Macroeconomics A Contemporary Introduction 11th Edition McEachern Test Bank instant download all chapter

Macroeconomics A Contemporary
Introduction 11th Edition McEachern

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

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

McEachern Test Bank
https://testbankdeal.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://testbankdeal.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://testbankdeal.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:
Dying, his lord he own’d; view’d him all o’er
With eager eyes, then closed those eyes, well pleased.
Of lesser ills the Muse declines to sing,
Nor stoops so low; of these, each groom can tell
The proper remedy. But oh! what care,
What prudence, can prevent madness, the worst
Of maladies? Terrifick pest! that blasts
The huntsman’s hopes, and desolation spreads
Through all the unpeopled kennel, unrestrain’d;
More fatal than the envenom’d viper’s bite,
Or that Apulian spider’s poisonous sting,
Heal’d by the pleasing antidote of sounds.
When Sirius reigns, and the sun’s parching beams
Bake the dry gaping surface, visit thou
Each even and morn, with quick observant eye,
Thy panting pack. If, in dark sullen mood,
The glouting hound refuse his wonted meal,
Retiring to some close obscure retreat,
Gloomy, disconsolate; with speed remove
The poor infectious wretch, and in strong chains
Bind him, suspected. Thus that dire disease,
Which art can’t cure, wise caution may prevent.
But, this neglected, soon expect a change,
A dismal change, confusion, frenzy, death!
Or, in some dark recess, the senseless brute
BOOK IV THE CHASE v. 210-234.

Sits, sadly pining; deep melancholy,
And black despair, upon his clouded brow
Hang lowering; from his half-opening jaws,
The clammy venom, and infectious froth,
Distilling fall; and from his lungs, inflamed,
Malignant vapours taint the ambient air,
Breathing perdition; his dim eyes are glazed,
He droops his pensive head; his trembling limbs
No more support his weight; abject he lies,
Dumb, spiritless, benumb’d; till death, at last,
Gracious attends, and kindly brings relief.
Or, if outrageous grown, behold, alas!
A yet more dreadful scene; his glaring eyes
Redden with fury; like some angry boar,
Churning, he foams, and, on his back, erect
His pointed bristles rise; his tail incurved
He drops; and, with harsh broken howlings, rends
The poison-tainted air; with rough hoarse voice
Incessant bays, and snuffs the infectious breeze;
This way and that he stares, aghast, and starts
At his own shade; jealous, as if he deem’d
The world his foes. If haply toward the stream
He cast his roving eye, cold horrour chills
His soul; averse, he flies, trembling, appall’d:
Now frantick, to the kennel’s utmost verge,

Raving, he runs, and deals destruction round.
The pack fly diverse; for whate’er he meets,
Vengeful, he bites, and every bite is death.
If now, perchance, through the weak fence escaped,
Far up the wind he roves, with open mouth
Inhales the cooling breeze, nor man, nor beast,
He spares, implacable. The hunter-horse,
Once kind associate of his sylvan toils,
Who haply, now, without the kennel’s mound,
Crops the rank mead, and, listening, hears with joy
The cheering cry, that morn and eve salutes
His raptured sense, a wretched victim falls.
Unhappy quadruped! no more, alas!
Shall thy fond master with his voice applaud
Thy gentleness, thy speed; or with his hand
Stroke thy soft dappled sides, as he each day
Visits thy stall, well pleased: no more shalt thou
With sprightly neighings, to the winding horn
And the loud-opening pack, in concert join’d,
Glad his proud heart; for, oh! the secret wound,
Rankling, inflames; he bites the ground, and dies.
Hence to the village, with pernicious haste,
Baleful, he bends his course: the village flies,
Alarm’d; the tender mother, in her arms,
Hugs close the trembling babe; the doors are barr’d;

And flying curs, by native instinct taught,
Shun the contagious bane; the rustick bands
Hurry to arms, the rude militia seize
Whate’er at hand they find; clubs, forks, or guns,
From every quarter charge the furious foe,
In wild disorder and uncouth array;
Till now, with wounds on wounds, oppress’d and gored,
At one short poisonous gasp he breathes his last.
Hence, to the kennel, Muse, return, and view,
With heavy heart, that hospital of woe,
Where horrour stalks at large! insatiate death
Sits growling o’er his prey; each hour presents
A different scene of ruin and distress.
How busy art thou, fate! and how severe
Thy pointed wrath! the dying and the dead
Promiscuous lie; o’er these, the living fight
In one eternal broil; not conscious why,
Nor yet with whom. So drunkards, in their cups,
Spare not their friends, while senseless squabble reigns.
Huntsman! it much behoves thee to avoid
The perilous debate. Ah! rouse up all
Thy vigilance, and tread the treacherous ground
With careful step. Thy fires unquench’d preserve,

