Question 1

Anyone who is not employed is classiﬁed as unemployed in the Bureau of Labor Statistics data on
the labor force.

Accepted Answer

A) True 
 B)False

Question 2

A worker would be hurt least by inﬂation when the

Accepted Answer

A)  worker anticipates inﬂation and increases savings at the bank. 
B)  worker is protected by a cost-of-living adjustment clause in an employment contract. 
C)  worker is protected by ﬁxed annual increases in wages and beneﬁts in an employment contract. 
D)  government increases the level of Social Security retirement beneﬁts to correct for the effects of anticipated inﬂation. 
A)  worker anticipates inﬂation and increases savings at the bank. 
B)  worker is protected by a cost-of-living adjustment clause in an employment contract. 
C)  worker is protected by ﬁxed annual increases in wages and beneﬁts in an employment contract. 
D)  government increases the level of Social Security retirement beneﬁts to correct for the effects of anticipated inﬂation.

Question 3

The best example of a "frictionally unemployed" worker is one who

Accepted Answer

A)  reduces productivity by causing friction in a business. 
B)  is laid off during a recessionary period in the economy. 
C)  is in the process of voluntarily switching jobs. 
D)  is discouraged and not actively seeking work. 
A)  reduces productivity by causing friction in a business. 
B)  is laid off during a recessionary period in the economy. 
C)  is in the process of voluntarily switching jobs. 
D)  is discouraged and not actively seeking work.

Question 4

The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in
This economy is

Accepted Answer

A)  6 million. 
B)  9 million. 
C)  12 million. 
D)  24 million. 
A)  6 million. 
B)  9 million. 
C)  12 million. 
D)  24 million.

Question 5

The rate of unemployment when the economy is at its potential output is called the

Accepted Answer

A)  full-employment rate of unemployment. 
B)  natural rate of unemployment. 
C)  structural rate of unemployment. 
D)  frictional rate of unemployment. 
A)  full-employment rate of unemployment. 
B)  natural rate of unemployment. 
C)  structural rate of unemployment. 
D)  frictional rate of unemployment.

Question 6

Unanticipated inﬂation arbitrarily

Accepted Answer

A)  helps those who are minimum wageworkers. 
B)  harms those who receive ﬁxed money incomes. 
C)  harms those who borrow money. 
D)  helps those who save money. 
A)  helps those who are minimum wageworkers. 
B)  harms those who receive ﬁxed money incomes. 
C)  harms those who borrow money. 
D)  helps those who save money.

Question 7

The labor force includes

Accepted Answer

A)  employed workers and persons who are oﬃcially unemployed. 
B)  employed workers but excludes persons who are oﬃcially unemployed. 
C)  full-time workers but excludes part-time workers. 
D)  permanent employees but excludes temporary employees. 
A)  employed workers and persons who are oﬃcially unemployed. 
B)  employed workers but excludes persons who are oﬃcially unemployed. 
C)  full-time workers but excludes part-time workers. 
D)  permanent employees but excludes temporary employees.

Question 8

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 structurally unemployed?

Accepted Answer

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

Question 9

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of

Accepted Answer

A)  Taylor's rule. 
B)  Okun's law. 
C)  Say's law. 
D)  the Coase theorem. 
A)  Taylor's rule. 
B)  Okun's law. 
C)  Say's law. 
D)  the Coase theorem.

Question 10

Which of the following constitute the types of unemployment occurring at the natural rate of unemployment?

Accepted Answer

A)  frictional and cyclical unemployment 
B)  structural and frictional unemployment 
C)  cyclical and structural unemployment 
D)  frictional, structural, and cyclical unemployment 
A)  frictional and cyclical unemployment 
B)  structural and frictional unemployment 
C)  cyclical and structural unemployment 
D)  frictional, structural, and cyclical unemployment

Question 11

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is

Accepted Answer

A)  2 percent. 
B)  3 percent. 
C)  4 percent. 
D)  6 percent. 
A)  2 percent. 
B)  3 percent. 
C)  4 percent. 
D)  6 percent.

Question 12

Last year, Tatum's nominal income rose by 4.6 percent and the price level rose by 1.6 percent. We can conclude that last year Tatum's real income

Accepted Answer

A)  may have either increased or decreased. 
B)  rose by approximately 6.2 percent. 
C)  rose by approximately 3 percent. 
D)  fell by approximately 13 percent. 
A)  may have either increased or decreased. 
B)  rose by approximately 6.2 percent. 
C)  rose by approximately 3 percent. 
D)  fell by approximately 13 percent.

Question 13

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percentage of
Potential GDP is

Accepted Answer

A)  4 percent. 
B)  8 percent. 
C)  10 percent. 
D)  2 percent. 
A)  4 percent. 
B)  8 percent. 
C)  10 percent. 
D)  2 percent.

