Question 1

If actual GDP is $340 billion and there is a positive GDP gap of $20 billion, potential GDP is

Accepted Answer

A)  $360 billion. 
B)  $660 billion. 
C)  $320 billion. 
D)  $20 billion. 
A)  $360 billion. 
B)  $660 billion. 
C)  $320 billion. 
D)  $20 billion.

Question 2

If actual GDP is less than potential GDP,

Accepted Answer

A)  potential GDP will fall. 
B)  the price level will rise. 
C)  investment spending will fall. 
D)  the actual unemployment rate will be higher than the natural unemployment rate. 
A)  potential GDP will fall. 
B)  the price level will rise. 
C)  investment spending will fall. 
D)  the actual unemployment rate will be higher than the natural unemployment rate.

Question 3

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 4

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result,

Accepted Answer

A)  the oﬃcial unemployment rate will fall. 
B)  the oﬃcial unemployment rate will rise. 
C)  the oﬃcial unemployment rate will remain unchanged. 
D)  the size of the labor force will increase. 
A)  the oﬃcial unemployment rate will fall. 
B)  the oﬃcial unemployment rate will rise. 
C)  the oﬃcial unemployment rate will remain unchanged. 
D)  the size of the labor force will increase.

Question 5

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

Accepted Answer

A)  2.5 percent. 
B)  3.2 percent. 
C)  5.0 percent. 
D)  6.9 percent. 
A)  2.5 percent. 
B)  3.2 percent. 
C)  5.0 percent. 
D)  6.9 percent.

Question 6

For a person to keep his real income steady at a certain level from one year to the next, his nominal income must

Accepted Answer

A)  rise if the price index falls. 
B)  stay the same as the price index rises. 
C)  fall if the price index rises. 
D)  rise as fast as the price index. 
A)  rise if the price index falls. 
B)  stay the same as the price index rises. 
C)  fall if the price index rises. 
D)  rise as fast as the price index.

Question 7

(Last Word) Today, community colleges are being asked to expand vocational programs to help businesses ﬁnd the skilled labor they need by offering classes like

Accepted Answer

A)  social studies and foreign languages. 
B)  English and biology. 
C)  chemistry and history. 
D)  welding and electronics. 
A)  social studies and foreign languages. 
B)  English and biology. 
C)  chemistry and history. 
D)  welding and electronics.

Question 8

Which of the following would most likely move the economy into a recession in the short term?

Accepted Answer

A)  invention of a new product that most consumers want to buy 
B)  innovations in management that enhance worker productivity 
C)  the central bank printing less money than was anticipated 
D)  Congress passing a reduction in personal income tax rates 
A)  invention of a new product that most consumers want to buy 
B)  innovations in management that enhance worker productivity 
C)  the central bank printing less money than was anticipated 
D)  Congress passing a reduction in personal income tax rates

Question 9

Inﬂation rates in the United States from 2008 to 2018 were within the range of about

Accepted Answer

A)  -0.5 percent to 4 percent. 
B)  5 percent to 8 percent. 
C)  8 percent to 15 percent. 
D)  12 percent to 25 percent. 
A)  -0.5 percent to 4 percent. 
B)  5 percent to 8 percent. 
C)  8 percent to 15 percent. 
D)  12 percent to 25 percent.

Question 10

Suppose the nominal annual interest rate on a two-year loan is 8 percent and lenders expect inﬂation to be 5 percent in each of the two years. The annual real rate of interest is

Accepted Answer

A)  6 percent. 
B)  8 percent. 
C)  2 percent. 
D)  3 percent. 
A)  6 percent. 
B)  8 percent. 
C)  2 percent. 
D)  3 percent.

Question 11

Unemployment rates in the United States from 2007 to 2018 were in the range of

Accepted Answer

A)  4.1 percent to 9.3 percent. 
B)  1.5 percent to 4.5 percent. 
C)  9.8 percent to 12.4 percent. 
D)  12.5 percent to 15.7 percent. 
A)  4.1 percent to 9.3 percent. 
B)  1.5 percent to 4.5 percent. 
C)  9.8 percent to 12.4 percent. 
D)  12.5 percent to 15.7 percent.

Question 12

Which of the following statements is correct?

Accepted Answer

A)  Frictional unemployment is the result of friction between labor and management over how best to perform work. 
B)  Structural unemployment is unemployment resulting from changes over time in consumer demand or technology. 
C)  Cyclical unemployment is also called wait unemployment because this unemployment depends on the timing of the business cycle. 
D)  Search unemployment is the broadest unemployment category because it covers all other types of unemployment. 
A)  Frictional unemployment is the result of friction between labor and management over how best to perform work. 
B)  Structural unemployment is unemployment resulting from changes over time in consumer demand or technology. 
C)  Cyclical unemployment is also called wait unemployment because this unemployment depends on the timing of the business cycle. 
D)  Search unemployment is the broadest unemployment category because it covers all other types of unemployment.

Question 13

$$\begin{array} { | l | c | } 
\hline \text { Full-time Employed } & 80 \
\hline \text { Part-time Employed } & 25 \
\hline \text { Unemployed } & 15 \
\hline \text { Discouraged Workers } & 5 \
\hline \text { Members of Underground Economy } & 6 \
\hline \text { Consumer Price Index } & 110 \
\hline
\end{array}$$ Refer to the given information about a hypothetical economy. If members of the underground economy are currently counted as part of the unemployed when in fact they are employed, the
O?cial unemployment rate is overstated by about

Accepted Answer

A)  0 percentage points. 
B)  2 percentage points. 
C)  5 percentage points. 
D)  6 percentage points. 
A)  0 percentage points. 
B)  2 percentage points. 
C)  5 percentage points. 
D)  6 percentage points.

