Economics Answers

Use the information below for the country Zip. All the figures are in millions.

Total population in 2016 1800
Total labour force in 2015 550
Economically active population in 2016 675
Number of people unemployed in 2016 225

The unemployment rate in 2016 is equal to...
1) 41%
2) 38%
3) 33.3%
4) 81%

Suppose that the CPI for July 2013 is 101.9 (with 2012 = 100) and the CPI for July 2014 is 108.8. The inflation rate between July 2013 and July 2014 is...

1) 1.9%
2) 8.8%
3) 6.8%
4) None of the above

Due to inflation, an increase in nominal wages will cause...

1) The real incomes to rise
2) The average rates of personal income tax to decrease
3) The average rates of personal income tax to increase
4) No change in the average rates of personal income tax

Assume that Betty is a borrower while Tony is a money lender. Suppose Betty obtains a loan from Tony to be repaid within 12 months at a given interest rate.

Which one of the following statements is correct?

a) If the interest rate is greater than the inflation rate, then Tony will be worse off than Betty
b) If the interest rate is lower than the inflation rate, then Betty will be worse off than Tony
c) If the inflation rate is lower than the interest rate, then Tony will receive a higher compensation for his income

1) c
2) b
3) a
4) a and c
5) a and b

The production price index...

1) Represents the supply side of the economy
2) Reflects the cost of living standards
3) Can only be calculated on annual bases
4) Takes all goods and services into consideration

To calculate the consumer price index accurately, it is necessary to include...

1)The value added tax in the prices
2) Intermediate goods
3) Consumer goods only
4) Capital goods only

Which of the following statements regarding definition and measurement of inflation is/are correct?

1) The consumer price index (CPI) is directly related to the cost of living
2) The producer price index (PPI) measures the cost of living rather than the cost of production
3) The continuous increase in the price of crude oil is an example of inflation
4) The consumer price index (CPI) is an index of the prices of all the consumer goods and services

During an economic depression, an appropriate policy initiative would be to...

1) Increase the taxes
2) Increase the interest rate
3) Increase the consumption spending
4) Decrease the government spending

An expansionary monetary policy will be less effective if...

1) The aggregate supply curve is very steep
2) The multiplier is very large
3) The investment demand is responsive to the interest rate
4) The aggregate demand curve is very steep

Which one of the following will shift aggregate supply to the right?

1) A fall in the general price level
2) An increase in aggregate spending
3) Improvements in productivity
4) A decrease in interest rate