When a worker quits work to stay at home with the children, it is an example of:
Answer(s): D
Choice "d" is correct. Unemployment only tallies workers actively seeking employment; it does not count retirees or stay-at-home parents.Choice "a" is incorrect. Frictional unemployment describes workers who leave work voluntarily to seek a better position.Choice "b" is incorrect. Structural unemployment describes workers whose skills are no longer needed. Choice "c" is incorrect. Cyclical unemployment describes workers unemployed due to the business cycle.
The CPI jumps from 131 in year 1 to 136.5 in year 2. What is annual inflation rate?
Answer(s): A
Choice "a" is correct. The inflation rate is measured as:
The inflation rate measures:
Choice "d" is correct. The inflation rate measures the rate of increase in the overall price level in the economy. Choice "a" is incorrect. The inflation rate is associated with price level changes not changes in the nominal value of output.Choice "b" is incorrect. Inflation refers to a sustained increase in the overall price level. Not the price of a particular good.Choice "c" is incorrect. The inflation rate is associated with price level changes not interest rate changes.
Stagflation refers to:
Answer(s): B
Choice "b" is correct. Stagflation occurs when the economy suffers a recession that is characterized by falling output, rising unemployment, and a rising price level.Choice "a" is incorrect. Real GDP is falling during stagflation, not rising.Choice "c" is incorrect. High inflation rates is just one aspect of stagflation; the other is falling output and rising unemployment.Choice "d" is incorrect. High unemployment rates are just one aspect of stagflation; the other is a rising overall price level (high inflation).
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