Question 1

Inflation is defined as the sustained increase in relative prices.

Accepted Answer

A) True 
 B)False

Question 2

The four phases of a business cycle, in order, are trough, depression, peak, and expansion.

Accepted Answer

A) True 
 B)False

Question 3

A coincident indicator will change before a recession starts.

Accepted Answer

A) True 
 B)False

Question 4

If increases in total spending are not offset by increases in the supply of goods and services, the average price level will rise. Which of the following factors is responsible for this rise?

Accepted Answer

A)  Cost-push inflation 
B)  Fiscal deficit 
C)  Demand-pull inflation 
D)  Wage-push inflation 
E)  Unemployment 
A)  Cost-push inflation 
B)  Fiscal deficit 
C)  Demand-pull inflation 
D)  Wage-push inflation 
E)  Unemployment

Question 5

To be considered employed, a person must have a full-time job.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is an example of cyclical unemployment?

Accepted Answer

A)  A recent college graduate still looking for her first job 
B)  A car salesman who loses his job because of a recession 
C)  A ski instructor who is out of work during the summer 
D)  An economics journalist who just quit her writing job in order to begin a new career as a college professor next month 
E)  A worker displaced from his factory job because of greater mechanization in the workplace 
A)  A recent college graduate still looking for her first job 
B)  A car salesman who loses his job because of a recession 
C)  A ski instructor who is out of work during the summer 
D)  An economics journalist who just quit her writing job in order to begin a new career as a college professor next month 
E)  A worker displaced from his factory job because of greater mechanization in the workplace

Question 7

Which of the following countries experienced hyperinflation in the 1920s?

Accepted Answer

A)  Argentina 
B)  Chile 
C)  Brazil 
D)  Canada 
E)  Germany 
A)  Argentina 
B)  Chile 
C)  Brazil 
D)  Canada 
E)  Germany

Question 8

Which of the following is true of hyperinflation?

Accepted Answer

A)  It causes the value of a currency to deteriorate so quickly that people become reluctant to hold that currency. 
B)  It is a situation in which people hoard currency expecting its value to increase in recent future. 
C)  It is a simultaneous increase in inflation and decrease in the quality of products. 
D)  It occurred in the United States in the 1970s. 
E)  It is a synonym for cost-push inflation. 
A)  It causes the value of a currency to deteriorate so quickly that people become reluctant to hold that currency. 
B)  It is a situation in which people hoard currency expecting its value to increase in recent future. 
C)  It is a simultaneous increase in inflation and decrease in the quality of products. 
D)  It occurred in the United States in the 1970s. 
E)  It is a synonym for cost-push inflation.

Question 9

In the 1990s, the unemployment rates in the U.S. were higher than that in the European nations.

Accepted Answer

A) True 
 B)False

Question 10

Which if the following is most likely to result if the Congress passes the living wage law?

Accepted Answer

A)  Cost-push inflation 
B)  Demand-pull inflation 
C)  Deflation 
D)  Recession 
E)  Stagnation 
A)  Cost-push inflation 
B)  Demand-pull inflation 
C)  Deflation 
D)  Recession 
E)  Stagnation

Question 11

Assume you borrow $1,000 on credit cards at an annual interest rate of 10 percent. If the inflation rate is 12 percent during the year and the debt has to be paid back in 12 months, then:

Accepted Answer

A)  income will be redistributed from you to the bank. 
B)  the real return for the bank will be greater than initially expected. 
C)  you will repay the bank with fewer dollars than you borrowed. 
D)  the dollars repaid will have less purchasing power than those borrowed. 
E)  the bank will obtain the same return on the loan as initially expected. 
A)  income will be redistributed from you to the bank. 
B)  the real return for the bank will be greater than initially expected. 
C)  you will repay the bank with fewer dollars than you borrowed. 
D)  the dollars repaid will have less purchasing power than those borrowed. 
E)  the bank will obtain the same return on the loan as initially expected.