As erst the vestal flame; the pointed steel
In the hot embers hide; and if, surprised,
Thou feel’st the deadly bite, quick urge it home
Into the recent sore, and cauterize
The wound: spare not thy flesh, nor dread the event;
Vulcan shall save, when Æsculapius fails.
Here, should the knowing Muse recount the means
To stop this growing plague. And here, alas!
Each hand presents a sovereign cure, and boasts
Infallibility, but boasts in vain.
On this depend; each to his separate seat
Confine, in fetters bound; give each his mess
Apart, his range in open air; and then,
If deadly symptoms, to thy grief, appear,
Devote the wretch; and let him greatly fall,
A generous victim for the public weal.
Sing, philosophick Muse, the dire effects
Of this contagious bite on hapless man!
The rustick swains, by long tradition taught,
Of leeches old, as soon as they perceive
The bite impress’d, to the sea-coasts repair.
Plunged in the briny flood, the unhappy youth
Now journeys home, secure; but soon shall wish
The seas, as yet, had cover’d him beneath
The foaming surge, full many a fathom deep.

A fate more dismal, and superiour ills,
Hang o’er his head devoted. When the moon,
Closing her monthly round, returns again
To glad the night, or when, full-orb’d, she shines
High in the vault of heaven, the lurking pest
Begins the dire assault. The poisonous foam,
Through the deep wound instill’d, with hostile rage,
And all its fiery particles, saline,
Invades the arterial fluid; whose red waves
Tempestuous heave, and, their cohesion broke,
Fermenting boil; intestine war ensues,
And order to confusion turns, embroil’d.
Now the distended vessels scarce contain
The wild uproar, but press each weaker part,
Unable to resist: the tender brain
And stomach suffer most; convulsions shake
His trembling nerves, and wandering pungent pains
Pinch sore the sleepless wretch; his fluttering pulse
Oft intermits; pensive and sad, he mourns
His cruel fate, and to his weeping friends
Laments in vain: to hasty anger prone,
Resents each slight offence, walks with quick step,
And wildly stares: at last, with boundless sway,
The tyrant frenzy reigns; for, as the dog,
Whose fatal bite convey’d the infectious bane,

Raving, he foams, and howls, and barks, and bites!
Like agitations in his boiling blood,
Present like species to his troubled mind;
His nature, and his actions, all canine.
So, as old Homer sung, the associates wild
Of wandering Ithacus, by Circe’s charms
To swine transformed, ran gruntling through the groves,
Dreadful example to a wicked world!
See, there distress’d he lies! parch’d up with thirst,
But dares not drink; till now, at last, his soul
Trembling escapes, her noisome dungeon leaves,
And to some purer region wings away.
One labour yet remains, celestial Maid!
Another element demands thy song.
No more o’er craggy steeps, through coverts thick
With pointed thorn, and briers intricate,
Urge on, with horn and voice, the painful pack;
But skim, with wanton wing, the irriguous vale,
Where winding streams, amid the flowery meads,
Perpetual glide along, and undermine
The cavern’d banks, by the tenacious roots
Of hoary willows arch’d; gloomy retreat
Of the bright scaly kind; where they, at will,
On the green watery reed, their pasture, graze,

Suck the moist soil, or slumber at their ease,
Rock’d by the restless brook, that draws aslope
Its humid train, and laves their dark abodes.
Where rages not oppression? where, alas,
Is innocence secure? Rapine and spoil
Haunt even the lowest deeps; seas have their sharks;
Rivers and ponds inclose the ravenous pike;
He, in his turn, becomes a prey; on him
The amphibious otter feasts. Just is his fate,
Deserved; but tyrants know no bounds: nor spears
That bristle on his back, defend the perch
From his wide greedy jaws; nor burnish’d mail
The yellow carp; nor all his arts can save
The insinuating eel, that hides his head
Beneath the slimy mud; nor yet escapes
The crimson-spotted trout, the river’s pride,
And beauty of the stream. Without remorse,
This midnight pillager, ranging around,
Insatiate, swallows all. The owner mourns
The unpeopled rivulet, and gladly hears
The huntsman’s early call, and sees with joy
The jovial crew, that march upon its banks
In gay parade, with bearded lances arm’d.
This subtle spoiler of the beaver kind,
Far off perhaps, where ancient alders shade

