Question Details

The unemployment rate increased despite so many new payroll jobs because 


"A February employment report that wasn't particularly weak--there were 275,000 new payroll jobs--sparked a major rally Friday because it didn't point to the blockbuster growth that many investors and traders had expected. It was a "relief rally," said one 78 
analyst. The unemployment rate ticked up to 4.4 percent from 4.3 percent, but the most soothing news was a small 0.1 percent increase in average hourly earnings. That suggested that strong growth still isn't sparking more inflation, and therefore the Federal Reserve can remain on hold, a number of analysts said." 
1. The unemployment rate increased despite so many new payroll jobs because 
a) more than 275,000 jobs were expected 
b) the labor force increased by more than 275,000 
c) discouraged workers increased by more than 275,000 
d) payroll jobs don't count in the unemployment figures 
2. The "brief rally" refers to a rise in 
a) growth b) inflation c) bond prices d) interest rates 
3. It was expected that the Fed would 
a) tighten monetary policy b) loosen monetary policy 
c) offset the rise in unemployment d) increase the money supply 
4." Indexed bonds - also known as real-return bonds - pay investors an annual rate of interest plus the inflation rate from that year. If the government really believes that its inflation targets will be met, it should issue more indexed bonds. This would minimize its interest costs because ......." This is best completed with 
a) inflation would be lower b) lenders would experience capital gains on their bonds 
c) purchasers would not have to be compensated for the risk of unexpected inflation 
d) interest payments would be calculated using the real rate rather than the nominal rate 
5. "For one thing, the current economy doesn't look the way it generally has in the past when the Fed has embarked on a series of rate increases. Real, or inflation-adjusted, interest rates, for example, already are high, not low. That's because _____ has been falling _____ than interest rates." The blanks are best filled with 
a) inflation; faster b) inflation; slower 
c) unemployment; faster d) unemployment; slower 
6. In addition, some economists argue that there is useful information contained in the yields of non-indexed and indexed government bonds. The difference in the two yields is a market-based signal of _________. The blank is best filled with 
a) expected inflation b) the money growth rate 
c) unemployment d) the real growth rate



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