CHAPTER 5 - INFLATION & UNEMPLOYMENT

The phases of a business cycle in which unemployment is at the lowest level is a _____________.

• peak

• trough

• recovery

• recession

Due to hypermarket the existence of self-service counters, many cashiers are no longer needed and laid off. These unemployed cashiers are categorized under _____________.

• cyclical unemployment

• structural unemployment

• frictional unemployment

• seasonal unemployment

Which of the following group will gain profit during inflation?

• Pensioner

• Businessman

• Fixed income worker

• Holders of fixed deposits in a bank

An increase in the price of raw materials causes a/an ______________ inflation

• cost push

• profit push

• import push

• demand pull

Fiscal policy influences the economic activities by using

• tax rates and interest rate

• tax rates and government expenditure

• interest rate and reserve requirement

• government expenditure and reserve

Assume that the total labor force is 100 individuals with 10 are unemployment. The unemployment rate is __________. Assumed that 10 people drop out of the labor force, and that 10 remain unemployed. The new unemployment rate is ________.

• 10%; 11%

• 11%; 10%

• 10%; 9%

• 9%; 10%

Suppose that the number of jobs in the fishing industry decreases, but the number of jobs in the travel industry increases. Initially ________________

• the economy remains at full employment

• structural unemployment increases

• cyclical unemployment increases

• there is a shortage of workers in both sectors

Every country experiencing inflation is in the trap of liquidity. Government action to overcome the country's economy is ______________.

• increase the bank rate

• increase reserve requirement ratio

• reduce money supply

• adopt a surplus budget policy

If the consumer price index (CPI) for the year 2014 is equal to 180 and for the year 2015 is equal to 198, calculate the inflation rate level in year 2015.

• 10%

• 18%

• 80%

• 98%

Which of the following statements would be classified as "full employment"?

• Everyone who wants to work has a job

• Approximately 95% of people have a job

• People who have been hunting for a job for a long time

• Everyone who wants to work have full jobs