The deep still pool, within some hollow trunk
Contrives his wicker couch; whence he surveys
His long purlieu, lord of the stream, and all
The finny shoals his own. But you, brave youths,
Dispute the felon’s claim; try every root,
And every reedy bank; encourage all
The busy spreading pack, that fearless plunge
Into the flood, and cross the rapid stream.
Bid rocks and caves, and each resounding shore,
Proclaim your bold defiance; loudly raise
Each cheering voice, till distant hills repeat
The triumphs of the vale. On the soft sand,
See there, his seal impress’d; and, on that bank,
Behold the glittering spoils, half-eaten fish,
Scales, fins, and bones, the leavings of his feast.
Ah! on that yielding sag-bed, see, once more
His seal I view. O’er yon dank rushy marsh
The sly goose-footed prowler bends his course,
And seeks the distant shallows. Huntsman! bring
Thy eager pack, and trail him to his couch.
Hark! the loud peal begins; the clamorous joy,
The gallant chiding, loads the trembling air.
Ye Naiads fair, who o’er these floods preside,
Raise up your dripping heads above the wave,
And hear our melody. The harmonious notes

Float with the stream; and every winding creek,
And hollow rock, that o’er the dimpling flood
Nods pendent, still improve, from shore to shore,
Our sweet reiterated joys. What shouts!
What clamour loud! What gay, heart-cheering sounds
Urge, through the breathing brass their mazy way!
Not choirs of Tritons glad, with sprightlier strains,
The dancing billows, when proud Neptune rides
In triumph o’er the deep. How greedily
They snuff the fishy steam, that to each blade,
Rank-scenting, clings! See! how the morning dews
They sweep, that from their feet, besprinkling, drop,
Dispersed, and leave a track oblique behind.
Now on firm land they range; then in the flood
They plunge tumultuous; or through reedy pools,
Rustling, they work their way: no holt escapes
Their curious search. With quick sensation now
The fuming vapour stings, flutters their hearts,
And joy, redoubled, bursts from every mouth,
In louder symphonies. Yon hollow trunk,
That, with its hoary head incurved, salutes
The passing wave, must be the tyrant’s fort,
And dread abode. How these impatient climb,
While others, at the root, incessant bay:
They put him down. See, there he dives along!

The ascending bubbles mark his gloomy way.
Quick fix the nets, and cut off his retreat
Into the sheltering deeps. Ah, there he vents!
The pack plunge headlong, and protended spears
Menace destruction: while the troubled surge
Indignant foams, and all the scaly kind,
Affrighted, hide their heads. Wild tumult reigns,
And loud uproar. Ah, there once more he vents!
See, that bold hound has seized him; down they sink
Together, lost: but soon shall he repent
His rash assault. See, there escaped, he flies,
Half-drown’d, and clambers up the slippery bank,
With ooze and blood distain’d. Of all the brutes,
Whether by nature formed, or by long use,
This artful diver best can bear the want
Of vital air. Unequal is the fight,
Beneath the whelming element. Yet there
He lives not long; but respiration needs,
At proper intervals: again he vents;
Again the crowd attack. That spear has pierced
His neck; the crimson waves confess the wound.
Fix’d is the bearded lance, unwelcome guest,
Where’er he flies; with him it sinks beneath,
With him it mounts; sure guide to every foe.
Inly he groans; nor can his tender wound

Bear the cold stream. Lo! to yon sedgy bank
He creeps, disconsolate: his numerous foes
Surround him, hounds, and men. Pierced through and through,
On pointed spears they lift him high in air;
Wriggling, he hangs, and grins, and bites in vain.
Bid the loud horns, in gaily-warbling strains,
Proclaim the felon’s fate; he dies, he dies!
Rejoice, ye scaly tribes; and, leaping, dance
Above the wave, in sign of liberty
Restored: the cruel tyrant is no more.
Rejoice, secure and bless’d; did not as yet
Remain, some of your own rapacious kind;
And man, fierce man, with all his various wiles.
O happy, if ye knew your happy state,
Ye rangers of the fields! whom nature boon
Cheers with her smiles, and every element
Conspires to bless. What, if no heroes frown
From marble pedestals; nor Raphael’s works,
Nor Titian’s lively tints, adorn our walls?
Yet these the meanest of us may behold;
And, at another’s cost, may feast at will
Our wondering eyes; what can the owner more?
But vain, alas! is wealth, not graced with power.
The flowery landscape, and the gilded dome,

