Exam 7: Unemployment and Inflation

The GDP gap tends to increase when the economy shifts into recession.

Other things equal, as the number of discouraged workers rises in an economy, the gap between potential and actual real GDP will widen.

An increase in stock prices can be considered as an increase in:

A variable-rate mortgage:

Why do the European countries like France, Germany, Italy and Spain have higher unemployment rates than other industrialized nations?

When the U.S. economy is at its full-employment level, the unemployment rate is not equal to zero because:

In the business cycle, a trough marks the end of a(n) _____ and the beginning of a new _____.

Which of the following would be considered a leading indicator?

At potential real GDP:

In the official labor statistics, discouraged workers are:

When the government provides generous unemployment benefits, unemployed workers have less incentive to look for jobs.

Assume that the U.S. labor force consists of 185 million workers and that 17.5 million are officially unemployed. What is the unemployment rate if 68.5 million are under age 16 and 6 million are institutionalized?

Suppose statistical surveys indicate that new orders for manufactured goods and new building permits for single-family homes are declining and that business inventories are rising. This implies economic activity is slowing down and the economy is potentially entering a recessionary period.

Which of the following refers to business cycles?

In the 1990s, the Danish government passed laws tightening eligibility requirements for receiving unemployment benefits. What happened to Danish unemployment rates as a result of this policy change?

Which of the following is the closest example of structural unemployment?

The natural rate of unemployment is the unemployment rate that would exist in the absence of _____.

The Great Depression was the most severe recession experienced by the U.S. economy, during which national output had declined by 25 percent.

Assume that for a given year, the nominal interest rate is 9 percent while inflation rises to 11 percent indicating a 4 percent higher rate than anticipated. Which group of people is made better off by the inflation?

Including discouraged workers in the labor market statistics would raise the unemployment rate.