ECON ​Chapter 7 homework Complete Solution

​Chapter 7 homework questions

Suppose, you are planning to put away $20,000 of your savings for one year. You have the following options:

​1.) Buy an  indexed savings bond that earns  6.50%  interest rate for the next year​ or,

​2.) Buy a​ non-indexed savings bond that earns 9.50% interest rate for the next year. The inflation rate for the next year is expected to be 3.00%. Which option will you choose for the next​ year?

A.The​ non-indexed bond should be chosen as it pays a higher rate of interest.

B.The indexed bond option should be chosen as it protects from inflation.

C.The rate of inflation should not play a role in making this decision.

D.It does not matter whether the indexed or the​ non-indexed bonds are​ chosen, since they pay the same real rate of interest.

If all​ wages, salaries, welfare​ benefits, and other sources of income were indexed to​ inflation,

A.inflation will lower the purchasing power of people on fixed income.

B.inflation may not have negative impacts on​ people's purchasing​ power, but it will still have harmful effects on the economy by increasing administrative costs and inefficiencies.

C.inflation will have no negative effect on the economy.

D.inflation will benefit both debtors and creditors.

18. In the economy of Macroland 60.3percent of the population is​ employed, while the unemployment rate

is 7.0 percent. Calculate the labor force participation rate .

Labor Force Participation Rate​ = ?

percent. ​(Enter your response rounded to one decimal​ place.)

19. The average growth rate of output in the U.S. economy since 1900 has been

A.2.4%.

B.3.3%.

C.6.3%.

D.10.5%

24.

2000

Labor Force  140.0 million

Employment 119.0 million

2010

Labor Force 156.8 million

Employment 129.7 million

Calculate the unemployment rates for 2000 and 2010.

Unemployment Rate for 2000​ =  _____​%.

​(Enter your response rounded to one decimal​ place.)

Unemployment Rate for 2010​ = ______​%.

​(Enter your response rounded to one decimal​ place.)

32. Compared to students who graduate college and obtain employment during an economic​ expansion, students who graduate during a recession often find that starting wages are​ ________ and wage growth is​ ________.

Lower; faster

Lower; slower

Higher; faster

Higher; slower

33. Recession is a period during which

A. real GDP declines for at least two consecutive quarters.

B.real GDP fluctuates.

C.real GDP grows at a rate less than five percent.

D.unemployment rate falls.