1)Robert received a $100 gift certificate to a bookstore a yearago. The economy
ID: 1243141 • Letter: 1
Question
1)Robert received a $100 gift certificate to a bookstore a yearago. The economy has been in an inflationary period for the lastyear. This gift certificate isA. not expressed in either real or nominal terms since it is notmoney.
B. adjusted in terms of the CPI.
C. expressed in nominal terms and is worth less.
2)One criticism of the unemployment rate is that it
A. does not include the number of discouraged workers asunemployed.
B. is a stock measure.
C. does not include people who are not working and are not lookingfor work.
Explanation / Answer
1 - C. It is a fixed value of $100 as of the time of itsissuance. In an inflationary period, prices willincrease. Since the value of the certificate is fixed, withprices increasing the certificate will purchase less product thanit could have initially. 2 - Seems like the answer is both A and C, but I would lean towardA. The unemployment rate represents the number of unemployed people asa percentage of the total labor pool. People who are jobless,looking for jobs, and available for work are defined as beingunemployed. Discouraged workers (i.e. people not working andnot looking for work) are not defined as unemployed, and also areexcluded from the labor pool. That is, they are not only notemployed (or unemployed), they aren't included in thedenominator. The unemployment rate isn't fully accurate ifyou ignore discouraged workers. On the other hand, people whotruly have no intention of working and never will (who may notnecessarily be "discouraged" workers) shouldn't be included.
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