Principles of Economics

Economics 110

Mr. Beck

SUNY College at Oneonta

Review Questions for Chapter 24

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Review Questions for Economics 110


1. A worker who becomes unemployed because his wife relocates to a new job is called

  1. frictionally unemployed.
  2. structurally unemployed.
  3. cyclically unemployed.
  4. a discouraged worker.

    5.     Q1 answer
2.A "discouraged worker" is the economic term given to adults who
  1. are unemployed.
  2. are employed, but only working part time.
  3. have dropped out of the labor force.
  4. are employed full time, but are dissatisfied with their job.
  5. are employed full time, but inefficiently because they are not in a job which utilizes their skills or training.
        Q2 answer
3. Unexpectedly rapid inflation is most likely to benefit
  1. debtors (borrowers)
  2. savers
  3. holders of government bonds
  4. retired persons living on private pensions
  5. wage earners.
        Q3 answer
4.A worker who becomes unemployed because his skills are no longer in demand is called
  1. frictionally unemployed.
  2. structurally unemployed.
  3. cyclically unemployed.

    4. a discouraged worker.
Q4 answer
5. A person who becomes unemployed because of the effects of a severe recession is referred to as
  1. frictionally unemployed.
  2. structurally unemployed.
  3. cyclically unemployed.
  4. a discouraged worker.
        Q5 answer
6. Mr. Bledsoe stopped looking for a job in 1990 because there were no jobs available where he lived. In 1991 he begins to actively seek employment. However, he is unable to obtain employment because of the recession in the economy. Mr. Bledsoe is considered
  1. a discouraged worker in 1990 and frictionally unemployed in 1991.
  2. a discouraged worker in 1990 and cyclically unemployed in 1991.
  3. a discouraged worker in both 1990 and 1991.
  4. frictionally unemployed in 1990 and cyclically unemployed in 1991.
  5. cyclically unemployed in both 1990 and 1991.
        Q6 answer
7. Economists claim that in a severe recession the official unemployment % rate understates the true unemployment % rate because, in a severe recession, the number of
  1. frictionally unemployed increases.
  2. structurally unemployed increases.
  3. discouraged workers increases.
  4. cyclically unemployed increases.
        Q7 answer
8. Ms. Carner loses her job in 1990 because a recession occurs. She is unable to find another job despite her active efforts to do so. By 1991 the recession has become so severe that she stops even looking for a job. Ms. Carner is considered
  1. a discouraged worker in 1990 and frictionally unemployed in 1991.
  2. a discouraged worker in 1990 and cyclically unemployed in 1991.
  3. a discouraged worker in both 1990 and 1991.
  4. frictionally unemployed in 1990 and cyclically unemployed in 1991.
  5. cyclically unemployed in both 1990 and 1991.

    6. cyclically unemployed in 1990 and a discouraged worker in 1991.
    Q8 answer
9. As an economy recovers from a severe recession, unemployment decreases because of the decrease in the number of
  1. frictionally unemployed.
  2. structurally unemployed.
  3. cyclically unemployed.

    4. discouraged workers.
    Q9 answer
10. Mr. Waters becomes unemployed in 1992 because his job skills are outdated. In 1993 he stops looking for employment.
Mr. Waters is considered
  1. structurally unemployed in 1992 and frictionally unemployed in 1993.
  2. structurally unemployed in 1992 and a discouraged worker in 1993.
  3. a discouraged worker in both 1992 and 1993.
  4. frictionally unemployed in 1992 and structurally unemployed in 1993.
  5. structurally unemployed in both 1992 and 1993.
        Q10 answer
Review Questions from Last Year's Exams

11. Mr. Hopkins loses his job in 1996 because his job skills are outdated and no longer in demand. He retrains and is hired again in 1998. However, in 2001 he becomes unemployed again because the economy goes into a recession. Mr. Hopkins is considered

  1. structurally unemployed in 1996 and frictionally unemployed in 2001.
  2. structurally unemployed in 1996 and cyclically unemployed in 2001.
  3. frictionally unemployed in 1996 and structurally unemployed in 2001.
  4. frictionally unemployed in 1996 and cyclically unemployed in 2001.
  5. cyclically unemployed in 1996 and frictionally unemployed in 2001.
  6. cyclically unemployed in 1996 and structurally unemployed in 2001.

    7. Q11 answer
12. The unemployment compensation (insurance) program is an automatic (built-in) stabilizer for the economy. This is because if someone earning $1,000 per week were to become unemployed, his weekly disposable income (DI) would
  1. increase.
  2. decrease by less than $1,000 because his transfer payments would decrease.
  3. decrease by more than $1,000 because his transfer payments would increase.
  4. decrease by $1,000 because his transfer payments would remain constant.
  5. decrease by less than $1,000 because his transfer payments would increase.
  6. decrease by more than $1,000 because his transfer payments would decrease.

    7. Q12 answer

13. Mr. Bridges loses his job in 1998 because his family relocated to the West Coast. He later finds a job in 1999. However, in 2001 he becomes unemployed again because the economy goes into a recession. Mr. Bridges is considered
  1. structurally unemployed in 1998 and frictionally unemployed in 2001.
  2. structurally unemployed in 1998 and cyclically unemployed in 2001.
  3. frictionally unemployed in 1998 and structurally unemployed in 2001.
  4. frictionally unemployed in 1998 and cyclically unemployed in 2001.
  5. cyclically unemployed in 1998 and frictionally unemployed in 2001.
  6. cyclically unemployed in 1998 and structurally unemployed in 2001.

    7. Q13 answer

14. It has been proposed that workers who lost their jobs as a direct result of the September 11th terrorist actions be eligible for unemployment compensation (insurance) equal to 75% of their lost wages. Under this government program, if a worker who was earning $1,000 per week becomes unemployed, his disposable income would
  1. increase by $250.
  2. increase by $750.
  3. increase by $1,750.
  4. decrease by $250.
  5. decrease by $750.
  6. decrease by $1,000.

    7. Q14 answer

15. Unexpectedly rapid inflationary price increases will redistribute income in favor of
  1. retired persons living on private pensions.
  2. debtors (borrowers)
  3. elderly people who have saved money during their working years.
  4. lenders
  5. wage earners

    6. Q15 answer
Formula



Disposable Income (DI)  =  Income (Y) - Net Taxes (T)
[Net taxes (T) = Taxes - Transfer Payments]

Answers



 

1. a  Return to Q1
Solution to Q1

 

2. c  Return to Q2
Solution to Q2

 

3. a  Return to Q3
Solution to Q3

 

4. b  Return to Q4
Solution to Q4

 

5. c  Return to Q5
Solution to Q5

 

6. b  Return to Q6
Solution to Q6

 

7. c  Return to Q7
Solution to Q7

 

8. f  Return to Q8
Solution to Q8

 

9. c  Return to Q9
Solution to Q9

 

10. b  Return to Q10
Solution to Q10

 

11. b  Return to Q11
Solution to Q11

 

12. e  Return to Q12
Solution to Q12

 

13. d  Return to Q13
Solution to Q13

 

14. d  Return to Q14
Solution to Q14

 

15. b  Return to Q15
Solution to Q15
 

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