Question 1

The severe recession of 2008 - 2009 was precipitated by:

Accepted Answer

A) a slowdown in productivity. 
B) a combination of excessive money and financial frenzy. 
C) a combination of a decrease in the money supply and financial frenzy. 
D) A combination of a decrease in money and a productivity slowdown. 
A) a slowdown in productivity. 
B) a combination of excessive money and financial frenzy. 
C) a combination of a decrease in the money supply and financial frenzy. 
D) A combination of a decrease in money and a productivity slowdown.

Question 2

Okun's law:

Accepted Answer

A) measures the tradeoff between the rate of inflation and the rate of unemployment. 
B) indicates the number of years it will take for a constant rate of inflation to cause the price level to double. 
C) quantifies the relationship between nominal and real incomes. 
D) shows the relationship between the unemployment rate and the size of the GDP gap. 
A) measures the tradeoff between the rate of inflation and the rate of unemployment. 
B) indicates the number of years it will take for a constant rate of inflation to cause the price level to double. 
C) quantifies the relationship between nominal and real incomes. 
D) shows the relationship between the unemployment rate and the size of the GDP gap.

Question 3

If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Accepted Answer

A) $17,343 
B) $18,521 
C) $19,481 
D) $20,955 
A) $17,343 
B) $18,521 
C) $19,481 
D) $20,955

Question 4

Full-employment output is also called:

Accepted Answer

A) zero-unemployment output. 
B) equilibrium output. 
C) potential output. 
D) zero-savings output. 
A) zero-unemployment output. 
B) equilibrium output. 
C) potential output. 
D) zero-savings output.

Question 5

In an economy, 35 million workers are employed out of a labour force of 50 million and a total population of 70 million.The unemployment rate is:

Accepted Answer

A) 15 percent. 
B) 25 percent. 
C) 50 percent. 
D) 30 percent. 
A) 15 percent. 
B) 25 percent. 
C) 50 percent. 
D) 30 percent.

Question 6

In which industry or sector of the economy is output least likely to be affected by the business cycle?

Accepted Answer

A) housing construction 
B) automobile production 
C) agricultural commodities 
D) capital goods production 
A) housing construction 
B) automobile production 
C) agricultural commodities 
D) capital goods production

Question 7

Suppose there are 5 million unemployed workers seeking jobs.After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work.As a result of this, the official unemployment rate would:

Accepted Answer

A) increase in the short run but eventually decline. 
B) increase. 
C) decline. 
D) be unchanged. 
A) increase in the short run but eventually decline. 
B) increase. 
C) decline. 
D) be unchanged.

Question 8

Refer to the above diagram.The phases of the business cycle from points A to D are, respectively:

Accepted Answer

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

Question 9

Which of the following is correct?

Accepted Answer

A) inflation will always increase the real income. 
B) inflation does not affect the distribution of income. 
C) the redistribution effects of inflation does not depend upon expectation. 
D) the redistribution effects of inflation depends upon whether or not it is expected. 
A) inflation will always increase the real income. 
B) inflation does not affect the distribution of income. 
C) the redistribution effects of inflation does not depend upon expectation. 
D) the redistribution effects of inflation depends upon whether or not it is expected.

Question 10

When unanticipated inflation occurs:

Accepted Answer

A) both creditors and debtors benefit. 
B) both creditors and debtors are hurt. 
C) debtors are hurt, but creditors benefit. 
D) creditors are hurt, but debtors benefit. 
A) both creditors and debtors benefit. 
B) both creditors and debtors are hurt. 
C) debtors are hurt, but creditors benefit. 
D) creditors are hurt, but debtors benefit.

Question 11

Which of the following currencies was used by the countries that had a negative nominal interest rate in early 2016?

Accepted Answer

A) The euro 
B) The Canadian dollar 
C) The United States dollar 
D) The Indian rupee 
A) The euro 
B) The Canadian dollar 
C) The United States dollar 
D) The Indian rupee

Question 12

In the expansion phase of a business cycle:

Accepted Answer

A) the inflation rate decreases, but productive capacity increases. 
B) the inflation rate and productive capacity decrease. 
C) employment increases, but output decreases. 
D) employment and output increase. 
A) the inflation rate decreases, but productive capacity increases. 
B) the inflation rate and productive capacity decrease. 
C) employment increases, but output decreases. 
D) employment and output increase.

Question 13

A large negative GDP gap implies:

Accepted Answer

A) an excess of imports over exports. 
B) a low rate of unemployment. 
C) a high rate of unemployment. 
D) a sharply rising price level. 
A) an excess of imports over exports. 
B) a low rate of unemployment. 
C) a high rate of unemployment. 
D) a sharply rising price level.

Exam 9: B: Business Cycles, Unemployment, and Inflation

The severe recession of 2008 - 2009 was precipitated by:

Okun's law:

If the average level of nominal income is $30,000 and the price level index is 154, the average real income would be about:

Full-employment output is also called:

In an economy, 35 million workers are employed out of a labour force of 50 million and a total population of 70 million.The unemployment rate is:

In which industry or sector of the economy is output least likely to be affected by the business cycle?

Suppose there are 5 million unemployed workers seeking jobs.After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work.As a result of this, the official unemployment rate would:

Refer to the above diagram.The phases of the business cycle from points A to D are, respectively:

Which of the following is correct?

When unanticipated inflation occurs:

Which of the following currencies was used by the countries that had a negative nominal interest rate in early 2016?

In the expansion phase of a business cycle:

A large negative GDP gap implies:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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