Question 1

Consider that the CPI market basket includes two goods (X and Y), and the spending on X constitutes 70% of the overall consumer spending, while the remainder is allocated to Y.

If the price of Y increases by 10% while the price of X decreases by 10% then, all else held constant,

1)The CPI increases

2)The CPI decreases

3)The CPI remains unchanged

Question 2

Unemployment is comprized of those individuals who have have no work and yet are actively looking for work

1)True

2)False

Question 3

Inflation is experienced identically by all consumers

1)True

2)False

Question 4

When energy and food prices rise faster than the average of all other prices,

1)the overall CPI increases faster than the core CPI

2)The core CPI increases faster than the overall CPI

3)The core CPI increases at the same rate as the overall CPI

Question 5

A rise in the number of discouraged workers helps reduce the official unemployment rate, all else held constant.

1)True

2)False

Question 6

Assume the following information about the economy:

Totalpopulation 800000

Total civiliannoninstitutionalized adult population 600000

Employedpopulation 324000

Unemployedpopulation 36000

What is the unemployment rate in this economy?

1)4.5%

2)6%

3)10%

4)11.1%

5)None of the Above