Question 1

Which of the following about unemployment is true?

Accepted Answer

A) The unemployment rates of the major European economies have been lower than that of the United States during the last decade. 
B) Compared to the U.S., European labor markets are characterized by less extensive regulation and less generous unemployment benefits. 
C) High unemployment rates over lengthy time periods are indicative of structural factors that are adversely affecting the natural rate of unemployment. 
D) The natural rate of unemployment decreases when youthful workers expand as a proportion of the workforce. 
A) The unemployment rates of the major European economies have been lower than that of the United States during the last decade. 
B) Compared to the U.S., European labor markets are characterized by less extensive regulation and less generous unemployment benefits. 
C) High unemployment rates over lengthy time periods are indicative of structural factors that are adversely affecting the natural rate of unemployment. 
D) The natural rate of unemployment decreases when youthful workers expand as a proportion of the workforce.

Question 2

Which of the following about unemployment is true?

Accepted Answer

A) When a dynamic labor market is operating efficiently, mostly cyclical unemployment will be present. 
B) Some unemployment will be present even when a dynamic labor market is operating efficiently. 
C) When full employment is present, the rate of unemployment will be zero. 
D) When full employment is present, there will not be any frictional unemployment. 
E) When full employment is present, it will be impossible to sustain the current rate of output in the future. 
A) When a dynamic labor market is operating efficiently, mostly cyclical unemployment will be present. 
B) Some unemployment will be present even when a dynamic labor market is operating efficiently. 
C) When full employment is present, the rate of unemployment will be zero. 
D) When full employment is present, there will not be any frictional unemployment. 
E) When full employment is present, it will be impossible to sustain the current rate of output in the future.

Question 3

The natural rate of unemployment is not zero because

Accepted Answer

A) some workers will always have few skills. 
B) unemployment will always rise during the recessionary phase of the business cycle. 
C) the economy is characterized by dynamic change and imperfect information. 
D) not every member of society is capable of participating in the labor force. 
A) some workers will always have few skills. 
B) unemployment will always rise during the recessionary phase of the business cycle. 
C) the economy is characterized by dynamic change and imperfect information. 
D) not every member of society is capable of participating in the labor force.

Question 4

Suppose the population (age 16 and over) of Peru is 400 million; 20 million are unemployed, and 230 million hold jobs. What are the rates of unemployment and labor force participation of Peru?

Accepted Answer

A) Unemployment is 8 percent, and labor force participation is 62.5 percent. 
B) Unemployment is 8.7 percent, and labor force participation is 92 percent. 
C) Unemployment is 8.7 percent, and labor force participation is 62.5 percent. 
D) Unemployment is 5 percent, and labor force participation is 57.5 percent. 
A) Unemployment is 8 percent, and labor force participation is 62.5 percent. 
B) Unemployment is 8.7 percent, and labor force participation is 92 percent. 
C) Unemployment is 8.7 percent, and labor force participation is 62.5 percent. 
D) Unemployment is 5 percent, and labor force participation is 57.5 percent.

Question 5

Suppose that the consumer price index at year-end 2008 was 140 and by year-end 2009 had risen to 150. What was the inflation rate during 2009?

Accepted Answer

A) 7.1 percent 
B) 10 percent 
C) 14.2 percent 
D) 50 percent 
A) 7.1 percent 
B) 10 percent 
C) 14.2 percent 
D) 50 percent

Question 6

Darryl would like to work as an accountant full time. A full-time position is not available, however, so he must accept a part-time job working 15 hours per week. The Bureau of Labor Statistics would categorize Darryl as

Accepted Answer

A) employed. 
B) unemployed. 
C) both employed and unemployed. 
D) not in the labor force. 
A) employed. 
B) unemployed. 
C) both employed and unemployed. 
D) not in the labor force.

Question 7

Cyclical unemployment is primarily caused by

Accepted Answer

A) a large proportion of youthful workers in the labor force. 
B) fluctuations in aggregate demand. 
C) a lack of training on the part of job seekers. 
D) the failure of job seekers to search adequately for the available jobs. 
A) a large proportion of youthful workers in the labor force. 
B) fluctuations in aggregate demand. 
C) a lack of training on the part of job seekers. 
D) the failure of job seekers to search adequately for the available jobs.

Question 8

The labor force participation rate is defined as the number of

Accepted Answer

A) unemployed individuals plus employed individuals divided by the number of individuals in the working-age population. 
B) employed individuals divided by the number of individuals in the working-age population. 
C) unemployed individuals plus employed individuals divided by the number of employed individuals. 
D) employed individuals divided by the number of individuals employed plus the number of unemployed individuals. 
A) unemployed individuals plus employed individuals divided by the number of individuals in the working-age population. 
B) employed individuals divided by the number of individuals in the working-age population. 
C) unemployed individuals plus employed individuals divided by the number of employed individuals. 
D) employed individuals divided by the number of individuals employed plus the number of unemployed individuals.

