Question 1

Explain the difference between nominal and real interest rates.

Accepted Answer

The nominal interest rate is the interes

Question 2

If the CPI rises from 125 to 140 from one year to the next, then the rate of inﬂation is 15 percent.

Accepted Answer

A) True 
 B)False

Question 3

Unemployment rates for skilled workers compared to unemployment rates for unskilled workers are

Accepted Answer

A)  lower, because skilled workers tend to be employed in less cyclically vulnerable industries, such as the services and nondurable goods industries. 
B)  higher, because skilled workers tend to be employed in more cyclically vulnerable industries, such as the durable goods industry. 
C)  higher, because businesses are less likely to retain the more costly skilled workers no matter what type of industry. 
D)  lower, because skilled workers tend to be primarily employed by government at the local, state, and federal levels. 
A)  lower, because skilled workers tend to be employed in less cyclically vulnerable industries, such as the services and nondurable goods industries. 
B)  higher, because skilled workers tend to be employed in more cyclically vulnerable industries, such as the durable goods industry. 
C)  higher, because businesses are less likely to retain the more costly skilled workers no matter what type of industry. 
D)  lower, because skilled workers tend to be primarily employed by government at the local, state, and federal levels.

Question 4

If the Consumer Price Index was 125 in one year and 120 in the following year, then the rate of inﬂation was approximately

Accepted Answer

A)  4.0 percent. 
B)  4.2 percent. 
C)  -4.0 percent. 
D)  -4.2 percent. 
A)  4.0 percent. 
B)  4.2 percent. 
C)  -4.0 percent. 
D)  -4.2 percent.

Question 5

Which of the following is the correct way to calculate the unemployment rate?

Accepted Answer

A)  [(unemployed)/(population)] × 100 
B)  [(unemployed)/(labor force)] × 100 
C)  [(labor force)/(population)] × 100 
D)  [(labor force)/(unemployed)] × 100 
A)  [(unemployed)/(population)] × 100 
B)  [(unemployed)/(labor force)] × 100 
C)  [(labor force)/(population)] × 100 
D)  [(labor force)/(unemployed)] × 100

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

The accompanying list describes the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment.
1) Mollie just graduated from college and is now looking for work. She has had three job interviews in
The past month but still has not gotten a job offer.
2) George used to work in an automotive assembly plant. He was laid off six months ago as the
Economy weakened. He expects to return to work in a few months when national economic
Conditions improve.
3) Jeanette worked as an aircraft design engineer for a company that produces military aircraft until
She lost her job last year when the Federal government cut defense spending. She has been
Looking for similar work for a year, but no company seems interested in her aircraft design skills.
4) Ricardo lost his job last year when his company downsized and laid off middle-level managers. He
Tried to ﬁnd another job for a year but was unsuccessful and quit looking for work.
Which individual is frictionally unemployed?

Accepted Answer

A)  Mollie 
B)  George 
C)  Jeanette 
D)  Ricardo 
A)  Mollie 
B)  George 
C)  Jeanette 
D)  Ricardo

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

When unanticipated deﬂation occurs,

Accepted Answer

A)  both creditors and debtors beneﬁt. 
B)  both creditors and debtors are hurt. 
C)  debtors are hurt, but creditors beneﬁt. 
D)  creditors are hurt, but debtors beneﬁt. 
A)  both creditors and debtors beneﬁt. 
B)  both creditors and debtors are hurt. 
C)  debtors are hurt, but creditors beneﬁt. 
D)  creditors are hurt, but debtors beneﬁt.

Question 10

Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is

Accepted Answer

A)  3 percent. 
B)  6 percent. 
C)  7 percent. 
D)  53 percent. 
A)  3 percent. 
B)  6 percent. 
C)  7 percent. 
D)  53 percent.

Question 11

The production of durable goods is more stable than the production of nondurables over the
business cycle.

Accepted Answer

A) True 
 B)False

Question 12

$$\begin{array} { | l | r | } 
\hline \text { Unemployed } & 7 \
\hline \text { Total Population } & 145 \
\hline \text { Employed } & 95 \
\hline \text { Discouraged Workers } & 3 \
\hline
\end{array}$$ The table contains information about the hypothetical economy of Scoob. All ?gures are in millions. The labor force in Scoob is

Accepted Answer

A)  95 million. 
B)  102 million. 
C)  105 million. 
D)  145 million. 
A)  95 million. 
B)  102 million. 
C)  105 million. 
D)  145 million.

Question 13

(Last Word) All of the following are explanations for why many job openings were going unﬁlled after the Great Recession except

Accepted Answer

A)  skills mismatches between the worker and the employer. 
B)  employers set unreasonably high recruiting criteria. 
C)  less geographic relocation of the labor force. 
D)  the fact that some amount of frictional unemployment always exists. 
E)  the extensive array of vocational programs offered at high schools today. 
A)  skills mismatches between the worker and the employer. 
B)  employers set unreasonably high recruiting criteria. 
C)  less geographic relocation of the labor force. 
D)  the fact that some amount of frictional unemployment always exists. 
E)  the extensive array of vocational programs offered at high schools today.

