Question 1

A worker who loses a job at a call center because the company moved the call center operations to another country is an example of

Accepted Answer

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

Question 2

An unexpected increase in total spending will cause an increase in GDP

Accepted Answer

A) if prices are sticky. 
B) if prices are fully flexible. 
C) regardless of whether prices are sticky or fully flexible. 
D) only if prices are stuck in the long term. 
A) if prices are sticky. 
B) if prices are fully flexible. 
C) regardless of whether prices are sticky or fully flexible. 
D) only if prices are stuck in the long term.

Question 3

In which industry or sector of the economy is output least likely to be affected by the business cycle?

Accepted Answer

A) housing construction 
B) automobile production 
C) agricultural commodities 
D) capital goods production 
A) housing construction 
B) automobile production 
C) agricultural commodities 
D) capital goods production

Question 4

The production of durable goods varies more than the production of nondurable goods because

Accepted Answer

A) durable purchases of durables are not postponable. 
B) durable purchases of durables are postponable. 
C) the producers of nondurables have monopoly power. 
D) producers of durables are highly competitive. 
A) durable purchases of durables are not postponable. 
B) durable purchases of durables are postponable. 
C) the producers of nondurables have monopoly power. 
D) producers of durables are highly competitive.

Question 5

If the unemployment rate for the U.S.economy rises from 7 to 11 percent during a year, we can conclude that

Accepted Answer

A) actual GDP exceeds potential GDP. 
B) actual GDP is less than potential GDP. 
C) the economy is experiencing only frictional unemployment. 
D) the natural rate of unemployment for the U.S.economy has risen. 
A) actual GDP exceeds potential GDP. 
B) actual GDP is less than potential GDP. 
C) the economy is experiencing only frictional unemployment. 
D) the natural rate of unemployment for the U.S.economy has risen.

Question 6

If the negative GDP gap were equal to 4 percent of the potential GDP, Okun's law suggests that the actual unemployment rate would exceed the natural rate of unemployment by

Accepted Answer

A) one percentage point. 
B) two percentage points. 
C) three percentage points. 
D) four percentage points. 
A) one percentage point. 
B) two percentage points. 
C) three percentage points. 
D) four percentage points.

Question 7

Governments imposing negative nominal interest rates are attempting to

Accepted Answer

A) discourage the use of banks. 
B) compete with private banks in the lending market. 
C) discourage consumption and encourage saving. 
D) encourage consumption by discouraging saving. 
A) discourage the use of banks. 
B) compete with private banks in the lending market. 
C) discourage consumption and encourage saving. 
D) encourage consumption by discouraging saving.

Question 8

Recently, a labor union argued that the standard of living of its members was falling.A critic of the union argued that this could not possibly be true because the union had been receiving increases in the nominal incomes of its members through collective bargaining.Is the critic correct?

Accepted Answer

A) Yes, because when you have a large nominal income, your standard of living automatically increases. 
B) No, because real income may fall if prices increase more proportionately than the increase in nominal income. 
C) No, because real income may fall if prices increase less proportionately than the increases in nominal income. 
D) Yes, because real income may fall if prices increase less proportionately than the increases in nominal income. 
A) Yes, because when you have a large nominal income, your standard of living automatically increases. 
B) No, because real income may fall if prices increase more proportionately than the increase in nominal income. 
C) No, because real income may fall if prices increase less proportionately than the increases in nominal income. 
D) Yes, because real income may fall if prices increase less proportionately than the increases in nominal income.

Question 9

The unemployment rate is the Accessibility: Keyboard Navigation Blooms: Understand

Accepted Answer

A) ratio of unemployed to employed workers. 
B) number of employed workers minus the number of workers who are not in the labor force. 
C) percentage of the labor force that is unemployed. 
D) percentage of the total population that is unemployed. 
A) ratio of unemployed to employed workers. 
B) number of employed workers minus the number of workers who are not in the labor force. 
C) percentage of the labor force that is unemployed. 
D) percentage of the total population that is unemployed.

Question 10

A person's real income will increase by 3 percent if her nominal income

Accepted Answer

A) increases by 5 percent while the price index falls by 2 percent. 
B) increases by 5 percent while the price index rises by 2 percent. 
C) increases by 2 percent while the price index rises by 5 percent. 
D) increases by 2 percent while the price index falls by 5 percent. 
A) increases by 5 percent while the price index falls by 2 percent. 
B) increases by 5 percent while the price index rises by 2 percent. 
C) increases by 2 percent while the price index rises by 5 percent. 
D) increases by 2 percent while the price index falls by 5 percent.

Question 11

The type of unemployment associated with recessions is called

Accepted Answer

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

Question 12

The total population of an economy is 175 million, the labor force is 125 million, and the number of employed workers is 117 million.The unemployment rate for this economy is

Accepted Answer

A) 3.3 percent. 
B) 5.8 percent. 
C) 6.4 percent. 
D) 7.8 percent. 
A) 3.3 percent. 
B) 5.8 percent. 
C) 6.4 percent. 
D) 7.8 percent.

