Question 1

Which of the following types of unemployment is directly associated with insufficient overall demand for goods and services?

Accepted Answer

A) search unemployment 
B) wait unemployment 
C) cyclical unemployment 
D) frictional unemployment 
A) search unemployment 
B) wait unemployment 
C) cyclical unemployment 
D) frictional unemployment C

Question 2

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is

Accepted Answer

A) 2 percent. 
B) 3 percent. 
C) 4 percent. 
D) 6 percent. 
A) 2 percent. 
B) 3 percent. 
C) 4 percent. 
D) 6 percent. C

Question 3

Anyone who is not employed is classified as unemployed in the Bureau of Labor Statistics data on the labor force.

Accepted Answer

A) True 
 B)False  False

Question 4

With mild demand-pull inflation, the economy's output level would tend to be

Accepted Answer

A) pulled up by the increase in total spending. 
B) pulled down by the decrease in total spending. 
C) pulled up by the rising unemployment. 
D) pulled down by the rising unemployment. 
A) pulled up by the increase in total spending. 
B) pulled down by the decrease in total spending. 
C) pulled up by the rising unemployment. 
D) pulled down by the rising unemployment.

Question 5

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 6

Full-time homemakers and retirees are classified in the BLS data as

Accepted Answer

A) employed. 
B) unemployed. 
C) part of the labor force. 
D) not in the labor force. 
A) employed. 
B) unemployed. 
C) part of the labor force. 
D) not in the labor force.

Question 7

Under which of the following circumstances would we observe the greatest increase in real income?

Accepted Answer

A) Nominal income falls by 2 percent, and the price level falls by 10 percent. 
B) Nominal income rises by 8 percent, and the price level rises by 4 percent. 
C) Nominal income rises by 15 percent, and the price level rises by 12 percent. 
D) Nominal income falls by 4 percent, and the price level rises by 6 percent. 
A) Nominal income falls by 2 percent, and the price level falls by 10 percent. 
B) Nominal income rises by 8 percent, and the price level rises by 4 percent. 
C) Nominal income rises by 15 percent, and the price level rises by 12 percent. 
D) Nominal income falls by 4 percent, and the price level rises by 6 percent.

Question 8

If the rate of inflation is 12 percent per year, the price level will double in about

Accepted Answer

A) 4.1 years. 
B) 5.8 years. 
C) 10.2 years. 
D) 12.4 years. 
A) 4.1 years. 
B) 5.8 years. 
C) 10.2 years. 
D) 12.4 years.

Question 9

The economy has an annual inflation rate of 3.5 percent.It will take approximately how many years for the price level to double?

Accepted Answer

A) 10 years 
B) 20 years 
C) 25 years 
D) 30 years 
A) 10 years 
B) 20 years 
C) 25 years 
D) 30 years

Question 10

In response to slow recoveries after the Great Recession, several governments made the nominal interest rates in their nations turn negative with the intent of stimulating their economies.

Accepted Answer

A) True 
 B)False

Question 11

"Depression means idleness.And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest." This quote describes some of the

Accepted Answer

A) consequences of the hyperinflation that accompanies a recession. 
B) reasons for the natural rate of unemployment. 
C) noneconomic costs of unemployment. 
D) characteristics of structural unemployment. 
A) consequences of the hyperinflation that accompanies a recession. 
B) reasons for the natural rate of unemployment. 
C) noneconomic costs of unemployment. 
D) characteristics of structural unemployment.

Question 12

A recession is a decline in

Accepted Answer

A) the inflation rate that lasts six months or longer. 
B) the unemployment rate that lasts six months or longer. 
C) real GDP that lasts six months or longer. 
D) potential GDP that lasts six months or longer. 
A) the inflation rate that lasts six months or longer. 
B) the unemployment rate that lasts six months or longer. 
C) real GDP that lasts six months or longer. 
D) potential GDP that lasts six months or longer.

Question 13

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then the

Accepted Answer

A) frictional unemployment rate is 5 percent. 
B) cyclical unemployment rate and the frictional unemployment rate together are 5 percent. 
C) cyclical unemployment rate is 4 percent. 
D) natural rate of unemployment will eventually increase. 
A) frictional unemployment rate is 5 percent. 
B) cyclical unemployment rate and the frictional unemployment rate together are 5 percent. 
C) cyclical unemployment rate is 4 percent. 
D) natural rate of unemployment will eventually increase.

Question 14

A peak in the business cycle

Accepted Answer

A) occurs when the unemployment rate is its greatest. 
B) occurs when the inflation rate is its lowest. 
C) is a temporary maximum point. 
D) is a temporary minimum point. 
A) occurs when the unemployment rate is its greatest. 
B) occurs when the inflation rate is its lowest. 
C) is a temporary maximum point. 
D) is a temporary minimum point.

Question 15

If the average level of nominal income in a nation is $44,000 and the price level index is 175, the average real income would be about

Accepted Answer

A) $18,857. 
B) $25,143. 
C) $44,000. 
D) $77,000. 
A) $18,857. 
B) $25,143. 
C) $44,000. 
D) $77,000.

Question 16

(Consider This) If wages were more downwardly flexible, then we would expect

Accepted Answer

A) fewer layoffs during recessions. 
B) more layoffs during recessions. 
C) more severe recessions. 
D) no business cycle fluctuations. 
A) fewer layoffs during recessions. 
B) more layoffs during recessions. 
C) more severe recessions. 
D) no business cycle fluctuations.

Question 17

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

Accepted Answer

A) reduces productivity by causing friction 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 friction 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 18

The downward stickiness of wages serves like a in the labor market.

Accepted Answer

A) price floor 
B) price ceiling 
C) demand determinant 
D) supply determinant 
A) price floor 
B) price ceiling 
C) demand determinant 
D) supply determinant

Question 19

Inflation affects

Accepted Answer

A) both the level and the distribution of income. 
B) neither the level nor the distribution of income. 
C) the distribution, but not the level, of income. 
D) the level, but not the distribution, of income. 
A) both the level and the distribution of income. 
B) neither the level nor the distribution of income. 
C) the distribution, but not the level, of income. 
D) the level, but not the distribution, of income.

Question 20

Cost-push inflation may be caused by

Accepted Answer

A) a decline in per-unit production costs. 
B) a decrease in wage rates. 
C) a negative supply shock. 
D) an increase in resource availability. 
A) a decline in per-unit production costs. 
B) a decrease in wage rates. 
C) a negative supply shock. 
D) an increase in resource availability.

Exam 29: Business Cycles, Unemployment, and Inflation

Which of the following types of unemployment is directly associated with insufficient overall demand for goods and services?

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is

Anyone who is not employed is classified as unemployed in the Bureau of Labor Statistics data on the labor force.

With mild demand-pull inflation, the economy's output level would tend to be

Full-employment output is also called

Full-time homemakers and retirees are classified in the BLS data as

Under which of the following circumstances would we observe the greatest increase in real income?

If the rate of inflation is 12 percent per year, the price level will double in about

The economy has an annual inflation rate of 3.5 percent.It will take approximately how many years for the price level to double?

In response to slow recoveries after the Great Recession, several governments made the nominal interest rates in their nations turn negative with the intent of stimulating their economies.

"Depression means idleness.And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest." This quote describes some of the

A recession is a decline in

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then the

A peak in the business cycle

If the average level of nominal income in a nation is $44,000 and the price level index is 175, the average real income would be about

(Consider This) If wages were more downwardly flexible, then we would expect

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

The downward stickiness of wages serves like a in the labor market.

Inflation affects

Cost-push inflation may be caused by

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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