Question 14

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 15

If a person's nominal income increases by 5 percent while the price level increases by 2 percent, then that person's real income

Accepted Answer

A)  increases by 3 percent. 
B)  increases by 5 percent. 
C)  decreases by 7 percent. 
D)  decreases by 2 percent. 
A)  increases by 3 percent. 
B)  increases by 5 percent. 
C)  decreases by 7 percent. 
D)  decreases by 2 percent.

Question 16

Oﬃcial unemployment rate statistics may

Accepted Answer

A)  overstate the amount of unemployment by including part-time workers in the calculations. 
B)  understate the amount of unemployment by excluding part-time workers in the calculations. 
C)  overstate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment. 
D)  understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment. 
A)  overstate the amount of unemployment by including part-time workers in the calculations. 
B)  understate the amount of unemployment by excluding part-time workers in the calculations. 
C)  overstate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment. 
D)  understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment.

Question 17

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 18

As it relates to economic growth, the term long-run trend refers to

Accepted Answer

A)  the long-run increase in the relative importance of durable goods in the U.S. economy. 
B)  the long-term expansion or contraction of business activity that occurs over many years. 
C)  ﬂuctuations in business activity that average 40 months in duration. 
D)  ﬂuctuations in business activity that occur around Christmas, Easter, and other major holidays. 
A)  the long-run increase in the relative importance of durable goods in the U.S. economy. 
B)  the long-term expansion or contraction of business activity that occurs over many years. 
C)  ﬂuctuations in business activity that average 40 months in duration. 
D)  ﬂuctuations in business activity that occur around Christmas, Easter, and other major holidays.

Question 19

Inﬂation means that

Accepted Answer

A)  all prices are rising, but at different rates. 
B)  all prices are rising at approximately the same rate. 
C)  prices on average are rising, although some particular prices may be falling. 
D)  real incomes are rising. 
A)  all prices are rising, but at different rates. 
B)  all prices are rising at approximately the same rate. 
C)  prices on average are rising, although some particular prices may be falling. 
D)  real incomes are rising.

Question 20

In what circumstances would lenders most beneﬁt?

Accepted Answer

A)  when there is an unanticipated decrease in inﬂation 
B)  when there is an anticipated increase in inﬂation 
C)  when there is an unanticipated increase in inﬂation 
D)  when there is an anticipated decrease in inﬂation 
A)  when there is an unanticipated decrease in inﬂation 
B)  when there is an anticipated increase in inﬂation 
C)  when there is an unanticipated increase in inﬂation 
D)  when there is an anticipated decrease in inﬂation

Explain the difference between nominal and real interest rates.

If the CPI rises from 125 to 140 from one year to the next, then the rate of inﬂation is 15 percent.

Unemployment rates for skilled workers compared to unemployment rates for unskilled workers are

If the Consumer Price Index was 125 in one year and 120 in the following year, then the rate of inﬂation was approximately

Which of the following is the correct way to calculate the unemployment rate?

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

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

When unanticipated deﬂation occurs,

Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is

The production of durable goods is more stable than the production of nondurables over the business cycle.

Unemployed 7 Total Population 145 Employed 95 Discouraged Workers 3 The table contains information about the hypothetical economy of Scoob. All ?gures are in millions. The labor force in Scoob is

(Last Word) All of the following are explanations for why many job openings were going unﬁlled after the Great Recession except

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

If a person's nominal income increases by 5 percent while the price level increases by 2 percent, then that person's real income

Oﬃcial unemployment rate statistics may

A peak in the business cycle

As it relates to economic growth, the term long-run trend refers to

Inﬂation means that

In what circumstances would lenders most beneﬁt?

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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

Exam 9: Business Cycles, Unemployment, and Inflation

Explain the difference between nominal and real interest rates.

If the CPI rises from 125 to 140 from one year to the next, then the rate of inﬂation is 15 percent.

Unemployment rates for skilled workers compared to unemployment rates for unskilled workers are

If the Consumer Price Index was 125 in one year and 120 in the following year, then the rate of inﬂation was approximately

Which of the following is the correct way to calculate the unemployment rate?

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

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

When unanticipated deﬂation occurs,

Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is

The production of durable goods is more stable than the production of nondurables over the business cycle.

Unemployed 7 Total Population 145 Employed 95 Discouraged Workers 3 The table contains information about the hypothetical economy of Scoob. All ?gures are in millions. The labor force in Scoob is

(Last Word) All of the following are explanations for why many job openings were going unﬁlled after the Great Recession except

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

If a person's nominal income increases by 5 percent while the price level increases by 2 percent, then that person's real income

Oﬃcial unemployment rate statistics may

A peak in the business cycle

As it relates to economic growth, the term long-run trend refers to

Inﬂation means that

In what circumstances would lenders most beneﬁt?

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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