Question 1

Hyperinflation does not have a devastating impact on real output and employment.

Accepted Answer

A) True 
 B)False

Question 2

According to the economists, different kinds of shocks to the economy could be responsible for the variations in real output and employment over time.These shocks include:

Accepted Answer

A) the changes in population, innovations and money supply. 
B) the changes in the level of total spending, productivity, irregular innovations and money supply. 
C) the changes in the population. 
D) the changes in the standards of living. 
A) the changes in population, innovations and money supply. 
B) the changes in the level of total spending, productivity, irregular innovations and money supply. 
C) the changes in the population. 
D) the changes in the standards of living.

Question 3

Between 1967 and 1977 the price level approximately doubled.On the basis of this information we can say that the average annual rate of inflation over this ten-year period was about:

Accepted Answer

A) 10 percent. 
B) 7 percent. 
C) 4 percent. 
D) 2 percent. 
A) 10 percent. 
B) 7 percent. 
C) 4 percent. 
D) 2 percent.

Question 4

The descriptions give the responses of four individuals to Statistics Canada.1.Mollie just graduated from university and is now looking for work.She has had three job interviews in the past month.2.George works in an automotive assembly plant.He was laid off six months ago as the economy weakened.He expects to return to work in several months when national economic conditions improve.3.Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defence spending.She has been looking for similar work for a year but no company seems interested in her aircraft design skills.4.Ryan lost his job last year when his company downsized and laid off middle-level managers.He tried to find another job for a year, but was unsuccessful and quit looking for work.Refer to the above information.Which individual is structurally unemployed?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 5

Which of the following is the phase that follows the peak of a business cycle?

Accepted Answer

A) Recession 
B) Expansion 
C) Trough 
D) Contraction 
A) Recession 
B) Expansion 
C) Trough 
D) Contraction

Question 6

Which of the following is correct?

Accepted Answer

A) Real and nominal incomes always move in the same direction. 
B) Inflation increases the purchasing power of the dollar and necessarily reduces one's nominal income. 
C) Inflation reduces the purchasing power of the dollar and necessarily reduces one's real income. 
D) Inflation reduces the purchasing power of the dollar, but does not necessarily reduce one's real income. 
A) Real and nominal incomes always move in the same direction. 
B) Inflation increases the purchasing power of the dollar and necessarily reduces one's nominal income. 
C) Inflation reduces the purchasing power of the dollar and necessarily reduces one's real income. 
D) Inflation reduces the purchasing power of the dollar, but does not necessarily reduce one's real income.

Question 7

The best example of a "frictionally unemployed" worker is one who:

Accepted Answer

A) reduces productivity by causing frictions in a business. 
B) is laid off during a recessionary period in the economy. 
C) is in the process of voluntarily switching jobs. 
D) is discouraged and not actively seeking work. 
A) reduces productivity by causing frictions in a business. 
B) is laid off during a recessionary period in the economy. 
C) is in the process of voluntarily switching jobs. 
D) is discouraged and not actively seeking work.

Question 8

When the unemployment rate is relatively high, we can conclude that:

Accepted Answer

A) the economy is in the expansion phase of the business cycle. 
B) potential GDP is in excess of actual GDP. 
C) actual GDP is in excess of potential GDP. 
D) actual GDP is equal to potential GDP. 
A) the economy is in the expansion phase of the business cycle. 
B) potential GDP is in excess of actual GDP. 
C) actual GDP is in excess of potential GDP. 
D) actual GDP is equal to potential GDP.

Question 9

Too much spending chasing too few goods best describes:

Accepted Answer

A) the GDP gap. 
B) demand-pull inflation. 
C) the inflation premium. 
D) cost-push inflation. 
A) the GDP gap. 
B) demand-pull inflation. 
C) the inflation premium. 
D) cost-push inflation.

Question 10

Which of the following is the phase that follows the expansionary phase of a business cycle?

Accepted Answer

A) Recession 
B) Expansion 
C) Peak 
D) Contraction 
A) Recession 
B) Expansion 
C) Peak 
D) Contraction

Question 11

In the depth of the Great Depression, the unemployment rate in Canada was about:

Accepted Answer

A) 15 percent. 
B) 33 percent. 
C) 20 percent. 
D) 40 percent. 
A) 15 percent. 
B) 33 percent. 
C) 20 percent. 
D) 40 percent.

Question 12

A statement that is often used to describe demand-pull inflation is:

Accepted Answer

A) a rising tide lifts all boats. 
B) money is easily earned, but not easily saved. 
C) too much spending chasing too few goods. 
D) there is no such thing as a free lunch. 
A) a rising tide lifts all boats. 
B) money is easily earned, but not easily saved. 
C) too much spending chasing too few goods. 
D) there is no such thing as a free lunch.