Question 12

The table given below lists the average price level in a country for four consecutive years.
Table 7.2
 $\begin{array}{c}
\text { Price Data }\
\begin{array}{|c|c|}
\hline \text { Year } & \text { Average Price Level } \
\hline 1992 & 1.000 \
1993 & 1.039 \
1994 & 1.064 \
1995 & 1.093 \
\hline
\end{array}
\end{array}$
-Refer to the Table 7.2. How many times more goods and services could be purchased with one dollar in 1992 than in 1995?

Accepted Answer

A)  1.064 
B)  1.07 
C)  1.093 
D)  1.93 
E)  1.96 
A)  1.064 
B)  1.07 
C)  1.093 
D)  1.93 
E)  1.96

Question 13

The figure given below reports the GDP gap experienced by a country for four years in billions of dollars.
Figure 7.2
  
-Refer to Figure 7.2. Which time period is most likely to be associated with an economic expansion?

Accepted Answer

A)  Years 1 to 2 
B)  Years 1 to 3 
C)  Year 4 only 
D)  Years 1 to 4 
E)  Years 3 to 4 
A)  Years 1 to 2 
B)  Years 1 to 3 
C)  Year 4 only 
D)  Years 1 to 4 
E)  Years 3 to 4

Question 14

The table given below reports the consumer price index in a country for four different years.
Table 7.1
 $\begin{array}{c}
\text { Inflation Data }\
\begin{array}{|c|c|}
\hline \text { Year } & \text { Consumer Price Index } \
\hline 1976 & 100.00 \
1980 & 110.50 \
1990 & 128.50 \
2003 & 145.00 \
\hline
\end{array}
\end{array}$
-Refer to Table 7.1. If a bicycle used to cost $90 in 1990, what did it cost in 2003 based on the inflation rate (rounded to the first decimal place)?

Accepted Answer

A)  $115.7 
B)  $118.1 
C)  $101.6 
D)  $130.5 
E)  $79.8 
A)  $115.7 
B)  $118.1 
C)  $101.6 
D)  $130.5 
E)  $79.8

Question 15

Which of the following statements about the GDP gap is not true?

Accepted Answer

A)  It widens during recessions and narrows during expansions. 
B)  When the GDP gap equals zero, the economy operates on its production possibilities curve. 
C)  It is a measure of output lost as a result of unemployment. 
D)  There are more goods and services available as the gap widens. 
E)  It is equal to potential real GDP minus actual real GDP. 
A)  It widens during recessions and narrows during expansions. 
B)  When the GDP gap equals zero, the economy operates on its production possibilities curve. 
C)  It is a measure of output lost as a result of unemployment. 
D)  There are more goods and services available as the gap widens. 
E)  It is equal to potential real GDP minus actual real GDP.

Question 16

Which of the following statements regarding the unemployment rates in the U.S. between 1971 and 2002 is true?

Accepted Answer

A)  The unemployment among the whites were much lower compared to the non-whites. 
B)  The unemployment rate for all workers reached a low of 2.9 percent in 1982. 
C)  The unemployment rate of both male and female workers have consistently increased from 1971 to 1998. 
D)  The whites had much higher unemployment rates than the nonwhites. 
E)  Teenagers reported the lowest unemployment rates in the country. 
A)  The unemployment among the whites were much lower compared to the non-whites. 
B)  The unemployment rate for all workers reached a low of 2.9 percent in 1982. 
C)  The unemployment rate of both male and female workers have consistently increased from 1971 to 1998. 
D)  The whites had much higher unemployment rates than the nonwhites. 
E)  Teenagers reported the lowest unemployment rates in the country.

Question 17

A worker who loses his or her job as a consequence of a decline in aggregate demand in the economy is experiencing:

Accepted Answer

A)  disguised unemployment. 
B)  underemployment. 
C)  cyclical unemployment. 
D)  frictional unemployment. 
E)  seasonal unemployment. 
A)  disguised unemployment. 
B)  underemployment. 
C)  cyclical unemployment. 
D)  frictional unemployment. 
E)  seasonal unemployment.

