Government policies can affect frictional

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1. Government policies can affect frictional and structural unemployment in either ways. Which policies can increase these two types of unemployment?

A. Increasing the length of time that the unemployed can receive payments from the government

B. Passing legislation that makes it more difficult for firms to fire workers

C. Increasing the minimum wage

D. Increasing the amount of unemployment insurance

E. All of the above

2. Which of the following is the prevailing view of economists about unemployment insurance program in the United States?

A. Unemployment insurance is a bad idea because the unemployed spend more time searching for jobs

B. Unemployment insurance is a bad idea because it promotes laziness among the unemployed

C. Unemployment insurance is not a bad idea because it helps the unemployed maintain their income and spending (although at reduced level) which helps reduce the severity of recessions and also help the business sector

D. Most economist are against it because it interferes with labor market and violates the “survival of the fittest” norm.

3. To obtain prices of a representative basket of goods and services, the Bureau of Labor Statistics conducts a monthly survey of ______________ households nationwide on their spending habits. The results of this survey are used to construct market basket of ___________ goods and services purchased by the typical urban family of four

A. 1,000; 80,000

B. 10,000; 525

C. 5,000; 75

D. 30,000; 211

4. Of the eight categories in the CPI market basket, which three make up more than 75 % of the total expenditure on the basket?

A. Medical care, recreation, and education

B. Housing, transportation, and food

C. Food and beverages, apparel, and other goods and services

D. None of the above. All categories have similar percentage around 10-12%

5. Changes in the CPI overstate the true inflation rate due to four “biases”. If apple prices rise rapidly during the month while orange prices fall, consumers may reduce their apple purchases and increase their orange purchases. Which of the four biases is concerned with this tendency?

A. The new product bias

B. The substitution bias

C. The increase in quality bias

D. the outlet bias

6. The CPI in 2002 was 180 and in 2003 was 184, what was the inflation rate?

A. 4%

B. 2.22%

C. 1.75%

D. 97.8%

Reference no: EM131380032

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