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| 1 | |
Who is most likely to be hurt by unanticipated inflation? |
| | A) | A creditor |
| | B) | A debtor |
| | C) | A union worker with a COLA in her contract |
| | D) | A homeowner with a $200,000 mortgage |
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| 2 | |
Carlos is an unemployed software designer. In his area, the software industry is in decline but there are many jobs in the real-estate sector. Carlos' unemployment is best classified as: |
| | A) | cyclical unemployment |
| | B) | counter-cyclical unemployment |
| | C) | structural unemployment |
| | D) | frictional unemployment |
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| 3 | |
Unemployment in the U.S. has been significantly higher than in France, the U.K., and Germany over the past several years. |
| | A) | True |
| | B) | False |
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| 4 | |
Assume that Okun's law applies and the following information is relevant:
Potential real GDP = $500 billion
Natural rate of unemployment = 5%
Actual rate of unemployment = 8%
Which of the following statements is correct? |
| | A) | This economy is operating at a point on its production possibilities curve |
| | B) | There is a positive GDP gap of 3% |
| | C) | There is a negative GDP gap of 3% |
| | D) | GDP is $30 billion below its potential |
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| 5 | |
Unanticipated inflation: |
| | A) | arbitrarily redistributes income from creditors to debtors |
| | B) | invariably leads to unemployment |
| | C) | reduces the real incomes of all individuals |
| | D) | has the same consequences as anticipated inflation |
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| 6 | |
In 2007, Maxine's nominal income increased by 3% while the price level rose by 1%. Consequently, Maxine's real income: |
| | A) | rose by approximately 4% |
| | B) | fell by approximately 1% |
| | C) | rose by approximately 2% |
| | D) | fell by approximately 2% |
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| 7 | |
Cost of living adjustments (COLAs): |
| | A) | are typically ineffective against unanticipated inflation |
| | B) | are often used to protect union workers against unanticipated inflation |
| | C) | are the basis for Okun's law |
| | D) | are effective protection against demand-pull inflation but not cost-push inflation |
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| 8 | |
Consider the following groups of individuals:
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The labor force consists of: |
| | A) | group 1 only |
| | B) | groups 1 and 2 only |
| | C) | groups 1, 2, and 3 only |
| | D) | groups 1, 2, 3, and 4 |
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| 9 | |
Suppose the total population is 200 million workers, 100 million of whom are in the labor force. 80 million people are employed full time and another 16 million are employed part time; 5 million people are "discouraged workers." The unemployment rate is: |
| | A) | 21% |
| | B) | 20% |
| | C) | 11% |
| | D) | 4% |
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| 10 | |
In the nation of Zorn, GDP has doubled in the past 14 years. Over this time period, its annual rate of growth was approximately: |
| | A) | 2% |
| | B) | 4% |
| | C) | 5% |
| | D) | 7% |
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