Question

Which of the three measures of inflation measures the average price level of the largest number 19. of goods? a. The CP b. The GDP Deflator c. The Producer Price Index d. The Wholesale Price Index 20. Which of the following is NOT a reason why people save a. To smooth consumption over their lives b. To finance their future retirement c. As a way to transfer income from good times to bad d. To increase investment 21. If the demand for loanable funds increases, all other things being equal, the quantity of loanable funds exchanged will Increase a. Decrease b. Remain the same c. d. Increase, decrease or remain the same 22. The percentage of adults in the labor force is the a. Unemployment rate b. Employment rate c. Labor force participation rate d. Discouraged worker rate 23. Variations in growth of real GDP around the long term trend are called a. Business cycles b. Frictional unemployment c. Deflation d. The velocity of money 24. What is the name for a person who has given up looking for a job even though they would stl like one? a. Jobless worker b. Discouraged worker c. Laid off worker d. Discarded worker If a worker loses his job and becomes unemployed, the labor force participation rate: a. Remains constant b. Increases c. Decreases d. Changes unpredictably

Answer 1

19) a. The CPI (consumer price index)
20) a. to smooth consumption over their lives.
When the demand for loanable funds increases the quantity of
loanable funds exchanged remains the same. The quantity exchanged remains
the same because the supply of loans remains unchanged. Moreover the interest
rate will rise when the demand for loanable funds increases.
21) c. remain the same.
22) c. Labor force participation rate.
23) a. business cycles.
24) b. discouraged worker.
The labor force participation rate is the total number of employed workers
divided by the working age population. When a worker loses their job and becomes
unemployed, the labor force participation rate decreases.
25) c. decreases.