Chapter 6 Study Guide

The sum of the unemployment rate and the employment rate always equals 100 percent.

• True

• False

Discouraged workers are not counted as unemployed because they are working.

• True

• False

A common measure of inflation is the percentage change in the CPI of adjacent years.

• True

• False

Jamaal lost his job when a mechanical device replaced people with his skills. If Jamaal's skills are non-transferable, he would be considered to be structurally unemployed.

• True

• False

Most unemployed persons fall into the category of job loser.

• True

• False

The CPI was 154 in one year and 165 the following year. How much did prices rise between these two years?

• 5.46%

• 6.67%

• 7.14%

• 0.07%

Suppose the market basket consists of 100X, 200Y, and 300Z. Current-year prices are $5 for each unit of X, $2 for each unit of Y, and $3 for each unit of Z. Base-year prices are $2 for each unit of X, Y, and Z. What is the approximate CPI in the current year?

• 15

• 70.2

• 1,200

• 150

One measure of the inflation rate is the

• sum of the CPIs of adjacent years

• percentage change in the CPI of adjacent years

• percentage change in the Real GDP of adjacent

• GDP minus the Real GDP in a year

The base year is the year

• in which prices are unstable

• in which prices are the lowest

• in which prices are highest

• that serves as a reference point or benchmark

• in which nominal output is largest

Refer to Exhibit 6-1. Prices rose by __________ percent from Year 1 to Year 2

• 1.38

• 0.14

• 1.29

• 1.94

• 3.00