Select the only best answer for each multiple choice question.

Of the possible effects of hyperinflation, the following is not one of the main direct causes of a severe decline in total output:

• everyone spends more of the local currency, as it depreciates in value, for the same goods or services.
• everyone spends less time working at their job to produce output and more time speculating about which goods might go up fastest in price, or transferring goods already in existence.
• everyone decides to convert their savings into nonproductive wealth such as jewelry rather than invest in capital equipment to produce more goods.

a(1).The Consumer Price Index

• measures the prices of the basket of goods and services preferred by the typical consumer each month. The market value of the basket of goods is compared to the market value of that basket in the previous month.
• measures the prices of a fixed market basket of goods and services that is bought by a typical consumer. The market value of the basket of goods is compared to the market value of that basket in a base year.
• measures the prices of the basket of goods and services preferred by the typical consumer each year. The market value of the basket of goods is compared to the market value of that basket in the previous year.
• measures the prices of a fixed market basket of goods and services that is bought by a consumer selected by the government. The market value of the basket of goods is compared to the market value of that basket in a base year.

a(2).In Canada the CPI is constructed by

• personnel at Statistics Canada who collect price quotes from selected retail outlets on a monthly basis.
• personnel at the Department of Finance who collect price quotes from selected retail outlets on a monthly basis.
• personnel at Statistics Canada who collect price quotes from selected retail outlets on a yearly basis.
• personnel at the Department of Finance who collect price quotes from selected retail outlets on a yearly basis.

a.A difficult aspect of measuring the unemployment rate is

• collecting sufficient, accurate, and relevant information to determine how many people in a population are employed or eligible and available to work and searching for work.
• collating information from provinces that use vastly different methods to collect information on the population in their local area.
• collecting information from every person in the population to determine if they are employed, eligible or available to work.
• choosing the right people to respond to inquires regarding individual personal, private information such as your employment status or eligibility and availability to work and work search status.

b(1).Why is it difficult to distinguish between frictional, structural, seasonal and cyclical unemployment?

• The total unemployment rate and the sum of frictional, seasonal, and structural unemployment are always changing. Because of this it is difficult to isolate the individual contribution of cyclical unemployment, which is also always changing, to the total rate.
• There is no difference between frictional and stuctural unemployment.
• It is only possible to measure cyclical unemployment when the economy is undergoing a recession.
• People often mis-report the type of unemployment they are suffering in order to avoid embarrasment.

a.How is the labour force defined and who measures it?

• Statistics Canada measures the labour force as people 18 years of age or older who are actively seeking employment.
• The Canadian Bureau of Labour Statistics (BLS) measures the labour force as people 15 years of age or older who are actively seeking employment.
• Statistics Canada measures the labour force as people 15 years of age or older who are actively seeking employment.
• The Canadian Labour Commission (CLC) measures the labour force as people 18 years of age or older who are actively seeking employment.

b.The length of a complete cycle

• has lengthened and then shortened in the past 25 years.
• varies greatly in duration and intensity but historically, in Canada, tends to vary from about 2 to 3 years to as long as 15 or 20 years.
• varies greatly in duration and intensity but historically, in Canada, tends to vary from about 1 to 2 years to about 5 years.
• is generally about 3 years.

c.Seasonal variations and long-run trends complicate the measurement of the business cycle because

• it is difficult to treat all the variations the same when the causes differ.
• long-term trends have only recently been measured.
• the seasons vary so the changes are not consistent.
• normal seasonal variation does not signal boom or recession.

d.The business cycle affects output and employment in capital goods industries and consumer durable goods industries more severely than in industries producing nondurables because capital goods and durable goods

• are expensive and require regular payments.
• last and these purchases cannot be postponed.
• last and these purchases can be postponed.
• do not last and these purchases cannot be postponed.

Jimmer's nominal income will go up by 10 percent next year. Inflation is expected to be 2 percent next year. By approximately how much will Jimmer's real income change next year?

• 10 percent
• 8 percent
• 2 percent