Question 1

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 2

The total value of all final goods and services produced in a country during a given period, adjusted to eliminate the effects of changes in prices is called:

Accepted Answer

A)  nominal GDP. 
B)  current GDP. 
C)  real GDP. 
D)  average GDP. 
A)  nominal GDP. 
B)  current GDP. 
C)  real GDP. 
D)  average GDP.

Question 3

What is the difference between a nominal value and a real value?

Accepted Answer

A)  A nominal value is measured in monetary units adjusted for inflation, unlike a real value. 
B)  A nominal value is measured in market rates while a real value is measured in terms of exchange rates. 
C)  A nominal value is measured in units of constant purchasing power while a real value is measured in units of current purchasing power. 
D)  A nominal value is measured in current market prices while a real value is measured in base year prices. 
A)  A nominal value is measured in monetary units adjusted for inflation, unlike a real value. 
B)  A nominal value is measured in market rates while a real value is measured in terms of exchange rates. 
C)  A nominal value is measured in units of constant purchasing power while a real value is measured in units of current purchasing power. 
D)  A nominal value is measured in current market prices while a real value is measured in base year prices.

Question 4

Which of the following is the most broad-based price index available?

Accepted Answer

A)  The consumer price index 
B)  The producer price index 
C)  The implicit price deflator 
D)  The personal consumption expenditures price index 
A)  The consumer price index 
B)  The producer price index 
C)  The implicit price deflator 
D)  The personal consumption expenditures price index

Question 5

Which of the following statements is true of inflation?

Accepted Answer

A)  It refers to a decrease in the general price level in an economy. 
B)  It refers to a rise in the price level of gasoline. 
C)  It refers to a constant general price level in an economy. 
D)  It refers to an increase in the average level of prices. 
A)  It refers to a decrease in the general price level in an economy. 
B)  It refers to a rise in the price level of gasoline. 
C)  It refers to a constant general price level in an economy. 
D)  It refers to an increase in the average level of prices.

Question 6

Use the following to answer questions .
Exhibit: Market Basket for a Typical College Student
  
-(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2007. What is the value of the price index in 2008?

Accepted Answer

A)  0.88 
B)  1.14 
C)  3.42 
D)  3.90 
A)  0.88 
B)  1.14 
C)  3.42 
D)  3.90

Question 7

Use the following to answer questions.
Exhibit: Real GDP Over Time  
-(Exhibit: Real GDP Over Time). The peak of the business cycle occurs:

Accepted Answer

A)  between t1 and t3. 
B)  at t3. 
C)  between t2 and t3. 
D)  at t2. 
A)  between t1 and t3. 
B)  at t3. 
C)  between t2 and t3. 
D)  at t2.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The terms inflation and deflation refer to changes in:

Accepted Answer

A)  the average level of prices. 
B)  the average output level. 
C)  the prices of goods supplied by the government. 
D)  the prices in black markets. 
A)  the average level of prices. 
B)  the average output level. 
C)  the prices of goods supplied by the government. 
D)  the prices in black markets.

Question 10

Define the natural rate of unemployment. Identify three factors that may cause the natural rate to change over time.

Accepted Answer

The natural rate of unemployment refers

Question 11

If all prices experience an increase of 4 percent in one year, then which of the following is necessarily true?

Accepted Answer

A)  The rate of inflation for that year is 4 percent. 
B)  The level of consumer demand is higher in that year as compared to the previous year. 
C)  The average unemployment level has increased. 
D)  The output of the economy has fallen by 4 percent in that year. 
A)  The rate of inflation for that year is 4 percent. 
B)  The level of consumer demand is higher in that year as compared to the previous year. 
C)  The average unemployment level has increased. 
D)  The output of the economy has fallen by 4 percent in that year.

Question 12

Workers who are in the process of changing jobs are counted as being:

Accepted Answer

A)  frictionally unemployed. 
B)  underemployed. 
C)  structurally unemployed. 
D)  cyclically unemployed. 
A)  frictionally unemployed. 
B)  underemployed. 
C)  structurally unemployed. 
D)  cyclically unemployed.

Question 13

Use the following to answer questions .
Exhibit Real GDP and Employment
  
-(Exhibit: Real GDP and Employment) The exhibit shows data on real GDP and employment for a particular country from the year 1991 to 2000. The peak(s) in economic activity occurred:

Accepted Answer

A)  once in the ten-year period, in 1999. 
B)  twice in the ten-year period, in 1998 and in 1999. 
C)  once in the ten-year period, in 1994. 
D)  twice in the ten-year period, in 1994 and in 1999. 
A)  once in the ten-year period, in 1999. 
B)  twice in the ten-year period, in 1998 and in 1999. 
C)  once in the ten-year period, in 1994. 
D)  twice in the ten-year period, in 1994 and in 1999.

Question 14

Use the following to answer questions .
Exhibit: Nominal and Real Income
  
-(Exhibit: Nominal and Real Income) What has happened to an assistant professor's salary between 1967 and 1997?

