Question 1

The recessionary phase of the business cycle is characterized by

Accepted Answer

A) decreasing real output and increasing unemployment. 
B) decreasing real output and declining unemployment. 
C) increasing real output and increasing unemployment. 
D) increasing real output and declining unemployment. 
A) decreasing real output and increasing unemployment. 
B) decreasing real output and declining unemployment. 
C) increasing real output and increasing unemployment. 
D) increasing real output and declining unemployment.

Question 2

During the last several decades the labor force participation rate

Accepted Answer

A) of women has increased substantially. 
B) of men has increased substantially. 
C) of women has steadily declined. 
D) of both men and women has steadily declined. 
A) of women has increased substantially. 
B) of men has increased substantially. 
C) of women has steadily declined. 
D) of both men and women has steadily declined.

Question 3

The natural rate of unemployment

Accepted Answer

A) increases sharply during a recession but declines significantly during a business expansion. 
B) is the unemployment rate accompanying the economy's maximum sustainable output. 
C) is generally less than the unemployment rate associated with the economy's full-employment rate of output. 
D) is present when the economy operates at approximately 94 percent of its potential GDP. 
A) increases sharply during a recession but declines significantly during a business expansion. 
B) is the unemployment rate accompanying the economy's maximum sustainable output. 
C) is generally less than the unemployment rate associated with the economy's full-employment rate of output. 
D) is present when the economy operates at approximately 94 percent of its potential GDP.

Question 4

The best definition of inflation is

Accepted Answer

A) a temporary increase in prices. 
B) an increase in the price of one important commodity such as food. 
C) a persistent increase in the general level of prices as measured by a price index. 
D) an increase in the purchasing power of the dollar. 
A) a temporary increase in prices. 
B) an increase in the price of one important commodity such as food. 
C) a persistent increase in the general level of prices as measured by a price index. 
D) an increase in the purchasing power of the dollar.

Question 5

At the beginning of a year, decision makers expect the general level of prices to increase at a 6 percent annual rate. The CPI increases from 150 to 154.5 during the year; this indicates that

Accepted Answer

A) decision makers underestimated the rate of inflation during the year. 
B) decision makers overestimated the rate of inflation during the year. 
C) decision makers accurately forecast the rate of inflation during the year. 
D) the rate of inflation during the year was 4.5 percent. 
A) decision makers underestimated the rate of inflation during the year. 
B) decision makers overestimated the rate of inflation during the year. 
C) decision makers accurately forecast the rate of inflation during the year. 
D) the rate of inflation during the year was 4.5 percent.

Question 6

The difference between actual real GDP and potential GDP

Accepted Answer

A) decreases as the unemployment rate rises. 
B) increases as the unemployment rate rises. 
C) increases as the employment rate rises. 
D) decreases as the labor force increases. 
A) decreases as the unemployment rate rises. 
B) increases as the unemployment rate rises. 
C) increases as the employment rate rises. 
D) decreases as the labor force increases.

Question 7

The employment/population ratio _____ between 1980 and 2000, but this ratio has _______ since 2000. (fill in the blanks)

Accepted Answer

A) fell; risen 
B) was virtually constant; risen 
C) rose; been virtually constant 
D) rose; fallen 
A) fell; risen 
B) was virtually constant; risen 
C) rose; been virtually constant 
D) rose; fallen

Question 8

The civilian labor force includes those individuals who are

Accepted Answer

A) unemployed and looking for work. 
B) staying home to care for other family members. 
C) attending school and not working at a job. 
D) retired. 
A) unemployed and looking for work. 
B) staying home to care for other family members. 
C) attending school and not working at a job. 
D) retired.

Question 9

As the economy recovered from the 2008-2009 recession during 2010-2013 the employment/population ratio

Accepted Answer

A) rose sharply during the expansion. 
B) remained well below the rates achieved prior to the recession. 
C) remained well above the rates achieved prior to the recession. 
D) rose even though the labor force participation rate was declining. 
A) rose sharply during the expansion. 
B) remained well below the rates achieved prior to the recession. 
C) remained well above the rates achieved prior to the recession. 
D) rose even though the labor force participation rate was declining.

Question 10

Structural unemployment is a result of

Accepted Answer

A) difficulties in matching qualified workers with available jobs. 
B) inaccurate or costly information about job opportunities. 
C) slow or negative economic growth, as during a recession. 
D) not enough workers to fill available jobs. 
A) difficulties in matching qualified workers with available jobs. 
B) inaccurate or costly information about job opportunities. 
C) slow or negative economic growth, as during a recession. 
D) not enough workers to fill available jobs.

Question 11

Which of the following about inflation is true?

Accepted Answer

A) High and variable rates of inflation will be easy for decision makers to forecast accurately. 
B) Unanticipated inflation is an increase in the general level of prices that was not expected by most decision makers. 
C) In contrast with unanticipated inflation, anticipated inflation implies that the increase in the general level of prices was expected by borrowers but not lenders. 
D) Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers. 
A) High and variable rates of inflation will be easy for decision makers to forecast accurately. 
B) Unanticipated inflation is an increase in the general level of prices that was not expected by most decision makers. 
C) In contrast with unanticipated inflation, anticipated inflation implies that the increase in the general level of prices was expected by borrowers but not lenders. 
D) Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers.

Question 12

If borrowers and lenders expect a higher rate of inflation,

Accepted Answer

A) nominal interest rates will tend to fall. 
B) real interest rates will tend to fall. 
C) nominal interest rates will tend to rise. 
D) real interest rates will tend to rise. 
A) nominal interest rates will tend to fall. 
B) real interest rates will tend to fall. 
C) nominal interest rates will tend to rise. 
D) real interest rates will tend to rise.

Question 13

Inflation isn't costly just because prices are going up. After all, inflation means salaries and wages are going up as well. If higher prices are not the problem, discuss two important aspects of inflation that are costly.

Accepted Answer

One important cost of inflation is that

Question 14

If a country's population (age 16 and over) is 50 million, with 2 million unemployed and 23 million currently holding jobs, the

Accepted Answer

A) unemployment rate is 4 percent, and the labor force participation rate is 46 percent. 
B) unemployment rate is 8.0 percent, and the labor force participation rate is 50 percent. 
C) unemployment rate is 4 percent, and the labor force participation rate is 50 percent. 
D) unemployment rate is 8.7 percent, and the labor force participation rate 50 percent. 
A) unemployment rate is 4 percent, and the labor force participation rate is 46 percent. 
B) unemployment rate is 8.0 percent, and the labor force participation rate is 50 percent. 
C) unemployment rate is 4 percent, and the labor force participation rate is 50 percent. 
D) unemployment rate is 8.7 percent, and the labor force participation rate 50 percent.

Question 15

Which of the following is true?

Accepted Answer

A) The natural rate of unemployment is present when the economy is operating at full employment. 
B) The natural rate of unemployment is equal to the number of persons unemployed divided by the number of persons in the labor force. 
C) The natural rate of unemployment is primarily the result of the ups and downs of the business cycle. 
D) Public policy cannot influence the natural rate of unemployment. 
A) The natural rate of unemployment is present when the economy is operating at full employment. 
B) The natural rate of unemployment is equal to the number of persons unemployed divided by the number of persons in the labor force. 
C) The natural rate of unemployment is primarily the result of the ups and downs of the business cycle. 
D) Public policy cannot influence the natural rate of unemployment.

Question 16

During a sustained economic expansion,

Accepted Answer

A) the rate of unemployment will generally fall and the employment/population ratio will generally rise. 
B) the rate of unemployment will generally rise and the employment/population ratio will generally fall. 
C) both the rate of unemployment and the employment/population ratio will generally decline. 
D) both the rate of unemployment and the employment/population ratio will generally rise. 
A) the rate of unemployment will generally fall and the employment/population ratio will generally rise. 
B) the rate of unemployment will generally rise and the employment/population ratio will generally fall. 
C) both the rate of unemployment and the employment/population ratio will generally decline. 
D) both the rate of unemployment and the employment/population ratio will generally rise.

Question 17

Which of the following about inflation is true?