Question 14

Brieﬂy describe the economic conditions that contributed to the severe recession of 2007-2009.

Accepted Answer

The economic conditions that led to the

Question 15

Which of the following types of unemployment is directly associated with insuﬃcient overall demand for goods and services?

Accepted Answer

A)  search unemployment 
B)  wait unemployment 
C)  cyclical unemployment 
D)  frictional unemployment 
A)  search unemployment 
B)  wait unemployment 
C)  cyclical unemployment 
D)  frictional unemployment

Question 16

In the United States, the rate of unemployment is highest for

Accepted Answer

A)  white teenagers. 
B)  African-American teenagers. 
C)  married women. 
D)  unmarried women. 
A)  white teenagers. 
B)  African-American teenagers. 
C)  married women. 
D)  unmarried women.

Question 17

Unlike demand-pull inﬂation, cost-push inﬂation

Accepted Answer

A)  causes the supply of goods and services to decline. 
B)  drives up the price level. 
C)  increases nominal income. 
D)  increases real income. 
A)  causes the supply of goods and services to decline. 
B)  drives up the price level. 
C)  increases nominal income. 
D)  increases real income.

Question 18

If the nominal interest rate is 8 percent and the real interest rate is 5 percent, then the inﬂation
premium is 13 percent.

Accepted Answer

A) True 
 B)False

Question 19

As applied to the price level, the "rule of 70" indicates that the number of years required for the price level to double can be found by

Accepted Answer

A)  dividing 70 into the annual rate of inﬂation. 
B)  dividing the annual rate of inﬂation into 70. 
C)  subtracting the annual change in nominal incomes from 70. 
D)  multiplying the annual rate of inﬂation by 70. 
A)  dividing 70 into the annual rate of inﬂation. 
B)  dividing the annual rate of inﬂation into 70. 
C)  subtracting the annual change in nominal incomes from 70. 
D)  multiplying the annual rate of inﬂation by 70.

Question 20

After the First World War, Germany experienced an economic condition that can be best described as

Accepted Answer

A)  hyperinﬂation. 
B)  cost-push inﬂation. 
C)  unanticipated inﬂation. 
D)  anticipated inﬂation. 
A)  hyperinﬂation. 
B)  cost-push inﬂation. 
C)  unanticipated inﬂation. 
D)  anticipated inﬂation.

Anyone who is not employed is classiﬁed as unemployed in the Bureau of Labor Statistics data on the labor force.

A worker would be hurt least by inﬂation when the

The best example of a "frictionally unemployed" worker is one who

The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in This economy is

The rate of unemployment when the economy is at its potential output is called the

Unanticipated inﬂation arbitrarily

The labor force includes

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of

Which of the following constitute the types of unemployment occurring at the natural rate of unemployment?

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is

Last year, Tatum's nominal income rose by 4.6 percent and the price level rose by 1.6 percent. We can conclude that last year Tatum's real income

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percentage of Potential GDP is

Brieﬂy describe the economic conditions that contributed to the severe recession of 2007-2009.

Which of the following types of unemployment is directly associated with insuﬃcient overall demand for goods and services?

In the United States, the rate of unemployment is highest for

Unlike demand-pull inﬂation, cost-push inﬂation

If the nominal interest rate is 8 percent and the real interest rate is 5 percent, then the inﬂation premium is 13 percent.

As applied to the price level, the "rule of 70" indicates that the number of years required for the price level to double can be found by

After the First World War, Germany experienced an economic condition that can be best described as

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

Anyone who is not employed is classiﬁed as unemployed in the Bureau of Labor Statistics data on the labor force.

A worker would be hurt least by inﬂation when the

The best example of a "frictionally unemployed" worker is one who

The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in This economy is

The rate of unemployment when the economy is at its potential output is called the

Unanticipated inﬂation arbitrarily

The labor force includes

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of

Which of the following constitute the types of unemployment occurring at the natural rate of unemployment?

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is

Last year, Tatum's nominal income rose by 4.6 percent and the price level rose by 1.6 percent. We can conclude that last year Tatum's real income

Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percentage of Potential GDP is

Brieﬂy describe the economic conditions that contributed to the severe recession of 2007-2009.

Which of the following types of unemployment is directly associated with insuﬃcient overall demand for goods and services?

In the United States, the rate of unemployment is highest for

Unlike demand-pull inﬂation, cost-push inﬂation

If the nominal interest rate is 8 percent and the real interest rate is 5 percent, then the inﬂation premium is 13 percent.

As applied to the price level, the "rule of 70" indicates that the number of years required for the price level to double can be found by

After the First World War, Germany experienced an economic condition that can be best described as

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