And vistas opening to the wearied eye,
Through all his wide domain; the planted grove,
The shrubby wilderness, with its gay choir
Of warbling birds, can’t lull to soft repose
The ambitious wretch, whose discontented soul
Is harrow’d day and night; he mourns, he pines,
Until his prince’s favour makes him great.
See there he comes, the exalted idol comes!
The circle’s form’d, and all his fawning slaves
Devoutly bow to earth; from every mouth
The nauseous flattery flows, which he returns
With promises, that die as soon as born.
Vile intercourse! where virtue has no place.
Frown but the monarch, all his glories fade;
He mingles with the throng, outcast, undone,
The pageant of a day; without one friend
To sooth his tortured mind; all, all are fled.
For though they bask’d in his meridian ray,
The insects vanish, as his beams decline.
Not such our friends; for here no dark design,
No wicked interest, bribes the venal heart;
But inclination to our bosom leads,
And weds them there for life; our social cups
Smile, as we smile; open, and unreserved.
We speak our inmost souls; good humour, mirth,

Soft complaisance, and wit from malice free,
Smooth every brow, and glow on every cheek.
O happiness sincere! what wretch would groan
Beneath the galling load of power, or walk
Upon the slippery pavements of the great,
Who thus could reign, unenvied and secure?
Ye guardian powers, who make mankind your care,
Give me to know wise nature’s hidden depths,
Trace each mysterious cause, with judgment read
The expanded volume, and, submiss, adore
That great creative will, who, at a word,
Spoke forth the wonderous scene. But if my soul
To this gross clay confined, flutters on earth
With less ambitious wing; unskill’d to range
From orb to orb, where Newton leads the way;
And, view with piercing eyes, the grand machine;
Worlds above worlds, subservient to his voice;
Who, veil’d in clouded majesty, alone
Gives light to all; bids the great system move,
And changeful seasons, in their turns, advance,
Unmoved, unchanged himself: yet this, at least,
Grant me propitious, an inglorious life,
Calm and serene, nor lost in false pursuits
Of wealth or honours; but enough to raise
My drooping friends, preventing modest want
That dares not ask. And if, to crown my joys,

Ye grant me health, that, ruddy in my cheeks,
Blooms in my life’s decline; fields, woods, and streams,
Each towering hill, each humble vale below,
Shall hear my cheering voice; my hounds shall wake
The lazy morn, and glad the horizon round.
Printed by W. Bulmer and Co.
Cleveland-row, St. James’s.
*** END OF THE PROJECT GUTENBERG EBOOK THE CHASE ***
Updated editions will replace the previous one—the old editions will
be renamed.
Creating the works from print editions not protected by U.S.

copyright law means that no one owns a United States copyright in
these works, so the Foundation (and you!) can copy and distribute it
in the United States without permission and without paying copyright
royalties. Special rules, set forth in the General Terms of Use part of
this license, apply to copying and distributing Project Gutenberg™
electronic works to protect the PROJECT GUTENBERG™ concept
and trademark. Project Gutenberg is a registered trademark, and
may not be used if you charge for an eBook, except by following the
terms of the trademark license, including paying royalties for use of
the Project Gutenberg trademark. If you do not charge anything for
copies of this eBook, complying with the trademark license is very
easy. You may use this eBook for nearly any purpose such as
creation of derivative works, reports, performances and research.
Project Gutenberg eBooks may be modified and printed and given
away—you may do practically ANYTHING in the United States with
eBooks not protected by U.S. copyright law. Redistribution is subject
to the trademark license, especially commercial redistribution.
START: FULL LICENSE

THE FULL PROJECT GUTENBERG LICENSE
PLEASE READ THIS BEFORE YOU DISTRIBUTE OR USE THIS WORK
To protect the Project Gutenberg™ mission of promoting the free

distribution of electronic works, by using or distributing this work (or
any other work associated in any way with the phrase “Project
Gutenberg”), you agree to comply with all the terms of the Full
Project Gutenberg™ License available with this file or online at
www.gutenberg.org/license.
Section 1. General Terms of Use and

