If the unemployment rate is 5 percent and 9 million workers are unemployed, then the civilian labor force equals 140 million people 160 million 180 million 200 million people If Mary Miller’s nominal income increases by 4 percent while the consumer price index increases by 6 percent, her real income increases by 10 percent increases by 2 percent decreases by 10 percent decreases by 2 percent Suppose that the consumer price index equaled 177.1 in 2001 and 179.9 in 2002. The rate of inflation between these two years thus equaled 1.6 percent 2.8 percent 3.3 percent 4.1 percent True-False Questions 1. T F When the economy is fully employed, frictional unemployment equals zero. 2. T F The natural rate of unemployment results when cyclical unemployment is equal to zero. 3. T F Demand-pull inflation may be caused by too much money chasing too few goods. 4. T F Higher resource prices may lead to cost-push inflation. 5. T F An overheated economy tends to realize low rates of unemployment. 6. T F The business cycle is a pattern that has distinct phases. 7. T F When demand decreases, it tends to have a limited effect on employment. 8. T F An improvement in technology has a more immediate effect on domestic output and employment than total spending. 9. T F When the economy declines for one quarter, we say that the economy is in a recession. 10. T F The U.S. economy has had several recessions since the Great Depression. 11. T F When the economy reaches the bottom of the business cycle, it begins to suffer a recession. 12. T F Cyclical unemployment may be zero, but frictional unemployment is generally positive.
If the unemployment rate is 5 percent and 9 million workers are unemployed, then the civilian labor force equals 140 million people 160 million 180 million 200 million people If Mary Miller’s nominal income increases by 4 percent while the consumer price index increases by 6 percent, her real income increases by 10 percent increases by 2 percent decreases by 10 percent decreases by 2 percent Suppose that the consumer price index equaled 177.1 in 2001 and 179.9 in 2002. The rate of inflation between these two years thus equaled 1.6 percent 2.8 percent 3.3 percent 4.1 percent True-False Questions 1. T F When the economy is fully employed, frictional unemployment equals zero. 2. T F The natural rate of unemployment results when cyclical unemployment is equal to zero. 3. T F Demand-pull inflation may be caused by too much money chasing too few goods. 4. T F Higher resource prices may lead to cost-push inflation. 5. T F An overheated economy tends to realize low rates of unemployment. 6. T F The business cycle is a pattern that has distinct phases. 7. T F When demand decreases, it tends to have a limited effect on employment. 8. T F An improvement in technology has a more immediate effect on domestic output and employment than total spending. 9. T F When the economy declines for one quarter, we say that the economy is in a recession. 10. T F The U.S. economy has had several recessions since the Great Depression. 11. T F When the economy reaches the bottom of the business cycle, it begins to suffer a recession. 12. T F Cyclical unemployment may be zero, but frictional unemployment is generally positive.
Ch11_SGr.docx