Question 13

Inflation rates in Canada in recent years:

Accepted Answer

A) are relatively higher than the rates in other industrial countries. 
B) are relatively the same as the rates in other industrial countries. 
C) are relatively lower than the rates in some other industrial countries. 
D) are double digit and comparable with the rates in Kenya and Venezuela. 
A) are relatively higher than the rates in other industrial countries. 
B) are relatively the same as the rates in other industrial countries. 
C) are relatively lower than the rates in some other industrial countries. 
D) are double digit and comparable with the rates in Kenya and Venezuela.

Question 14

If a person's nominal income increases by 2% while the price level increases by 6%, the person's real income:

Accepted Answer

A) increases by about 2%. 
B) increases by about 4%. 
C) decreases by about 6%. 
D) decreases by about 2%. 
A) increases by about 2%. 
B) increases by about 4%. 
C) decreases by about 6%. 
D) decreases by about 2%.

Question 15

The total population of an economy is 175 million, the labour force is 125 million, and the number of unemployed is 8 million.The unemployment rate for this economy is:

Accepted Answer

A) 4.6 percent. 
B) 5.8 percent. 
C) 6.4 percent. 
D) 7.8 percent. 
A) 4.6 percent. 
B) 5.8 percent. 
C) 6.4 percent. 
D) 7.8 percent.

Question 16

Kimberly voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree.With degree in hand she is now searching for a position in management.Kimberly presently is:

Accepted Answer

A) cyclically unemployed. 
B) structurally unemployed. 
C) frictionally unemployed. 
D) not a member of the labour force. 
A) cyclically unemployed. 
B) structurally unemployed. 
C) frictionally unemployed. 
D) not a member of the labour force.

Question 17

Which of the following is the phase that follows the recessionary phase of a business cycle?

Accepted Answer

A) Trough 
B) Expansion 
C) Peak 
D) Contraction 
A) Trough 
B) Expansion 
C) Peak 
D) Contraction

Question 18

If the price level increases by 15 percent while nominal income increases by 8 percent, then in percentage terms real income would:

Accepted Answer

A) rise by about 8 percent. 
B) fall by about 8 percent. 
C) fall by about 7 percent. 
D) fall by about 15 percent. 
A) rise by about 8 percent. 
B) fall by about 8 percent. 
C) fall by about 7 percent. 
D) fall by about 15 percent.

Question 19

A headline reads: "Steel industry suffers slump as import competition increases and unemployment rises." This type of unemployment can best be characterized in economic terms as:

Accepted Answer

A) frictional. 
B) structural. 
C) cyclical. 
D) natural. 
A) frictional. 
B) structural. 
C) cyclical. 
D) natural.

Question 20

The unemployment rate is the:

Accepted Answer

A) ratio of unemployed to employed workers. 
B) number of employed workers minus the number of workers who are not in the labour force. 
C) percentage of the labour force which is out of work. 
D) percentage of the total population which is out of work. 
A) ratio of unemployed to employed workers. 
B) number of employed workers minus the number of workers who are not in the labour force. 
C) percentage of the labour force which is out of work. 
D) percentage of the total population which is out of work.

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

Hyperinflation does not have a devastating impact on real output and employment.

According to the economists, different kinds of shocks to the economy could be responsible for the variations in real output and employment over time.These shocks include:

Between 1967 and 1977 the price level approximately doubled.On the basis of this information we can say that the average annual rate of inflation over this ten-year period was about:

Which of the following is the phase that follows the peak of a business cycle?

Which of the following is correct?

The best example of a "frictionally unemployed" worker is one who:

When the unemployment rate is relatively high, we can conclude that:

Too much spending chasing too few goods best describes:

Which of the following is the phase that follows the expansionary phase of a business cycle?

In the depth of the Great Depression, the unemployment rate in Canada was about:

A statement that is often used to describe demand-pull inflation is:

Inflation rates in Canada in recent years:

If a person's nominal income increases by 2% while the price level increases by 6%, the person's real income:

The total population of an economy is 175 million, the labour force is 125 million, and the number of unemployed is 8 million.The unemployment rate for this economy is:

Kimberly voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree.With degree in hand she is now searching for a position in management.Kimberly presently is:

Which of the following is the phase that follows the recessionary phase of a business cycle?

If the price level increases by 15 percent while nominal income increases by 8 percent, then in percentage terms real income would:

A headline reads: "Steel industry suffers slump as import competition increases and unemployment rises." This type of unemployment can best be characterized in economic terms as:

The unemployment rate is the:

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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