Question 9

During a recession, the actual rate of unemployment will be

Accepted Answer

A) less than the natural rate of unemployment. 
B) greater than the natural rate of unemployment. 
C) equal to the natural rate of unemployment. 
D) unaffected by the economic contraction. 
A) less than the natural rate of unemployment. 
B) greater than the natural rate of unemployment. 
C) equal to the natural rate of unemployment. 
D) unaffected by the economic contraction.

Question 10

If the labor force grows at a faster rate than the number employed, the

Accepted Answer

A) unemployment rate will fall. 
B) unemployment rate will rise. 
C) labor force participation rate will fall. 
D) employment rate will rise. 
A) unemployment rate will fall. 
B) unemployment rate will rise. 
C) labor force participation rate will fall. 
D) employment rate will rise.

Question 11

When information about potential jobs is costly to acquire and individuals must spend time searching for jobs, which type of unemployment will result?

Accepted Answer

A) frictional 
B) seasonal 
C) structural 
D) cyclical 
A) frictional 
B) seasonal 
C) structural 
D) cyclical

Question 12

When workers are unemployed due to a mismatch between their skills and the jobs available, economists call this

Accepted Answer

A) cyclical unemployment. 
B) frictional unemployment. 
C) structural unemployment. 
D) transitional unemployment. 
A) cyclical unemployment. 
B) frictional unemployment. 
C) structural unemployment. 
D) transitional unemployment.

Question 13

Which of the following is true of the business cycle record of the United States?

Accepted Answer

A) Recessions have been lengthier during the last two decades than was true prior to 1980. 
B) Real GDP contracted throughout most of the 1950s. 
C) Real GDP in 2000 was approximately the same as 1950. 
D) Since 1950, the fluctuations in GDP have been less severe than before 1950. 
A) Recessions have been lengthier during the last two decades than was true prior to 1980. 
B) Real GDP contracted throughout most of the 1950s. 
C) Real GDP in 2000 was approximately the same as 1950. 
D) Since 1950, the fluctuations in GDP have been less severe than before 1950.

Question 14

Suppose there are 25,000 employed and 5,000 unemployed persons.
a.What is the unemployment rate?
b.If 2,000 of those unemployed became discouraged and quit actively seeking work, what would happen to the unemployment rate? Calculate the new unemployment rate.

Accepted Answer

a.
16.67 percent
b.

Question 15

Which of the following about inflation is true?

Accepted Answer

A) High rates of inflation are usually associated with wide year-to-year changes in inflation. 
B) High rates of inflation are usually associated only with very large countries such as the United States. 
C) High rates of inflation are usually associated only with smaller countries such as Costa Rica. 
D) High rates of inflation will generally improve the economic efficiency of an economy. 
A) High rates of inflation are usually associated with wide year-to-year changes in inflation. 
B) High rates of inflation are usually associated only with very large countries such as the United States. 
C) High rates of inflation are usually associated only with smaller countries such as Costa Rica. 
D) High rates of inflation will generally improve the economic efficiency of an economy.

Question 16

Which of the following is a positive effect of job search and the unemployment that often accompanies it?

Accepted Answer

A) It keeps wages and income levels low. 
B) It permits individuals to better match their skills and preferences with the requirements of a job. 
C) It reduces the wage gap between high skill workers and those with few skills. 
D) It creates political pressure for an increase in the minimum wage, which will reduce the rate of unemployment in the long run. 
A) It keeps wages and income levels low. 
B) It permits individuals to better match their skills and preferences with the requirements of a job. 
C) It reduces the wage gap between high skill workers and those with few skills. 
D) It creates political pressure for an increase in the minimum wage, which will reduce the rate of unemployment in the long run.

Question 17

In a modern dynamic economy such as the United States, full employment generally means

Accepted Answer

A) cyclical unemployment is present. 
B) everyone (excluding teenagers) that would like to work is employed. 
C) approximately 95 percent of the labor force is employed. 
D) 100 percent of the labor force is either working or seeking work. 
A) cyclical unemployment is present. 
B) everyone (excluding teenagers) that would like to work is employed. 
C) approximately 95 percent of the labor force is employed. 
D) 100 percent of the labor force is either working or seeking work.

Question 18

During an economic boom period, the actual rate of unemployment will be

Accepted Answer

A) less than the natural rate of unemployment. 
B) greater than the natural rate of unemployment. 
C) equal to the natural rate of unemployment. 
D) unaffected by the economic expansion. 
A) less than the natural rate of unemployment. 
B) greater than the natural rate of unemployment. 
C) equal to the natural rate of unemployment. 
D) unaffected by the economic expansion.

