Question 1

Given the annual rate of inflation, the "rule of 70" allows one to

Accepted Answer

A) determine whether the inflation is demand-pull or cost-push. 
B) calculate the accompanying rate of unemployment. 
C) determine when the value of a real asset will approach zero. 
D) calculate the number of years required for the price level to double. 
A) determine whether the inflation is demand-pull or cost-push. 
B) calculate the accompanying rate of unemployment. 
C) determine when the value of a real asset will approach zero. 
D) calculate the number of years required for the price level to double.

Question 2

Unanticipated inflation tends to penalize

Accepted Answer

A) people who save money in financial institutions. 
B) individuals who borrow money from financial institutions. 
C) businesses which borrow money from financial institutions. 
D) governments that have a progressive personal income tax. 
A) people who save money in financial institutions. 
B) individuals who borrow money from financial institutions. 
C) businesses which borrow money from financial institutions. 
D) governments that have a progressive personal income tax.

Question 3

The natural rate of unemployment in the United States today is about 5 to 6 percent.

Accepted Answer

A) True 
 B)False

Question 4

In the expansion phase of a business cycle,

Accepted Answer

A) the inflation rate decreases, but productive capacity increases. 
B) the inflation rate and productive capacity decrease. 
C) employment increases, but output decreases. 
D) employment and output increase. 
A) the inflation rate decreases, but productive capacity increases. 
B) the inflation rate and productive capacity decrease. 
C) employment increases, but output decreases. 
D) employment and output increase.

Question 5

Alex works in his own home as a homemaker and full-time caretaker of his children.Officially, he is

Accepted Answer

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

Question 6

If the total population is 200 million, the labor force is 100 million, and 92 million workers are employed, then the unemployment rate would be

Accepted Answer

A) 4 percent. 
B) 6 percent. 
C) 8 percent. 
D) 10 percent. 
A) 4 percent. 
B) 6 percent. 
C) 8 percent. 
D) 10 percent.

Question 7

If the inflation premium is 3 percent and the real interest on a loan is 4 percent, then the nominal interest rate is

Accepted Answer

A) 1 percent. 
B) −1 percent. 
C) 7 percent. 
D) 0.75 percent. 
A) 1 percent. 
B) −1 percent. 
C) 7 percent. 
D) 0.75 percent.

Question 8

If the real interest rate and the nominal interest rate are both negative and equal to each other, then the

Accepted Answer

A) inflation premium is zero. 
B) inflation premium is also negative. 
C) inflation premium is positive. 
D) economy must be in a recession. 
A) inflation premium is zero. 
B) inflation premium is also negative. 
C) inflation premium is positive. 
D) economy must be in a recession.

Question 9

The phase of the business cycle in which real GDP declines is called

Accepted Answer

A) the peak. 
B) an expansion. 
C) a recession. 
D) the trough. 
A) the peak. 
B) an expansion. 
C) a recession. 
D) the trough.

Question 10

The unemployment rate of

Accepted Answer

A) women greatly exceeds that of men. 
B) whites is roughly equal to that of African Americans. 
C) managerial and professional workers exceeds that of construction and extraction workers. 
D) teenagers is much higher than that of adults. 
A) women greatly exceeds that of men. 
B) whites is roughly equal to that of African Americans. 
C) managerial and professional workers exceeds that of construction and extraction workers. 
D) teenagers is much higher than that of adults.

Question 11

If potential GDP is $400 billion and there is a negative GDP gap of $15 billion, actual GDP is

Accepted Answer

A) $415 billion. 
B) $385 billion. 
C) $15 billion. 
D) $785 billion. 
A) $415 billion. 
B) $385 billion. 
C) $15 billion. 
D) $785 billion.

Question 12

Which of the following would most likely concern policymakers?

