# Measuring the Economy 2

### Review Test

What is an example of inflation?

What is inflation?

What is the effect of a small amount of inflation over many years?

What would be the approximate increase in the price level if inflation was at 5% for 70 years?

What does inflation affect?

What is the price level most commonly used in the US?

Which of the following is based on a fixed basket of goods and services?

Which of the following is based on a flexible basket of goods and services?

If the CPI in period 1, the base year, is 100 and the CPI in period 3 is 150, what is the inflation rate from period 1 to period 3?

If the CPI in period 2 is 120 and the CPI in period 5 is 200, what else do you need to know to determine the inflation rate from period 2 to period 5?

If the CPI in period 2 is 120 and the CPI in period 5 is 200, what is the inflation rate from period 2 to period 5 given that the CPI's are based on the same base year?

How does the base year for the CPI differ from comparison years?

What is the difference between the base year and the comparison year for the GDP deflator?

What do you need to know to calculate the GDP deflator?

If the nominal GDP in period 2 is 120 and the real GDP is 200, what is the GDP deflator?

What is the rate of inflation from period 1 to period 3, using the GDP deflator method, given that the nominal GDP in period 3 is \$74 and real GDP in period 3 using period 1 as the base year is \$64?

How is a Laspeyres index different from a Paasch index?

Which of the following pairs of terms best fit together?

Which of the following best describes the direction of the errors created by the CPI and GDP deflator methods of estimating the impact of inflation on the consumer?

Which of the following is not a possible reason that the CPI overestimates inflation?

Which of the following is not a cost of expected inflation?

Which of the following is an effect of unexpected inflation?

Which of following is not an effect of unemployment?

What is Okun's law?

What is the equation for Okun's law?

If a country had an unemployment rate of 8% in one year and 6% in the next, what would be percentage change in real GDP using Okun's law?

Which of the following is not one of the major types of unemployment?

What type of unemployment occurs because of the business cycle?

What type of unemployment occurs because of a mismatch between workers' skills and firms' needs?

What type of unemployment occurs because people are between jobs?

How do you calculate unemployment?

If there are 25 people employed, 20 people unemployed, and 30 people out of the labor force, what is the size of the labor force?

If there are 25 people employed, 20 people unemployed, and 30 people out of the labor force, what is the unemployment rate?

What is a reasonable estimate for the natural rate of unemployment?

When the economy is at full employment, what is a reasonable estimate for the rate of unemployment?

Which of the following causes of unemployment is not related to the wage paid to workers?

What is a minimum wage law?

Why do labor unions create some unemployment?

What is the rationale behind efficiency wages?

What relationship does the Phillips curve describe?

When is inflation often found?

What is the equation for the Phillips curve?

When is the Phillips curve applicable?

On what is the Phillips curve is based?

How is the Phillips curve useful?

What is stagflation?

Who benefits from stagflation?

What period of US history tends to refute the Phillips curve's general applicability?

Which of the following factors is not used in the computation of the Phillips curve?

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