Question 14

$$\begin{array} { | l | r | } 
\hline \text { Unemployed } & 7 \
\hline \text { Total Population } & 145 \
\hline \text { Employed } & 95 \
\hline \text { Discouraged Workers } & 3 \
\hline
\end{array}$$ The table contains information about the hypothetical economy of Scoob. All ?gures are in millions. If the natural rate of unemployment in Scoob is 5 percent, then

Accepted Answer

A)  structural unemployment is about 3 percent. 
B)  frictional unemployment is about 2 percent. 
C)  cyclical unemployment is about 2 percent. 
D)  hidden unemployment is about 5 percent. 
A)  structural unemployment is about 3 percent. 
B)  frictional unemployment is about 2 percent. 
C)  cyclical unemployment is about 2 percent. 
D)  hidden unemployment is about 5 percent.

Question 15

Core inﬂation refers to the inﬂation picture after stripping away the

Accepted Answer

A)  capital goods prices. 
B)  food and energy prices. 
C)  government-regulated prices. 
D)  service-sector prices. 
A)  capital goods prices. 
B)  food and energy prices. 
C)  government-regulated prices. 
D)  service-sector prices.

Question 16

$$\begin{array} { | l | r | } 
\hline \text { Full-time Employed } & 80 \
\hline \text { Part-time Employed } & 25 \
\hline \text { Unemployed } & 15 \
\hline \text { Discouraged Workers } & 5 \
\hline \text { Members of Underground Economy } & 6 \
\hline \text { Consumer Price Index } & 110 \
\hline
\end{array}$$ 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.

Question 17

In which of the following cases would real income rise?

Accepted Answer

A)  Nominal income rises by 8 percent, and the price level rises by 10 percent. 
B)  Nominal income rises by 2 percent, and the price level remains unchanged. 
C)  Nominal income falls by 4 percent, and the price level falls by 2 percent. 
D)  Real income will rise in all of these cases. 
A)  Nominal income rises by 8 percent, and the price level rises by 10 percent. 
B)  Nominal income rises by 2 percent, and the price level remains unchanged. 
C)  Nominal income falls by 4 percent, and the price level falls by 2 percent. 
D)  Real income will rise in all of these cases.

Question 18

If the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inﬂation in that year is

Accepted Answer

A)  11 percent. 
B)  33 percent. 
C)  91 percent. 
D)  10 percent. 
A)  11 percent. 
B)  33 percent. 
C)  91 percent. 
D)  10 percent.

Question 19

When oil and energy prices rise, the economy tends to experience

Accepted Answer

A)  natural inﬂation. 
B)  demand-pull inﬂation. 
C)  cost-push inﬂation. 
D)  unanticipated inﬂation. 
A)  natural inﬂation. 
B)  demand-pull inﬂation. 
C)  cost-push inﬂation. 
D)  unanticipated inﬂation.

Question 20

What is a COLA? How is it used?

Accepted Answer

A COLA is a cost-of-living adjustment an

If actual GDP is $340 billion and there is a positive GDP gap of $20 billion, potential GDP is

If actual GDP is less than potential GDP,

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

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result,

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 unemployment rate in Scoob is

For a person to keep his real income steady at a certain level from one year to the next, his nominal income must

(Last Word) Today, community colleges are being asked to expand vocational programs to help businesses ﬁnd the skilled labor they need by offering classes like

Which of the following would most likely move the economy into a recession in the short term?

Inﬂation rates in the United States from 2008 to 2018 were within the range of about

Suppose the nominal annual interest rate on a two-year loan is 8 percent and lenders expect inﬂation to be 5 percent in each of the two years. The annual real rate of interest is

Unemployment rates in the United States from 2007 to 2018 were in the range of

Which of the following statements is correct?

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. If the natural rate of unemployment in Scoob is 5 percent, then

Core inﬂation refers to the inﬂation picture after stripping away the

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

In which of the following cases would real income rise?

If the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inﬂation in that year is

When oil and energy prices rise, the economy tends to experience

What is a COLA? How is it used?

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

If actual GDP is $340 billion and there is a positive GDP gap of $20 billion, potential GDP is

If actual GDP is less than potential GDP,

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

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy. Five million of the part-time workers switch to full-time work. As a result,

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 unemployment rate in Scoob is

For a person to keep his real income steady at a certain level from one year to the next, his nominal income must

(Last Word) Today, community colleges are being asked to expand vocational programs to help businesses ﬁnd the skilled labor they need by offering classes like

Which of the following would most likely move the economy into a recession in the short term?

Inﬂation rates in the United States from 2008 to 2018 were within the range of about

Suppose the nominal annual interest rate on a two-year loan is 8 percent and lenders expect inﬂation to be 5 percent in each of the two years. The annual real rate of interest is

Unemployment rates in the United States from 2007 to 2018 were in the range of

Which of the following statements is correct?

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. If the natural rate of unemployment in Scoob is 5 percent, then

Core inﬂation refers to the inﬂation picture after stripping away the

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

In which of the following cases would real income rise?

If the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inﬂation in that year is

When oil and energy prices rise, the economy tends to experience

What is a COLA? How is it used?

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