Chapter 5

Question 1

What are the other three “unofficial” definitions of unemployment? (Excluded from official measure)

Answer 1

Discouraged workers
Long Term Future Starts
Involuntary Part Time Workers

Question 2

Discouraged workers, long term future starts, and involuntary part time workers are ___________

Answer 2

Not in the labor force

Question 3

In a recession, __________ Unemployment rises and the output gap becomes __________.

Answer 3

cyclical. negative.

Question 4

How does core inflation rate compare to CPI?

Answer 4

It excludes the volatile elements of the CPI

Question 5

Why does core inflation rate exclude volatile elements of CPI?

Answer 5

To find a more predictable and stable measure since foods are highly sensitive to price changes short term

Question 6

Why are foods sensitive to price changes short term?

Answer 6

Because weather, geopolitical events, or supply chain disruptions make them unpredictable