Accepted Answer

A)  Although the nominal salary increased 4-fold in the 30-year period, real salary increased by only 3.2 times. 
B)  The purchasing power of an assistant professor's salary has fallen by about 4.76%. 
C)  The purchasing power of an assistant professor's salary has increased by about 5.24%. 
D)  The real salary in 1997 is slightly higher than that in 1967. 
A)  Although the nominal salary increased 4-fold in the 30-year period, real salary increased by only 3.2 times. 
B)  The purchasing power of an assistant professor's salary has fallen by about 4.76%. 
C)  The purchasing power of an assistant professor's salary has increased by about 5.24%. 
D)  The real salary in 1997 is slightly higher than that in 1967.

Question 15

Which of the following is an example of structural 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 16

The point at which a recession ends and the expansion begins is called the:

Accepted Answer

A)  trough. 
B)  downturn. 
C)  peak. 
D)  lag. 
A)  trough. 
B)  downturn. 
C)  peak. 
D)  lag.

Question 17

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 18

The phases of a business cycle are identified by examining the growth of real GDP.

Accepted Answer

A) True 
 B)False

Question 19

A country's structural unemployment rate is 3.2%, the natural unemployment rate is 5.6%, and the cyclical unemployment rate is 4.7%. The frictional unemployment rate is _____ and the unemployment rate is _____.

Accepted Answer

A)  2.4%; 5.6% 
B)  2.4%; 10.3% 
C)  5.6%; 13.5% 
D)  7.9%; 12.6% 
A)  2.4%; 5.6% 
B)  2.4%; 10.3% 
C)  5.6%; 13.5% 
D)  7.9%; 12.6%

Question 20

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.

What is a business cycle?

The total value of all final goods and services produced in a country during a given period, adjusted to eliminate the effects of changes in prices is called:

What is the difference between a nominal value and a real value?

Which of the following is the most broad-based price index available?

Which of the following statements is true of inflation?

Use the following to answer questions . Exhibit: Market Basket for a Typical College Student -(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2007. What is the value of the price index in 2008?

Use the following to answer questions. Exhibit: Real GDP Over Time -(Exhibit: Real GDP Over Time). The peak of the business cycle occurs:

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

The terms inflation and deflation refer to changes in:

Define the natural rate of unemployment. Identify three factors that may cause the natural rate to change over time.

If all prices experience an increase of 4 percent in one year, then which of the following is necessarily true?

Workers who are in the process of changing jobs are counted as being:

Use the following to answer questions . Exhibit Real GDP and Employment -(Exhibit: Real GDP and Employment) The exhibit shows data on real GDP and employment for a particular country from the year 1991 to 2000. The peak(s) in economic activity occurred:

Use the following to answer questions . Exhibit: Nominal and Real Income -(Exhibit: Nominal and Real Income) What has happened to an assistant professor's salary between 1967 and 1997?

Which of the following is an example of structural unemployment?

The point at which a recession ends and the expansion begins is called the:

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

The phases of a business cycle are identified by examining the growth of real GDP.

A country's structural unemployment rate is 3.2%, the natural unemployment rate is 5.6%, and the cyclical unemployment rate is 4.7%. The frictional unemployment rate is _ and the unemployment rate is _.

Which of the following statements is NOT true?

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters

Exam 5: Macroeconomics: the Big Picture

What is a business cycle?

The total value of all final goods and services produced in a country during a given period, adjusted to eliminate the effects of changes in prices is called:

What is the difference between a nominal value and a real value?

Which of the following is the most broad-based price index available?

Which of the following statements is true of inflation?

Use the following to answer questions . Exhibit: Market Basket for a Typical College Student -(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2007. What is the value of the price index in 2008?

Use the following to answer questions. Exhibit: Real GDP Over Time -(Exhibit: Real GDP Over Time). The peak of the business cycle occurs:

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

The terms inflation and deflation refer to changes in:

Define the natural rate of unemployment. Identify three factors that may cause the natural rate to change over time.

If all prices experience an increase of 4 percent in one year, then which of the following is necessarily true?

Workers who are in the process of changing jobs are counted as being:

Use the following to answer questions . Exhibit Real GDP and Employment -(Exhibit: Real GDP and Employment) The exhibit shows data on real GDP and employment for a particular country from the year 1991 to 2000. The peak(s) in economic activity occurred:

Use the following to answer questions . Exhibit: Nominal and Real Income -(Exhibit: Nominal and Real Income) What has happened to an assistant professor's salary between 1967 and 1997?

Which of the following is an example of structural unemployment?

The point at which a recession ends and the expansion begins is called the:

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

The phases of a business cycle are identified by examining the growth of real GDP.

A country's structural unemployment rate is 3.2%, the natural unemployment rate is 5.6%, and the cyclical unemployment rate is 4.7%. The frictional unemployment rate is _____ and the unemployment rate is _____.

Which of the following statements is NOT true?

Economics: the Study of Choice

Demand and Supply

Applications of Supply and Demand

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

Filters

A country's structural unemployment rate is 3.2%, the natural unemployment rate is 5.6%, and the cyclical unemployment rate is 4.7%. The frictional unemployment rate is _ and the unemployment rate is _.