumer price index measures:

82. Since 1980, _____ has experienced deflation.

Copyright Cengage Learning. Powered by Cognero. Page 47