Redistributing Project Gutenberg™
electronic works
1.A. By reading or using any part of this Project Gutenberg™
electronic work, you indicate that you have read, understand, agree
to and accept all the terms of this license and intellectual property
(trademark/copyright) agreement. If you do not agree to abide by all
the terms of this agreement, you must cease using and return or
destroy all copies of Project Gutenberg™ electronic works in your
possession. If you paid a fee for obtaining a copy of or access to a
Project Gutenberg™ electronic work and you do not agree to be
bound by the terms of this agreement, you may obtain a refund from
the person or entity to whom you paid the fee as set forth in
paragraph 1.E.8.
1.B. “Project Gutenberg” is a registered trademark. It may only be

used on or associated in any way with an electronic work by people
who agree to be bound by the terms of this agreement. There are a
few things that you can do with most Project Gutenberg™ electronic
works even without complying with the full terms of this agreement.
See paragraph 1.C below. There are a lot of things you can do with
Project Gutenberg™ electronic works if you follow the terms of this
agreement and help preserve free future access to Project
Gutenberg™ electronic works. See paragraph 1.E below.
1.C. The Project Gutenberg Literary Archive Foundation (“the
Foundation” or PGLAF), owns a compilation copyright in the
collection of Project Gutenberg™ electronic works. Nearly all the
individual works in the collection are in the public domain in the
United States. If an individual work is unprotected by copyright law in
the United States and you are located in the United States, we do
not claim a right to prevent you from copying, distributing,
performing, displaying or creating derivative works based on the
work as long as all references to Project Gutenberg are removed. Of
course, we hope that you will support the Project Gutenberg™
mission of promoting free access to electronic works by freely
sharing Project Gutenberg™ works in compliance with the terms of
this agreement for keeping the Project Gutenberg™ name
associated with the work. You can easily comply with the terms of
this agreement by keeping this work in the same format with its
attached full Project Gutenberg™ License when you share it without
charge with others.
1.D. The copyright laws of the place where you are located also
govern what you can do with this work. Copyright laws in most
countries are in a constant state of change. If you are outside the
United States, check the laws of your country in addition to the terms
of this agreement before downloading, copying, displaying,
performing, distributing or creating derivative works based on this
work or any other Project Gutenberg™ work. The Foundation makes
no representations concerning the copyright status of any work in
any country other than the United States.
1.E. Unless you have removed all references to Project Gutenberg:
1.E.1. The following sentence, with active links to, or other

immediate access to, the full Project Gutenberg™ License must
appear prominently whenever any copy of a Project Gutenberg™
work (any work on which the phrase “Project Gutenberg” appears, or
with which the phrase “Project Gutenberg” is associated) is
accessed, displayed, performed, viewed, copied or distributed:
This eBook is for the use of anyone anywhere in the United
States and most other parts of the world at no cost and with
almost no restrictions whatsoever. You may copy it, give it away
or re-use it under the terms of the Project Gutenberg License
included with this eBook or online at www.gutenberg.org. If you
are not located in the United States, you will have to check the
laws of the country where you are located before using this
eBook.
1.E.2. If an individual Project Gutenberg™ electronic work is derived

from texts not protected by U.S. copyright law (does not contain a
notice indicating that it is posted with permission of the copyright
holder), the work can be copied and distributed to anyone in the
United States without paying any fees or charges. If you are
redistributing or providing access to a work with the phrase “Project
Gutenberg” associated with or appearing on the work, you must
comply either with the requirements of paragraphs 1.E.1 through
1.E.7 or obtain permission for the use of the work and the Project
Gutenberg™ trademark as set forth in paragraphs 1.E.8 or 1.E.9.
1.E.3. If an individual Project Gutenberg™ electronic work is posted

with the permission of the copyright holder, your use and distribution
must comply with both paragraphs 1.E.1 through 1.E.7 and any
additional terms imposed by the copyright holder. Additional terms
will be linked to the Project Gutenberg™ License for all works posted
with the permission of the copyright holder found at the beginning of
this work.
1.E.4. Do not unlink or detach or remove the full Project

Gutenberg™ License terms from this work, or any files containing a
part of this work or any other work associated with Project
Gutenberg™.
1.E.5. Do not copy, display, perform, distribute or redistribute this

electronic work, or any part of this electronic work, without
prominently displaying the sentence set forth in paragraph 1.E.1 with
active links or immediate access to the full terms of the Project
Gutenberg™ License.

Macroeconomics A Contemporary Introduction 11th Edition McEachern Test Bank instant download all chapter

Uploaded by

Document Information

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

Macroeconomics A Contemporary Introduction 11th Edition McEachern Test Bank instant download all 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

84. Which of the following is likely to be an effect of inflation?