Question 19

A person who argues that inflation "robs us of the purchasing power of our paychecks" should also consider that inflation

Accepted Answer

A) increases the value of the dollar, making paychecks worth more. 
B) will increase the size of paychecks as well as the prices of goods. 
C) does not affect the value of the dollar, either in paychecks or in prices. 
D) only affects the prices of things that we buy, not the prices of things that we sell. 
A) increases the value of the dollar, making paychecks worth more. 
B) will increase the size of paychecks as well as the prices of goods. 
C) does not affect the value of the dollar, either in paychecks or in prices. 
D) only affects the prices of things that we buy, not the prices of things that we sell.

Question 20

Which of the following would be officially classified as unemployed?

Accepted Answer

A) a school administrator who has been working as a substitute teacher one day per week while looking for a full-time job in administration 
B) a mathematician who returned to graduate school after failing to find a job the last four months 
C) a 60-year-old former steel worker who would like to work but has given up actively seeking employment 
D) a laid-off construction worker waiting to return to a previous job 
A) a school administrator who has been working as a substitute teacher one day per week while looking for a full-time job in administration 
B) a mathematician who returned to graduate school after failing to find a job the last four months 
C) a 60-year-old former steel worker who would like to work but has given up actively seeking employment 
D) a laid-off construction worker waiting to return to a previous job

Which of the following about unemployment is true?

Which of the following about unemployment is true?

The natural rate of unemployment is not zero because

Suppose the population (age 16 and over) of Peru is 400 million; 20 million are unemployed, and 230 million hold jobs. What are the rates of unemployment and labor force participation of Peru?

Suppose that the consumer price index at year-end 2008 was 140 and by year-end 2009 had risen to 150. What was the inflation rate during 2009?

Darryl would like to work as an accountant full time. A full-time position is not available, however, so he must accept a part-time job working 15 hours per week. The Bureau of Labor Statistics would categorize Darryl as

Cyclical unemployment is primarily caused by

The labor force participation rate is defined as the number of

During a recession, the actual rate of unemployment will be

If the labor force grows at a faster rate than the number employed, the

When information about potential jobs is costly to acquire and individuals must spend time searching for jobs, which type of unemployment will result?

When workers are unemployed due to a mismatch between their skills and the jobs available, economists call this

Which of the following is true of the business cycle record of the United States?

Suppose there are 25,000 employed and 5,000 unemployed persons. a.What is the unemployment rate? b.If 2,000 of those unemployed became discouraged and quit actively seeking work, what would happen to the unemployment rate? Calculate the new unemployment rate.

Which of the following about inflation is true?

Which of the following is a positive effect of job search and the unemployment that often accompanies it?

In a modern dynamic economy such as the United States, full employment generally means

During an economic boom period, the actual rate of unemployment will be

A person who argues that inflation "robs us of the purchasing power of our paychecks" should also consider that inflation

Which of the following would be officially classified as unemployed?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 8: Economic Fluctuations, Unemployment, and Inflation

Which of the following about unemployment is true?

Which of the following about unemployment is true?

The natural rate of unemployment is not zero because

Suppose the population (age 16 and over) of Peru is 400 million; 20 million are unemployed, and 230 million hold jobs. What are the rates of unemployment and labor force participation of Peru?

Suppose that the consumer price index at year-end 2008 was 140 and by year-end 2009 had risen to 150. What was the inflation rate during 2009?

Darryl would like to work as an accountant full time. A full-time position is not available, however, so he must accept a part-time job working 15 hours per week. The Bureau of Labor Statistics would categorize Darryl as

Cyclical unemployment is primarily caused by

The labor force participation rate is defined as the number of

During a recession, the actual rate of unemployment will be

If the labor force grows at a faster rate than the number employed, the

When information about potential jobs is costly to acquire and individuals must spend time searching for jobs, which type of unemployment will result?

When workers are unemployed due to a mismatch between their skills and the jobs available, economists call this

Which of the following is true of the business cycle record of the United States?

Suppose there are 25,000 employed and 5,000 unemployed persons. a.What is the unemployment rate? b.If 2,000 of those unemployed became discouraged and quit actively seeking work, what would happen to the unemployment rate? Calculate the new unemployment rate.

Which of the following about inflation is true?

Which of the following is a positive effect of job search and the unemployment that often accompanies it?

In a modern dynamic economy such as the United States, full employment generally means

During an economic boom period, the actual rate of unemployment will be

A person who argues that inflation "robs us of the purchasing power of our paychecks" should also consider that inflation

Which of the following would be officially classified as unemployed?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters