Question 1

Potential GDP

Accepted Answer

A) is always less than actual GDP. 
B) is identical to actual GDP. 
C) measures inflation. 
D) is the output an economy could produce at full employment. 
A) is always less than actual GDP. 
B) is identical to actual GDP. 
C) measures inflation. 
D) is the output an economy could produce at full employment.

Question 2

The primary cause of frictional unemployment is

Accepted Answer

A) discouraged workers who give up looking for work. 
B) fluctuations in aggregate demand. 
C) the lack of training and marketable qualifications in job seekers. 
D) inaccurate and costly information about job opportunities. 
A) discouraged workers who give up looking for work. 
B) fluctuations in aggregate demand. 
C) the lack of training and marketable qualifications in job seekers. 
D) inaccurate and costly information about job opportunities.

Question 3

When the inflation rate of a country is high over a lengthy time period,

Accepted Answer

A) the year-to-year variability in the rate of inflation is generally small. 
B) the year-to-year variability in the rate of inflation is generally large. 
C) decision makers will be able to forecast future rates of inflation accurately. 
D) there is no reason to believe that the inflation will exert harmful side effects on real output and the prosperity of the country. 
A) the year-to-year variability in the rate of inflation is generally small. 
B) the year-to-year variability in the rate of inflation is generally large. 
C) decision makers will be able to forecast future rates of inflation accurately. 
D) there is no reason to believe that the inflation will exert harmful side effects on real output and the prosperity of the country.

Question 4

Which of the following is a danger of high rates of inflation?

Accepted Answer

A) Price changes encourage long-term contracts at the expense of short-term contracts. 
B) Rapid price changes reduce uncertainty. 
C) Inflation increases the real value of assets, such as stocks and bonds. 
D) Inflation will encourage people to spend less time producing and more time trying to protect the value of their assets. 
A) Price changes encourage long-term contracts at the expense of short-term contracts. 
B) Rapid price changes reduce uncertainty. 
C) Inflation increases the real value of assets, such as stocks and bonds. 
D) Inflation will encourage people to spend less time producing and more time trying to protect the value of their assets.

Question 5

Each month, the Bureau of Labor Statistics calculates unemployment by

Accepted Answer

A) surveying all workers in the economy. 
B) surveying a random sample of households. 
C) making projections based on census data. 
D) surveying large business and government employers. 
A) surveying all workers in the economy. 
B) surveying a random sample of households. 
C) making projections based on census data. 
D) surveying large business and government employers.

Question 6

Terrell, an auto repair mechanic who remains unemployed because he refuses to work for less than $1,000 an hour, is

Accepted Answer

A) counted as part of the labor force. 
B) considered frictionally unemployed. 
C) an underemployed worker. 
D) not counted as part of the labor force. 
E) considered as productively active. 
A) counted as part of the labor force. 
B) considered frictionally unemployed. 
C) an underemployed worker. 
D) not counted as part of the labor force. 
E) considered as productively active.

Question 7

If the economy were at its potential output level, which of the following is not true?

Accepted Answer

A) The actual unemployment rate would equal the natural rate. 
B) There would be some cyclical unemployment. 
C) There would be some frictional unemployment. 
D) There would be some structural unemployment. 
A) The actual unemployment rate would equal the natural rate. 
B) There would be some cyclical unemployment. 
C) There would be some frictional unemployment. 
D) There would be some structural unemployment.

Question 8

During the early 1990s, many workers in military-related industries lost their jobs as the defense budget was reduced. Unemployment of this type is called

Accepted Answer

A) cyclical unemployment. 
B) the natural rate of unemployment. 
C) frictional unemployment. 
D) structural unemployment. 
A) cyclical unemployment. 
B) the natural rate of unemployment. 
C) frictional unemployment. 
D) structural unemployment.