Accepted Answer

A) high core inflation and low CPI inflation 
B) high CPI inflation and low core inflation 
C) core inflation and CPI inflation that moved consistently over time 
D) stable core inflation and volatile CPI inflation 
A) high core inflation and low CPI inflation 
B) high CPI inflation and low core inflation 
C) core inflation and CPI inflation that moved consistently over time 
D) stable core inflation and volatile CPI inflation

Question 13

Deflation is when the inflation rate turns negative.

Accepted Answer

A) True 
 B)False

Question 14

Official unemployment statistics overstate unemployment because discouraged workers who are not actively seeking work are counted as unemployed.

Accepted Answer

A) True 
 B)False

Question 15

The full-employment unemployment rate for the United States economy is now generally considered to be

Accepted Answer

A) 2 percent of the labor force. 
B) 4 percent of the labor force. 
C) 5 to 6 percent of the labor force. 
D) 8 to 9 percent of the labor force. 
A) 2 percent of the labor force. 
B) 4 percent of the labor force. 
C) 5 to 6 percent of the labor force. 
D) 8 to 9 percent of the labor force.

Question 16

The unemployment rate among teenagers tends to be lower than the unemployment rate among adults.

Accepted Answer

A) True 
 B)False

Question 17

The unemployed are those people who

Accepted Answer

A) do not have jobs. 
B) are not employed but are seeking work. 
C) are not working. 
D) are not in the workforce. 
A) do not have jobs. 
B) are not employed but are seeking work. 
C) are not working. 
D) are not in the workforce.

Question 18

Rising per-unit production costs are most directly associated with

Accepted Answer

A) frictional unemployment. 
B) structural unemployment. 
C) demand-pull inflation. 
D) cost-push inflation. 
A) frictional unemployment. 
B) structural unemployment. 
C) demand-pull inflation. 
D) cost-push inflation.

Question 19

Structural unemployment

Accepted Answer

A) is also known as frictional unemployment. 
B) is the main component of cyclical unemployment. 
C) is said to occur when people are waiting to be called back to previous jobs. 
D) may involve a locational mismatch between unemployed workers and job openings. 
A) is also known as frictional unemployment. 
B) is the main component of cyclical unemployment. 
C) is said to occur when people are waiting to be called back to previous jobs. 
D) may involve a locational mismatch between unemployed workers and job openings.

Question 20

"Full employment" refers to the situation when there is

Accepted Answer

A) 100 percent employment of the labor force. 
B) 0 percent unemployment rate. 
C) no frictional or structural unemployment. 
D) no cyclical unemployment. 
A) 100 percent employment of the labor force. 
B) 0 percent unemployment rate. 
C) no frictional or structural unemployment. 
D) no cyclical unemployment.

Exam 29: Business Cycles, Unemployment, and Inflation

Given the annual rate of inflation, the "rule of 70" allows one to

Unanticipated inflation tends to penalize

The natural rate of unemployment in the United States today is about 5 to 6 percent.

In the expansion phase of a business cycle,

Alex works in his own home as a homemaker and full-time caretaker of his children.Officially, he is

If the total population is 200 million, the labor force is 100 million, and 92 million workers are employed, then the unemployment rate would be

If the inflation premium is 3 percent and the real interest on a loan is 4 percent, then the nominal interest rate is

If the real interest rate and the nominal interest rate are both negative and equal to each other, then the

The phase of the business cycle in which real GDP declines is called

The unemployment rate of

If potential GDP is $400 billion and there is a negative GDP gap of $15 billion, actual GDP is

Which of the following would most likely concern policymakers?

Deflation is when the inflation rate turns negative.

Official unemployment statistics overstate unemployment because discouraged workers who are not actively seeking work are counted as unemployed.

The full-employment unemployment rate for the United States economy is now generally considered to be

The unemployment rate among teenagers tends to be lower than the unemployment rate among adults.

The unemployed are those people who

Rising per-unit production costs are most directly associated with

Structural unemployment

"Full employment" refers to the situation when there is

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

Filters