Question 1

The nominal interest rate will be less than the real interest rate when

Accepted Answer

A)  the rate of inflation is positive but decreasing.
B)  the rate of inflation is positive and increasing.
C)  the rate of inflation is negative.
D)  the real interest rate is negative.
E)  the rate of inflation is positive and constant.F) B) and D)
G) B) and C)

Question 2

Statistics Canada would categorize a person as ________ if they were temporarily away from their job because they were ill.

Accepted Answer

A)  employed
B)  unemployed
C)  a discouraged worker
D)  out of the labour force
E)  disabledF) All of the above
G) A) and B)

Question 3

An increase in the size of the underground economy would

Accepted Answer

A)  have no effect on the official unemployment rate.
B)  cause the official unemployment rate to fall as more people find jobs outside the formal economy.
C)  cause the labour force participation rate to rise.
D)  cause the labour force participation rate to fall.
E)  raise the employment population ratio as reported by Statistics Canada.F) B) and C)
G) D) and E)

Question 4

If the CPI rises from 206.7 to 212.7 between two consecutive years,by how much has the cost of living changed between these two years?

Accepted Answer

A)  The cost of living has increased by 6%.
B)  The cost of living has increased by 2.9%.
C)  The cost of living has increased by 12.7%.
D)  The cost of living has decreased by 6%.
E)  The cost of living has decreased by 5.1%.F) D) and E)
G) B) and C) B

Question 5

Upon your graduation from university,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

Accepted Answer

A)  the cost of additional education is always higher during recession.
B)  high unemployment rates do not usually last for very long.
C)  looking for work is your only option.
D)  the wages of university graduates do not fall during recession.
E)  recessions typically last longer than it takes to complete a second university degree.F) All of the above
G) B) and E)

Question 6

Why would a firm pay efficiency wages?

Accepted Answer

An efficiency wage is a wage that is hig...

Question 7

In December 2015,CHCH TV laid-off 129 employees from its local news division.If these lay-offs occured because advertisers cut back their spending due to a slow down in the economy,the former local news division workers would be classed as

Accepted Answer

A)  structurally unemployed.
B)  frictionally unemployed.
C)  seasonally unemployed.
D)  cyclically unemployed.
E)  not in the labour force.F) All of the above
G) B) and E)

Question 8

Full employment is not considered to be zero unemployment,because

Accepted Answer

A)  some cyclical unemployment always exists.
B)  some people do not want a job.
C)  there are not enough jobs for everyone who wants one.
D)  people do not find jobs instantaneously.
E)  not everyone is entitled to work in Canada.F) A) and E)
G) A) and D)

Question 9

Shelter is the largest component of the Canadian CPI market basket.

Accepted Answer

A) True 
 B)False  True

Question 10

Explain whether you agree or disagree with the following statement: "The reason that inflation is bad is because it increases the cost of living - the costs of goods and services we buy - without increasing income in general."

Accepted Answer

Disagree.Inflation,in general,must incre...

Question 11

Efficiency wages cause unemployment because

Accepted Answer

A)  firms pay wages that are below the market wage,causing the quantity of labour demanded to be greater than the quantity of labour supplied.
B)  firms pay wages that are below the market wage,causing the quantity of labour demanded to be less than the quantity of labour supplied.
C)  firms pay wages that are above the market wage,causing the quantity of labour demanded to be greater than the quantity of labour supplied.
D)  firms pay wages that are above the market wage,causing the quantity of labour demanded to be less than the quantity of labour supplied.
E)  firms pay wages that are above the market wage,causing the quantity of labour demanded to increase in all industries.F) A) and B)
G) B) and E)

Question 12

Sarah is a full-time student who is not looking for work.What kind of unemployment is Sarah experiencing?

Accepted Answer

A)  cyclical
B)  structural
C)  frictional
D)  seasonal
E)  Sarah is not experiencing unemployment of any kind because she is not currently part of the labour force.F) C) and D)
G) None of the above E

Question 13

The economy has gone into a recession.You have majored in computer science and,because of the recession,have difficulty in finding a job.Should you go back to school and get a second major?

Accepted Answer

A)  Yes,the recession will ensure that I will never find a job as a programmer.
B)  Yes,the recession will lower income in my field permanently.
C)  No,the recession will most likely be short-lived and I can get a job after it is over.
D)  No,the recession will have no impact on my ability to get a job or my future income.
E)  Yes,the recession will likely reduce the demand for computer science majors permanently.F) A) and B)
G) None of the above

Question 14

Throughout 2016 Alberta's oil and gas sector laid-off thousands of workers due to low oil prices.If oil prices do not recover these unemployed workers would classed as

Accepted Answer

A)  structurally unemployed.
B)  seasonally unemployed.
C)  frictionally unemployed.
D)  cyclically unemployed.
E)  naturally unemployed.F) A) and B)
G) B) and D)

Question 15

The Employment Insurance program has which of the following effects?