Accepted Answer

A) Anticipated inflation is an increase in the price level that comes as a surprise, at least to most individuals. 
B) Unanticipated inflation is a change in the price level that is widely expected. 
C) Decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy. 
D) Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers. 
A) Anticipated inflation is an increase in the price level that comes as a surprise, at least to most individuals. 
B) Unanticipated inflation is a change in the price level that is widely expected. 
C) Decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy. 
D) Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers.

Question 18

In a dynamic economy under ideal conditions,

Accepted Answer

A) the unemployment rate should be near zero. 
B) some unemployment would be present due to workers temporarily being out of work while changing jobs. 
C) unemployment would tend to move upward slightly as prices increased. 
D) unemployment would tend to move slightly downward as unemployment compensation benefits increased. 
A) the unemployment rate should be near zero. 
B) some unemployment would be present due to workers temporarily being out of work while changing jobs. 
C) unemployment would tend to move upward slightly as prices increased. 
D) unemployment would tend to move slightly downward as unemployment compensation benefits increased.

Question 19

The natural rate of unemployment

Accepted Answer

A) is a temporary low rate that cannot be maintained. 
B) is fixed; it cannot be altered by public policy. 
C) is equal to the number of persons unemployed divided by the number in the labor force. 
D) is the unemployment rate accompanying the economy's maximum sustainable rate of output. 
A) is a temporary low rate that cannot be maintained. 
B) is fixed; it cannot be altered by public policy. 
C) is equal to the number of persons unemployed divided by the number in the labor force. 
D) is the unemployment rate accompanying the economy's maximum sustainable rate of output.

Question 20

The type of unemployment resulting from the fact that labor market information is less than perfect is called

Accepted Answer

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

The recessionary phase of the business cycle is characterized by

During the last several decades the labor force participation rate

The natural rate of unemployment

The best definition of inflation is

At the beginning of a year, decision makers expect the general level of prices to increase at a 6 percent annual rate. The CPI increases from 150 to 154.5 during the year; this indicates that

The difference between actual real GDP and potential GDP

The employment/population ratio _ between 1980 and 2000, but this ratio has ___ since 2000. (fill in the blanks)

The civilian labor force includes those individuals who are

As the economy recovered from the 2008-2009 recession during 2010-2013 the employment/population ratio

Structural unemployment is a result of

Which of the following about inflation is true?

If borrowers and lenders expect a higher rate of inflation,

Inflation isn't costly just because prices are going up. After all, inflation means salaries and wages are going up as well. If higher prices are not the problem, discuss two important aspects of inflation that are costly.

If a country's population (age 16 and over) is 50 million, with 2 million unemployed and 23 million currently holding jobs, the

Which of the following is true?

During a sustained economic expansion,

Which of the following about inflation is true?

In a dynamic economy under ideal conditions,

The natural rate of unemployment

The type of unemployment resulting from the fact that labor market information is less than perfect is called

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

The recessionary phase of the business cycle is characterized by

During the last several decades the labor force participation rate

The natural rate of unemployment

The best definition of inflation is

At the beginning of a year, decision makers expect the general level of prices to increase at a 6 percent annual rate. The CPI increases from 150 to 154.5 during the year; this indicates that

The difference between actual real GDP and potential GDP

The employment/population ratio _____ between 1980 and 2000, but this ratio has _______ since 2000. (fill in the blanks)

The civilian labor force includes those individuals who are

As the economy recovered from the 2008-2009 recession during 2010-2013 the employment/population ratio

Structural unemployment is a result of

Which of the following about inflation is true?

If borrowers and lenders expect a higher rate of inflation,

Inflation isn't costly just because prices are going up. After all, inflation means salaries and wages are going up as well. If higher prices are not the problem, discuss two important aspects of inflation that are costly.

If a country's population (age 16 and over) is 50 million, with 2 million unemployed and 23 million currently holding jobs, the

Which of the following is true?

During a sustained economic expansion,

Which of the following about inflation is true?

In a dynamic economy under ideal conditions,

The natural rate of unemployment

The type of unemployment resulting from the fact that labor market information is less than perfect is called

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

The employment/population ratio _ between 1980 and 2000, but this ratio has ___ since 2000. (fill in the blanks)