Question 1

To measure the "core" inflation rate, the Bureau of Economic Analysis uses a price measure that:

Accepted Answer

A)  excludes food and energy prices because the prices of these items can be volatile. 
B)  includes food and energy prices because these items account for a significant portion of the typical consumer's expenditures. 
C)  excludes non-durable goods and services since their consumption value decreases over time. 
D)  excludes prices for most components of personal consumption expenditures. 
A)  excludes food and energy prices because the prices of these items can be volatile. 
B)  includes food and energy prices because these items account for a significant portion of the typical consumer's expenditures. 
C)  excludes non-durable goods and services since their consumption value decreases over time. 
D)  excludes prices for most components of personal consumption expenditures.

Question 2

Which of the following is an example of frictional unemployment?

Accepted Answer

A)  An autoworker is temporarily laid off from an automobile company due to a decline in sales 
B)  A geologist is permanently laid off from an oil company due to a new technological advancement 
C)  A worker at a fast-food restaurant quits work to attend college 
D)  A real estate agent leaves a job in Texas and searches for a similar, higher paying job in California 
A)  An autoworker is temporarily laid off from an automobile company due to a decline in sales 
B)  A geologist is permanently laid off from an oil company due to a new technological advancement 
C)  A worker at a fast-food restaurant quits work to attend college 
D)  A real estate agent leaves a job in Texas and searches for a similar, higher paying job in California

Question 3

Which of the following statements is true?

Accepted Answer

A)  Unexpected inflation benefits lenders and hurts borrowers. 
B)  Unexpected deflation benefits lenders and hurts borrowers. 
C)  Unexpected inflation benefits borrowers but does not affect lenders. 
D)  Unexpected deflation benefits lenders but does not affect borrowers. 
A)  Unexpected inflation benefits lenders and hurts borrowers. 
B)  Unexpected deflation benefits lenders and hurts borrowers. 
C)  Unexpected inflation benefits borrowers but does not affect lenders. 
D)  Unexpected deflation benefits lenders but does not affect borrowers.

Question 4

A newspaper article recently stated that there are 45.06 million people over the age of 16 who have completed college education. Of this number, 36.21 million are in the labor force and 35.44 million are employed. What is the unemployment rate for this group of people above the age of 16?

Accepted Answer

A)  2.44% 
B)  2.17% 
C)  2.13% 
D)  1.71% 
A)  2.44% 
B)  2.17% 
C)  2.13% 
D)  1.71%

Question 5

Which of the following statements is NOT true?

Accepted Answer

A)  A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. 
B)  Between trough and peak, the economy is in an expansion. 
C)  Between two peaks, the economy is in a recession. 
D)  A complete business cycle is defined by the passage from one peak to the next. 
A)  A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. 
B)  Between trough and peak, the economy is in an expansion. 
C)  Between two peaks, the economy is in a recession. 
D)  A complete business cycle is defined by the passage from one peak to the next.

Question 6

The implicit price deflator is given by the formula:

Accepted Answer

A)  nominal GDP in current period ÷ nominal GDP in base period. 
B)  nominal GDP in current period ÷ real GDP in base period. 
C)  nominal GDP ÷ real GDP. 
D)  real GDP ÷ nominal GDP. 
A)  nominal GDP in current period ÷ nominal GDP in base period. 
B)  nominal GDP in current period ÷ real GDP in base period. 
C)  nominal GDP ÷ real GDP. 
D)  real GDP ÷ nominal GDP.

Question 7

To identify the onset of a recession, the National Bureau of Economic Research (NBER) Business Cycle Dating Committee:

Accepted Answer

A)  uses data on nominal GDP for two consecutive quarters. 
B)  uses a range of indicators including real GDP, employment and income. 
C)  identifies declining economic activity solely based on a fall in real GDP. 
D)  uses a procedure that determines the dates of peaks and troughs mainly on the basis of employment. 
A)  uses data on nominal GDP for two consecutive quarters. 
B)  uses a range of indicators including real GDP, employment and income. 
C)  identifies declining economic activity solely based on a fall in real GDP. 
D)  uses a procedure that determines the dates of peaks and troughs mainly on the basis of employment.

