Download Ch. 13 Study Guide Multiple Choice ____ 1. Which of the following

Ch. 13 Study Guide
Multiple Choice
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1. Which of the following might cause the inflation rate to spike up sharply?
A. The items in the CPI market basket change to account for changing consumer buying
habits.
B. The purchasing power of the average consumer decreases due to a sluggish economy.
C. Prices on world oil markets rise steeply due to war in the Middle East.
D. Plentiful rainfall and moderate temperatures result in good harvests of wheat and
soybeans.
2. A knitting factory worker who loses her job because the company has relocated the plant to another
country is an example of
A. frictional unemployment.
C. cyclical unemployment.
B. structural unemployment.
D. seasonal unemployment.
3. According to the demand-pull theory, what is responsible for inflation?
A. Producers raise prices to meet existing demand.
B. The economy is in a wage-price spiral.
C. Too much money is in circulation.
D. Demand for goods and services exceeds existing supply.
4. How has the distribution of income in the United States changed over the last 20 years?
A. It has become more equal.
B. It has become less equal.
C. It became more equal for about 10 years but has become less equal.
D. It has not changed appreciably.
5. Economists look to which of the following explanations for inflation?
A. too much money in the economy
B. demand for goods exceeds supply, as in wartime
C. producers raise prices in order to meet increased costs
D. all of the above
6. According to the cost-push theory, what is responsible for inflation?
A. Producers raise prices to meet increased costs.
B. Demand for goods and services exceeds existing supply.
C. Too much money is in circulation.
D. The economy is operating as though there was a war.
7. What does it mean when a person is underemployed?
A. The person has been working but now is laid off.
B. The person is looking for work in a special field.
C. The person is not making as much money as they need.
D. The person has a job but they are overqualified for it.
8. Which of the following is a result of unemployment that is very low?
A. The few people who are unemployed stop looking for jobs.
B. Wages drop below the level of minimum wage.
C. Companies have difficulties recruiting workers.
D. Companies stop looking for people to fill unfilled jobs.
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9. What is a major problem for businesses during a period of chronic inflation?
A. They cannot anticipate their costs.
C. They do not know when the inflation will
stop.
B. Their money becomes worthless.
D. They have difficulty hiring help.
10. Which of the following families is statistically the most likely to live below the poverty threshold?
A. a two-parent family of Hispanic origin living in the inner city
B. a black family headed by a single mother living in the inner city
C. a black family headed by a single mother living in the suburbs
D. a two-parent white family living in a rural area
11. When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job
at large urban university, she is
A. frictionally unemployed.
C. cyclically unemployed.
B. structurally unemployed.
D. a discouraged worker.
12. The “market basket” that is used by the Bureau of Labor Statistics to calculate prices is made up of which
of the following?
A. food items only
B. nonfood items only
C. typical goods and services for an urban household
D. food and necessary services for any family
13. If Jackson is paid an interest rate of 10% on his savings, but the inflation rate has risen to 20%, the
purchasing power of his savings is
A. decreased by 10%.
C. increased by 10%.
B. increased by 20%.
D. decreased by 20%.
Short Answer
14. Identify and explain the 2 main reason why prices rise.
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