Question 1

Suppose the U.S. labor force is 167 million people, and 6 million are unemployed. What is the unemployment rate? Use the formula $$	ext{Unemployment Rate} = \frac{	ext{Unemployed}}{	ext{Labor Force}} 	imes 100.$$

Accepted Answer

$$3.6\%$$

Question 2

Which of the following best describes a discouraged worker?

Accepted Answer

A person who is not working, wants a job, but has not looked for work in the past four weeks because they believe no jobs are available for them.

Question 3

If the working-age population is 266.8 million and the labor force is 167.0 million, what is the labor-force participation rate? Use $$	ext{Labor-force participation rate} = \frac{	ext{Labor force}}{	ext{Working-age population}} 	imes 100.$$

Accepted Answer

$$62.6\%$$

Question 4

Which of the following is an example of structural unemployment?

Accepted Answer

A factory worker loses their job because their skills are no longer needed due to automation.

Question 5

During the 2020 Covid recession, the average length of unemployment exceeded 6 months. What type of unemployment is most likely to increase during a recession?

Accepted Answer

Cyclical unemployment

Question 6

If the Consumer Price Index (CPI) was 120 in 2024 and 123 in 2025, what was the inflation rate from 2024 to 2025? Use $$	ext{Inflation Rate} = \frac{	ext{CPI}_{2025} - 	ext{CPI}_{2024}}{	ext{CPI}_{2024}} 	imes 100.$$

Accepted Answer

$$2.5\%$$

Question 7

Which of the following is NOT a problem with the Consumer Price Index (CPI) as a measure of inflation?

Accepted Answer

It is updated every month to include new products immediately.

Question 8

A worker loses their job at a steel mill due to increased imports from abroad. Which government policy is most directly aimed at helping this worker?

Accepted Answer

Trade Adjustment Assistance

Question 9

Suppose your mother earned $$30,000 in 1997, when the CPI was 160. In 2022, the CPI is 293. What is her 1997 salary equivalent in 2022 dollars? Use $$	ext{Value in 2022 dollars} = 	ext{Value in 1997 dollars} 	imes \frac{	ext{CPI}_{2022}}{	ext{CPI}_{1997}}$.

Accepted Answer

$$54,938$$

Question 10

If the nominal interest rate is $$5\%$$ and the inflation rate is $$3\%$$, what is the real interest rate? Use $$	ext{Real interest rate} = 	ext{Nominal interest rate} - 	ext{Inflation rate}.$$

Accepted Answer

$$2\%$$

Question 11

Which of the following best explains why anticipated inflation still imposes costs on the economy?

Accepted Answer

It increases menu costs and the real cost of holding cash.

Question 12

Which of the following is an example of frictional unemployment?

Accepted Answer

A recent college graduate is searching for their first job.

Question 13

If a country experiences unanticipated inflation, who is most likely to be hurt?

Accepted Answer

Lenders who made fixed-rate loans

Question 14

Which of the following statements about the establishment (payroll) survey is correct?

Accepted Answer

It measures employment based on company payrolls, not self-reporting.

Question 15

Suppose the minimum wage increases by 10%. According to studies, what is the likely effect on unemployment?

Accepted Answer

Unemployment increases by about 2%.

Question 16

Which of the following is most likely to increase the natural rate of unemployment?

Accepted Answer

An increase in structural unemployment due to automation

Question 17

If the employment-population ratio is calculated as $$\frac{	ext{Employed}}{	ext{Working-age population}} 	imes 100$$, and there are 161 million employed and 266.8 million working-age people, what is the ratio?

Accepted Answer

$$60.3\%$$

Question 18

Which of the following is a likely effect of inflation on people with lower incomes compared to those with higher incomes?

Accepted Answer

Inflation can have a larger negative effect on lower-income individuals if the prices of goods they buy rise faster than their wages.

Question 19

Which of the following is an example of a menu cost?

Accepted Answer

A restaurant must print new menus every time it raises prices due to inflation.

Question 20

Which of the following best describes the natural rate of unemployment?

Accepted Answer

The sum of frictional and structural unemployment when the economy is at full employment.

Unemployment and Inflation: Key Macroeconomic Indicators

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