Question 8

If the value of the price index in the current year is equal to 1, this means the current price of a particular market basket is the same as the price of that particular basket in the base period.

Accepted Answer

A) True 
 B)False

Question 9

The consumer price index (CPI) reflects:

Accepted Answer

A)  the changes in the prices of goods and services typically purchased by consumers. 
B)  the average level of prices for intermediate goods and services purchased by firms. 
C)  the median annual expenditures of a typical single family of four on consumer goods. 
D)  the average price of all goods and services computed from the ratio of nominal GDP to real GDP. 
A)  the changes in the prices of goods and services typically purchased by consumers. 
B)  the average level of prices for intermediate goods and services purchased by firms. 
C)  the median annual expenditures of a typical single family of four on consumer goods. 
D)  the average price of all goods and services computed from the ratio of nominal GDP to real GDP.

Question 10

The increased availability of job-related information online has lowered frictional unemployment.

Accepted Answer

A) True 
 B)False

Question 11

What is a business cycle?

Accepted Answer

A)  It is a firm's pattern of sales during a given year. 
B)  It is the economy's pattern of fluctuations in economic activity: expansion followed by contraction and then by another expansion. 
C)  It is the seasonal pattern of fluctuations in consumer spending: increased spending during the holiday season and decreased spending at other times of the year. 
D)  It refers to the peaks and troughs in the demand for luxury goods in a country. 
A)  It is a firm's pattern of sales during a given year. 
B)  It is the economy's pattern of fluctuations in economic activity: expansion followed by contraction and then by another expansion. 
C)  It is the seasonal pattern of fluctuations in consumer spending: increased spending during the holiday season and decreased spending at other times of the year. 
D)  It refers to the peaks and troughs in the demand for luxury goods in a country.

Question 12

Consider the following scenario: In January, 8 million people were seeking jobs but did not succeed. In February, 2 million of these people gave up and stopped looking for work. Holding all else constant, what happened to the unemployment rate in February?

Accepted Answer

A)  It increased. 
B)  It decreased. 
C)  It did not change. 
D)  The change in the unemployment rate will depend on the number of people aged 16 and above. 
A)  It increased. 
B)  It decreased. 
C)  It did not change. 
D)  The change in the unemployment rate will depend on the number of people aged 16 and above.

Question 13

To best determine whether an economy's output is growing or shrinking, one must keep track of changes in:

Accepted Answer

A)  nominal GDP. 
B)  the growth rate of nominal GDP. 
C)  the general price level. 
D)  real GDP. 
A)  nominal GDP. 
B)  the growth rate of nominal GDP. 
C)  the general price level. 
D)  real GDP.

Question 14

If an economy is operating at its natural level of employment, unemployment is equal to zero.

Accepted Answer

A) True 
 B)False

Question 15

Deflation increases the real value of money.

Accepted Answer

A) True 
 B)False

Question 16

A complete business cycle is defined by the passage from:

Accepted Answer

A)  one peak to the next peak. 
B)  one peak to the next trough. 
C)  one trough to the ensuing expansion. 
D)  one recession to the next recession. 
A)  one peak to the next peak. 
B)  one peak to the next trough. 
C)  one trough to the ensuing expansion. 
D)  one recession to the next recession.

Question 17

The logical sequence of the phases of a business cycle is:

Accepted Answer

A)  peak, trough, expansion, recession. 
B)  peak, expansion, trough, recession. 
C)  peak, recession, trough, expansion. 
D)  peak, expansion, recession, trough. 
A)  peak, trough, expansion, recession. 
B)  peak, expansion, trough, recession. 
C)  peak, recession, trough, expansion. 
D)  peak, expansion, recession, trough.

Question 18

The price index for 2007 is 1.28. What does this mean?

