Question 1

Demand-pull inﬂation

Accepted Answer

A)  occurs when total spending in the economy is excessive. 
B)  is measured differently than cost-push inﬂation. 
C)  can be present even during an economic depression. 
D)  is also called "hyperinﬂation." 
A)  occurs when total spending in the economy is excessive. 
B)  is measured differently than cost-push inﬂation. 
C)  can be present even during an economic depression. 
D)  is also called "hyperinﬂation."

Question 2

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 3

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 4

Real income is found by

Accepted Answer

A)  dividing nominal income by 70. 
B)  multiplying nominal income by 1.03. 
C)  dividing the price index (in hundredths) by nominal income. 
D)  dividing nominal income by the price index (in hundredths). 
A)  dividing nominal income by 70. 
B)  multiplying nominal income by 1.03. 
C)  dividing the price index (in hundredths) by nominal income. 
D)  dividing nominal income by the price index (in hundredths).

Question 5

Who is least likely to be hurt by unanticipated inﬂation?

Accepted Answer

A)  a disabled laborer who is living off accumulated savings 
B)  an owner of a small business 
C)  a secretary 
D)  a pensioned steelworker 
A)  a disabled laborer who is living off accumulated savings 
B)  an owner of a small business 
C)  a secretary 
D)  a pensioned steelworker

Question 6

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inﬂation premium is

Accepted Answer

A)  8 percent. 
B)  5 percent. 
C)  3 percent. 
D)  2 percent. 
A)  8 percent. 
B)  5 percent. 
C)  3 percent. 
D)  2 percent.

Question 7

$$\begin{array} { | l | c | } 
\hline \text { Potential Real GDP } & \$ 200 \text { Billion } \
\hline \text { Natural Rate of Unemployment } & 6 \% \
\hline \text { Actual Rate of Unemployment } & 12 \% \
\hline
\end{array}$$ Refer to the accompanying data, which is for a speci?c year in a hypothetical economy for which Okun's law is applicable. If the unemployment rate in the economy fell to 6 percent, we could
Conclude that

Accepted Answer

A)  only structural unemployment remained. 
B)  the economy's production possibilities curve shifted outward. 
C)  the economy had moved from a point inside its production possibilities curve to a point on or very near the curve. 
D)  nominal GDP would rise, but real GDP would fall. 
A)  only structural unemployment remained. 
B)  the economy's production possibilities curve shifted outward. 
C)  the economy had moved from a point inside its production possibilities curve to a point on or very near the curve. 
D)  nominal GDP would rise, but real GDP would fall.

Question 8

If the economy's actual GDP is greater than its potential GDP, then there is high unemployment in
that economy.

Accepted Answer

A) True 
 B)False

Question 9

The natural rate of unemployment is the

Accepted Answer

A)  unemployment rate experienced at the depth of a depression. 
B)  full-employment unemployment rate. 
C)  unemployment rate experienced by the least-skilled workers in the economy. 
D)  unemployment rate experienced by the most-skilled workers in the economy. 
A)  unemployment rate experienced at the depth of a depression. 
B)  full-employment unemployment rate. 
C)  unemployment rate experienced by the least-skilled workers in the economy. 
D)  unemployment rate experienced by the most-skilled workers in the economy.

Question 10

The natural rate of unemployment is

Accepted Answer

A)  higher than the full-employment rate of unemployment. 
B)  lower than the full-employment rate of unemployment. 
C)  that rate of unemployment occurring when the economy is at its potential output. 
D)  found by dividing total unemployment by the size of the labor force. 
A)  higher than the full-employment rate of unemployment. 
B)  lower than the full-employment rate of unemployment. 
C)  that rate of unemployment occurring when the economy is at its potential output. 
D)  found by dividing total unemployment by the size of the labor force.

Question 11

Inﬂation means that the prices of all items in the economy are increasing.

Accepted Answer

A) True 
 B)False

Question 12

According to the Bureau of Labor Statistics, to be oﬃcially unemployed a person must

Accepted Answer

A)  be in the labor force. 
B)  be 21 years of age or older. 
C)  have lost a job. 
D)  be waiting to be called back from a layoff. 
A)  be in the labor force. 
B)  be 21 years of age or older. 
C)  have lost a job. 
D)  be waiting to be called back from a layoff.

Question 13

Unemployment that is the result of deregulation, corporate downsizing, and the closure of military
bases is best categorized as frictional unemployment.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Unemployment rates for men and women normally are very similar. In the Great Recession of 2007- 09, the unemployment rate for men

Accepted Answer

A)  remained roughly similar to that for women. 
B)  was slightly lower than that for women. 
C)  was much lower than that for women. 
D)  signiﬁcantly exceeded that for women. 
A)  remained roughly similar to that for women. 
B)  was slightly lower than that for women. 
C)  was much lower than that for women. 
D)  signiﬁcantly exceeded that for women.

Question 16

Which of the following groups has traditionally beneﬁted from unanticipated inﬂation?

Accepted Answer

A)  consumers 
B)  business ﬁrms 
C)  the federal government 
D)  the foreign sector 
A)  consumers 
B)  business ﬁrms 
C)  the federal government 
D)  the foreign sector

Question 17

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

Question 18

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 19

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.

Question 20

Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in the assembly line. Kevin plans to go to technical school to learn how to repair
Microcomputers. The type of unemployment Kevin is faced with is

Accepted Answer

A)  cyclical. 
B)  frictional. 
C)  structural. 
D)  natural. 
A)  cyclical. 
B)  frictional. 
C)  structural. 
D)  natural.

Demand-pull inﬂation

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

In the expansion phase of a business cycle,

Real income is found by

Who is least likely to be hurt by unanticipated inﬂation?

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inﬂation premium is

If the economy's actual GDP is greater than its potential GDP, then there is high unemployment in that economy.

The natural rate of unemployment is the

The natural rate of unemployment is

Inﬂation means that the prices of all items in the economy are increasing.

According to the Bureau of Labor Statistics, to be oﬃcially unemployed a person must

Unemployment that is the result of deregulation, corporate downsizing, and the closure of military bases is best categorized as frictional unemployment.

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

Unemployment rates for men and women normally are very similar. In the Great Recession of 2007- 09, the unemployment rate for men

Which of the following groups has traditionally beneﬁted from unanticipated inﬂation?

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

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

Cost-push inﬂation may be caused by

Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in the assembly line. Kevin plans to go to technical school to learn how to repair Microcomputers. The type of unemployment Kevin is faced with is

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

Demand-pull inﬂation

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

In the expansion phase of a business cycle,

Real income is found by

Who is least likely to be hurt by unanticipated inﬂation?

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inﬂation premium is

If the economy's actual GDP is greater than its potential GDP, then there is high unemployment in that economy.

The natural rate of unemployment is the

The natural rate of unemployment is

Inﬂation means that the prices of all items in the economy are increasing.

According to the Bureau of Labor Statistics, to be oﬃcially unemployed a person must

Unemployment that is the result of deregulation, corporate downsizing, and the closure of military bases is best categorized as frictional unemployment.

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

Unemployment rates for men and women normally are very similar. In the Great Recession of 2007- 09, the unemployment rate for men

Which of the following groups has traditionally beneﬁted from unanticipated inﬂation?

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

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

Cost-push inﬂation may be caused by

Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in the assembly line. Kevin plans to go to technical school to learn how to repair Microcomputers. The type of unemployment Kevin is faced with is

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