Question 9

The employment/population ratio is the number of persons employed divided by the number of persons

Accepted Answer

A) in the labor force. 
B) unemployed. 
C) employed plus the number unemployed. 
D) in the civilian population age 16 and over. 
A) in the labor force. 
B) unemployed. 
C) employed plus the number unemployed. 
D) in the civilian population age 16 and over.

Question 10

Economists define full employment as the level of employment that results when

Accepted Answer

A) the economy is in an economic boom. 
B) the rate of unemployment is zero. 
C) the rate of unemployment has fallen to its historical low of approximately two percent. 
D) the rate of unemployment is normal, considering both frictional and structural factors. 
A) the economy is in an economic boom. 
B) the rate of unemployment is zero. 
C) the rate of unemployment has fallen to its historical low of approximately two percent. 
D) the rate of unemployment is normal, considering both frictional and structural factors.

Question 11

How would the Bureau of Labor Statistics classify a person who is not working and refuses an offer of employment in order to keep looking for a better job?

Accepted Answer

A) not in the labor force 
B) unemployed 
C) employed 
D) a discouraged worker 
A) not in the labor force 
B) unemployed 
C) employed 
D) a discouraged worker

Question 12

Which of the following is a danger of inflation?

Accepted Answer

A) Price changes can affect the people who sign long-term contracts. 
B) Rapid price changes reduce uncertainty. 
C) Anticipated inflation may be greater than unanticipated inflation. 
D) High rates of inflation will reduce interest rates. 
A) Price changes can affect the people who sign long-term contracts. 
B) Rapid price changes reduce uncertainty. 
C) Anticipated inflation may be greater than unanticipated inflation. 
D) High rates of inflation will reduce interest rates.

Question 13

Describe two ways that public policy could reduce the natural rate of unemployment.

Accepted Answer

Since one source of unemployment is the

Question 14

In contrast with unanticipated inflation, anticipated inflation implies that

Accepted Answer

A) the government was informed about inflation. 
B) most decision makers expected the general increase in the price level. 
C) the increase in the general level of prices was growth of GDP. 
D) the increase in the general level of prices was expected by borrowers but not lenders. 
A) the government was informed about inflation. 
B) most decision makers expected the general increase in the price level. 
C) the increase in the general level of prices was growth of GDP. 
D) the increase in the general level of prices was expected by borrowers but not lenders.

Potential GDP

The primary cause of frictional unemployment is

When the inflation rate of a country is high over a lengthy time period,

Which of the following is a danger of high rates of inflation?

Each month, the Bureau of Labor Statistics calculates unemployment by

Terrell, an auto repair mechanic who remains unemployed because he refuses to work for less than $1,000 an hour, is

If the economy were at its potential output level, which of the following is not true?

During the early 1990s, many workers in military-related industries lost their jobs as the defense budget was reduced. Unemployment of this type is called

The employment/population ratio is the number of persons employed divided by the number of persons

Economists define full employment as the level of employment that results when

How would the Bureau of Labor Statistics classify a person who is not working and refuses an offer of employment in order to keep looking for a better job?

Which of the following is a danger of inflation?

Describe two ways that public policy could reduce the natural rate of unemployment.

In contrast with unanticipated inflation, anticipated inflation implies that

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

Potential GDP

The primary cause of frictional unemployment is

When the inflation rate of a country is high over a lengthy time period,

Which of the following is a danger of high rates of inflation?

Each month, the Bureau of Labor Statistics calculates unemployment by

Terrell, an auto repair mechanic who remains unemployed because he refuses to work for less than $1,000 an hour, is

If the economy were at its potential output level, which of the following is not true?

During the early 1990s, many workers in military-related industries lost their jobs as the defense budget was reduced. Unemployment of this type is called

The employment/population ratio is the number of persons employed divided by the number of persons

Economists define full employment as the level of employment that results when

How would the Bureau of Labor Statistics classify a person who is not working and refuses an offer of employment in order to keep looking for a better job?

Which of the following is a danger of inflation?

Describe two ways that public policy could reduce the natural rate of unemployment.

In contrast with unanticipated inflation, anticipated inflation implies that

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