Accepted Answer

A)  It means that the average price level has increased by 128 percent over 2006. 
B)  It means that the average price level has increased by 1.28 percent over the base year. 
C)  It means that the average price level of the base year was 128 percent less than that in 2007. 
D)  It means that the average price level has increased by 28 percent over the base year. 
A)  It means that the average price level has increased by 128 percent over 2006. 
B)  It means that the average price level has increased by 1.28 percent over the base year. 
C)  It means that the average price level of the base year was 128 percent less than that in 2007. 
D)  It means that the average price level has increased by 28 percent over the base year.

Question 19

Immediately after the recession of 2007-08, the unemployment level among college graduates soared, but the average salary also increased.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following is an example of a frictionally unemployed individual?

Accepted Answer

A)  Martin, who lacks the skills necessary to be employed as a machinist 
B)  Lee, who lost his job as an art director because of a recession 
C)  Jan, who is a high school dropout and is working as a bus driver 
D)  Helena, who has just graduated from law school and is searching for a job 
A)  Martin, who lacks the skills necessary to be employed as a machinist 
B)  Lee, who lost his job as an art director because of a recession 
C)  Jan, who is a high school dropout and is working as a bus driver 
D)  Helena, who has just graduated from law school and is searching for a job

To measure the "core" inflation rate, the Bureau of Economic Analysis uses a price measure that:

Which of the following is an example of frictional unemployment?

Which of the following statements is true?

A newspaper article recently stated that there are 45.06 million people over the age of 16 who have completed college education. Of this number, 36.21 million are in the labor force and 35.44 million are employed. What is the unemployment rate for this group of people above the age of 16?

Which of the following statements is NOT true?

The implicit price deflator is given by the formula:

To identify the onset of a recession, the National Bureau of Economic Research (NBER) Business Cycle Dating Committee:

If the value of the price index in the current year is equal to 1, this means the current price of a particular market basket is the same as the price of that particular basket in the base period.

The consumer price index (CPI) reflects:

The increased availability of job-related information online has lowered frictional unemployment.

What is a business cycle?

Consider the following scenario: In January, 8 million people were seeking jobs but did not succeed. In February, 2 million of these people gave up and stopped looking for work. Holding all else constant, what happened to the unemployment rate in February?

To best determine whether an economy's output is growing or shrinking, one must keep track of changes in:

If an economy is operating at its natural level of employment, unemployment is equal to zero.

Deflation increases the real value of money.

A complete business cycle is defined by the passage from:

The logical sequence of the phases of a business cycle is:

The price index for 2007 is 1.28. What does this mean?

Immediately after the recession of 2007-08, the unemployment level among college graduates soared, but the average salary also increased.

Which one of the following is an example of a frictionally unemployed individual?

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters

Exam 5: Macroeconomics: the Big Picture

To measure the "core" inflation rate, the Bureau of Economic Analysis uses a price measure that:

Which of the following is an example of frictional unemployment?

Which of the following statements is true?

A newspaper article recently stated that there are 45.06 million people over the age of 16 who have completed college education. Of this number, 36.21 million are in the labor force and 35.44 million are employed. What is the unemployment rate for this group of people above the age of 16?

Which of the following statements is NOT true?

The implicit price deflator is given by the formula:

To identify the onset of a recession, the National Bureau of Economic Research (NBER) Business Cycle Dating Committee:

If the value of the price index in the current year is equal to 1, this means the current price of a particular market basket is the same as the price of that particular basket in the base period.

The consumer price index (CPI) reflects:

The increased availability of job-related information online has lowered frictional unemployment.

What is a business cycle?

Consider the following scenario: In January, 8 million people were seeking jobs but did not succeed. In February, 2 million of these people gave up and stopped looking for work. Holding all else constant, what happened to the unemployment rate in February?

To best determine whether an economy's output is growing or shrinking, one must keep track of changes in:

If an economy is operating at its natural level of employment, unemployment is equal to zero.

Deflation increases the real value of money.

A complete business cycle is defined by the passage from:

The logical sequence of the phases of a business cycle is:

The price index for 2007 is 1.28. What does this mean?

Immediately after the recession of 2007-08, the unemployment level among college graduates soared, but the average salary also increased.

Which one of the following is an example of a frictionally unemployed individual?

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Economic Development

Socialist Economies in Transition

Filters