Accepted Answer

A)  It decreases the amount of personal income of the unemployed.
B)  It contributes to the severity of a recession or economic downturn.
C)  It increases the amount of time spent searching for a job.
D)  It lowers the overall unemployment rate.
E)  It reduces structural unemployment.F) A) and C)
G) A) and D)

Question 16

The costs to firms of changing prices are called menu costs.

Accepted Answer

A) True 
 B)False

Question 17

Table 5.7
 
-Refer to Table 5.7.Consider a simple economy that produces only three products: tacos,earplugs,and toothbrushes.Use the information in the table to calculate the inflation rate for 2014,as measured by the consumer price index.

Accepted Answer

Total expenditures for 2002 = (5 × $1.50...

Question 18

The short-term unemployment arising from the process of matching workers with jobs is called

Accepted Answer

A)  frictional unemployment.
B)  structural unemployment.
C)  cyclical unemployment.
D)  seasonal unemployment.
E)  unnatural unemployment.F) B) and D)
G) A) and E)

Question 19

Which of the following cause the unemployment rate as measured by Statistics Canada to understate the true extent of joblessness?

Accepted Answer

A)  inflation
B)  discouraged workers
C)  people employed in the underground economy
D)  unemployed persons falsely report themselves to be actively looking for a job
E)  a shrinking working age populationF) A) and C)
G) B) and E)

Question 20

The consumer price index is the

Accepted Answer

A)  cost of a market basket of goods and services typically consumed in the base year.
B)  cost of a market basket of goods and services typically consumed in the current period.
C)  average of the prices of the goods and services purchased by a typical urban family of four.
D)  average of the prices of new final goods and services produced in the economy over a period of time.
E)  average price of consumer data purchased from Facebook.F) A) and B)
G) C) and D)

Exam 5: Unemployment and Inflation

The nominal interest rate will be less than the real interest rate when

Correct AnswerverifiedShow Answer

Statistics Canada would categorize a person as ________ if they were temporarily away from their job because they were ill.

Correct AnswerverifiedShow Answer

An increase in the size of the underground economy would

Correct AnswerverifiedShow Answer

If the CPI rises from 206.7 to 212.7 between two consecutive years,by how much has the cost of living changed between these two years?

Correct AnswerverifiedB

Upon your graduation from university,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

Correct AnswerverifiedShow Answer

Why would a firm pay efficiency wages?

Correct AnswerverifiedAn efficiency wage is a wage that is hig...View AnswerShow Answer

In December 2015,CHCH TV laid-off 129 employees from its local news division.If these lay-offs occured because advertisers cut back their spending due to a slow down in the economy,the former local news division workers would be classed as

Correct AnswerverifiedShow Answer

Full employment is not considered to be zero unemployment,because

Correct AnswerverifiedShow Answer

Shelter is the largest component of the Canadian CPI market basket.

Correct AnswerverifiedTrue

Explain whether you agree or disagree with the following statement: "The reason that inflation is bad is because it increases the cost of living - the costs of goods and services we buy - without increasing income in general."

Correct AnswerverifiedDisagree.Inflation,in general,must incre...View AnswerShow Answer

Efficiency wages cause unemployment because

Correct AnswerverifiedShow Answer

Sarah is a full-time student who is not looking for work.What kind of unemployment is Sarah experiencing?

Correct AnswerverifiedE

The economy has gone into a recession.You have majored in computer science and,because of the recession,have difficulty in finding a job.Should you go back to school and get a second major?

Correct AnswerverifiedShow Answer

Throughout 2016 Alberta's oil and gas sector laid-off thousands of workers due to low oil prices.If oil prices do not recover these unemployed workers would classed as

Correct AnswerverifiedShow Answer

The Employment Insurance program has which of the following effects?

Correct AnswerverifiedShow Answer

The costs to firms of changing prices are called menu costs.

Correct AnswerverifiedShow Answer

Table 5.7 -Refer to Table 5.7.Consider a simple economy that produces only three products: tacos,earplugs,and toothbrushes.Use the information in the table to calculate the inflation rate for 2014,as measured by the consumer price index.

Correct AnswerverifiedTotal expenditures for 2002 = (5 × $1.50...View AnswerShow Answer

The short-term unemployment arising from the process of matching workers with jobs is called

Correct AnswerverifiedShow Answer

Which of the following cause the unemployment rate as measured by Statistics Canada to understate the true extent of joblessness?

Correct AnswerverifiedShow Answer

The consumer price index is the

Correct AnswerverifiedShow Answer

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B

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An efficiency wage is a wage that is hig...
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True

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Disagree.Inflation,in general,must incre...
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E

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Total expenditures for 2002 = (5 × $1.50...
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