Question 13

When a recession begins and unemployment begins to rise, the demand for goods and services will fall.If the decline in demand is precipitous, which of the following will occur?

Accepted Answer

A) hyperinflation 
B) deflation 
C) rising interest rates 
D) rising inflation 
A) hyperinflation 
B) deflation 
C) rising interest rates 
D) rising inflation

Question 14

During the Great Depression of the 1930s, U.S.real GDP fell by about percent, in comparison to the percent decline during the Great Recession of 2007-09.

Accepted Answer

A) 27; 4.3 
B) 10; 7 
C) 25; 20 
D) 25; 30 
A) 27; 4.3 
B) 10; 7 
C) 25; 20 
D) 25; 30

Question 15

Innovations such as the microchip and the Internet lead to business cycle variations because

Accepted Answer

A) they cause prices to be sticky. 
B) significant innovations occur irregularly and unexpectedly. 
C) the central bank will often change the money supply in response. 
D) they cause prices to be flexible. 
A) they cause prices to be sticky. 
B) significant innovations occur irregularly and unexpectedly. 
C) the central bank will often change the money supply in response. 
D) they cause prices to be flexible.

Question 16

The GDP gap measures the amount by which

Accepted Answer

A) nominal GDP exceeds real GDP. 
B) actual GDP exceeds equilibrium GDP. 
C) potential GDP exceeds actual GDP. 
D) actual GDP exceeds national income. 
A) nominal GDP exceeds real GDP. 
B) actual GDP exceeds equilibrium GDP. 
C) potential GDP exceeds actual GDP. 
D) actual GDP exceeds national income.

Question 17

New college graduates still looking for their first jobs would be classified in the BLS data as

Accepted Answer

A) frictionally unemployed. 
B) not yet in the labor force. 
C) cyclically unemployed. 
D) part of structural unemployment. 
A) frictionally unemployed. 
B) not yet in the labor force. 
C) cyclically unemployed. 
D) part of structural unemployment.

Question 18

(Consider This) The main point of the Consider This box on clipping coins is that

Accepted Answer

A) decreases in the money supply cause deflation. 
B) decreases in tax rates often increase tax revenues. 
C) inflation imposes a "hidden tax" on those who hold money. 
D) demand creates its own supply. 
A) decreases in the money supply cause deflation. 
B) decreases in tax rates often increase tax revenues. 
C) inflation imposes a "hidden tax" on those who hold money. 
D) demand creates its own supply.

Question 19

If you knew that the per-unit production cost was $8 and that the total cost of inputs was $1,000, then the number of units of output would be

Accepted Answer

A) 75. 
B) 100. 
C) 125. 
D) 150. 
A) 75. 
B) 100. 
C) 125. 
D) 150.

Question 20

Full-Time Employed = 80 Part- Time Employed = 25 Unemployed = 15 Discouraged
Workers = 5
Members of Underground Economy = 6
Consumer Price Index = 110
Refer to the given information about a hypothetical economy.The unemployment rate is

Accepted Answer

A) 18.8 percent. 
B) 12.5 percent. 
C) 16.7 percent. 
D) 25 percent. 
A) 18.8 percent. 
B) 12.5 percent. 
C) 16.7 percent. 
D) 25 percent.

Exam 29: Business Cycles, Unemployment, and Inflation

A worker who loses a job at a call center because the company moved the call center operations to another country is an example of

An unexpected increase in total spending will cause an increase in GDP

In which industry or sector of the economy is output least likely to be affected by the business cycle?

The production of durable goods varies more than the production of nondurable goods because

If the unemployment rate for the U.S.economy rises from 7 to 11 percent during a year, we can conclude that

If the negative GDP gap were equal to 4 percent of the potential GDP, Okun's law suggests that the actual unemployment rate would exceed the natural rate of unemployment by

Governments imposing negative nominal interest rates are attempting to

Recently, a labor union argued that the standard of living of its members was falling.A critic of the union argued that this could not possibly be true because the union had been receiving increases in the nominal incomes of its members through collective bargaining.Is the critic correct?

The unemployment rate is the Accessibility: Keyboard Navigation Blooms: Understand

A person's real income will increase by 3 percent if her nominal income

The type of unemployment associated with recessions is called

The total population of an economy is 175 million, the labor force is 125 million, and the number of employed workers is 117 million.The unemployment rate for this economy is

When a recession begins and unemployment begins to rise, the demand for goods and services will fall.If the decline in demand is precipitous, which of the following will occur?

During the Great Depression of the 1930s, U.S.real GDP fell by about percent, in comparison to the percent decline during the Great Recession of 2007-09.

Innovations such as the microchip and the Internet lead to business cycle variations because

The GDP gap measures the amount by which

New college graduates still looking for their first jobs would be classified in the BLS data as

(Consider This) The main point of the Consider This box on clipping coins is that

If you knew that the per-unit production cost was $8 and that the total cost of inputs was $1,000, then the number of units of output would be

Full-Time Employed = 80 Part- Time Employed = 25 Unemployed = 15 Discouraged Workers = 5 Members of Underground Economy = 6 Consumer Price Index = 110 Refer to the given information about a hypothetical economy.The unemployment rate 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