Review Part Deux

Which of the following unemployed individuals represents frictional unemployment?

• Marissa, a full-time student who plays on the school’s soccer team.

• Janet, an accounting graduate who is interviewing with a number of accounting firms.

• Sameer, a retired faculty member who volunteers at the local hospital.

• Jeremy, a customer service representative who was laid-off after his job was automated.

In 2017 Sabrina earned an annual salary of $100,000 as an engineer. In 2018, her income rose to $105,000. The inflation rate in 2018 was 2%. How did Sabrina’s nominal income and real income change in 2018 compared to 2017?

• Nominal income decreased and real income decreased.

• Nominal income decreased and real income did not change.

• Nominal income increased and real income increased.

• Nominal income increased and real income did not change.

Which of the following is true?

• The inflation rate from 2012 to 2013 is 10%.

• The CPI in year 2013 is 110.

• The CPI in year 2013 is 120.

• Based on the CPI, the average real weekly wage rate increased by 10% from 2012 to 2013.

Which of the following explains why the rate of change of the consumer price index (CPI) tends to overstate the actual inflation rate?

• Consumers will require more income to buy goods whose prices have increased.

• Nominal wages do not always increase by as much as prices do.

• Consumers tend to substitute lower-priced goods that may not be represented in the basket of goods.

• When real wages increase, consumers can afford higher-priced goods.

Which of the following will happen if the actual inflation rate is greater than the expected inflation rate?

• Lenders of fixed interest rate loans will be better off.

• Lenders of variable interest rate loans will be worse off.

• Borrowers of fixed interest rate loans will be worse off.

• Borrowers of fixed interest rate loans will be better off.

Which of the following situations will benefit lenders of fixed interest rate loans?

• The actual inflation rate is equal to the natural rate of unemployment.

• The actual inflation rate is less than the expected inflation rate.

• The actual inflation rate is equal to the fixed interest rate.

• The consumer price index is greater than 100.

Which of the following allows an individual to gain from unexpected inflation?

• Living on a fixed income

• Working at the minimum wage

• Lending money at a fixed interest rate

• Borrowing money at a fixed interest rate

What are the nominal GDP and real GDP in 1993?

• Nominal GDP is $90, Real GDP is $96

• Nominal GDP is $74, Real GDP is $96

• Nominal GDP is $70, Real GDP is $96

• Nominal GDP is $96, Real GDP is $90

In 2016 the nominal GDP for Country X was $330 billion and the GDP deflator was 110. The real GDP for 2016 was

• $110 billion

• $220 billion

• $300 billion

• $330 billion

Which of the following is true about the real GDP?

• It measures aggregate output using current prices.

• It measures aggregate output using constant prices.

• It is greater than nominal GDP when the GDP deflator is greater than 100.

• It is equal to the GDP deflator divided by nominal GDP.