Question 18

Which of the following is true about workers who experience structural unemployment?

Accepted Answer

A)  They quickly accept a much lower salary in a different industry. 
B)  They do not adjust their expectations to the realities of the job market. 
C)  They sometimes enter the pool of discouraged workers. 
D)  They tend to quit their job search very easily. 
E)  They usually have the necessary skills to maintain their level of income in another industry. 
A)  They quickly accept a much lower salary in a different industry. 
B)  They do not adjust their expectations to the realities of the job market. 
C)  They sometimes enter the pool of discouraged workers. 
D)  They tend to quit their job search very easily. 
E)  They usually have the necessary skills to maintain their level of income in another industry.

Question 19

he figure given below represents the business cycle of an economy.
Figure 7.1
  
-Refer to Figure 7.1. The overall upward trend in real GDP reflected by this figure implies that:

Accepted Answer

A)  the real GDP gap is widening over time. 
B)  cyclical unemployment is growing at positive rates. 
C)  consumer purchasing power is rising over time. 
D)  on average, labor productivity is declining. 
E)  expansionary phases outweigh contractionary phases in the economy over time. 
A)  the real GDP gap is widening over time. 
B)  cyclical unemployment is growing at positive rates. 
C)  consumer purchasing power is rising over time. 
D)  on average, labor productivity is declining. 
E)  expansionary phases outweigh contractionary phases in the economy over time.

Question 20

Which of the following monthly data series are closely observed by the Business Cycle Dating Committee of the NBER?

Accepted Answer

A)  Real personal income less transfer payments 
B)  Wholesale prices of goods 
C)  Real GDP 
D)  Total unemployment 
E)  Real interest rates 
A)  Real personal income less transfer payments 
B)  Wholesale prices of goods 
C)  Real GDP 
D)  Total unemployment 
E)  Real interest rates

Inflation is defined as the sustained increase in relative prices.

The four phases of a business cycle, in order, are trough, depression, peak, and expansion.

A coincident indicator will change before a recession starts.

If increases in total spending are not offset by increases in the supply of goods and services, the average price level will rise. Which of the following factors is responsible for this rise?

To be considered employed, a person must have a full-time job.

Which of the following is an example of cyclical unemployment?

Which of the following countries experienced hyperinflation in the 1920s?

Which of the following is true of hyperinflation?

In the 1990s, the unemployment rates in the U.S. were higher than that in the European nations.

Which if the following is most likely to result if the Congress passes the living wage law?

Assume you borrow $1,000 on credit cards at an annual interest rate of 10 percent. If the inflation rate is 12 percent during the year and the debt has to be paid back in 12 months, then:

The figure given below reports the GDP gap experienced by a country for four years in billions of dollars. Figure 7.2 -Refer to Figure 7.2. Which time period is most likely to be associated with an economic expansion?

Which of the following statements about the GDP gap is not true?

Which of the following statements regarding the unemployment rates in the U.S. between 1971 and 2002 is true?

A worker who loses his or her job as a consequence of a decline in aggregate demand in the economy is experiencing:

Which of the following is true about workers who experience structural unemployment?

he figure given below represents the business cycle of an economy. Figure 7.1 -Refer to Figure 7.1. The overall upward trend in real GDP reflected by this figure implies that:

Which of the following monthly data series are closely observed by the Business Cycle Dating Committee of the NBER?

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 7: Unemployment and Inflation

Inflation is defined as the sustained increase in relative prices.

The four phases of a business cycle, in order, are trough, depression, peak, and expansion.

A coincident indicator will change before a recession starts.

If increases in total spending are not offset by increases in the supply of goods and services, the average price level will rise. Which of the following factors is responsible for this rise?

To be considered employed, a person must have a full-time job.

Which of the following is an example of cyclical unemployment?

Which of the following countries experienced hyperinflation in the 1920s?

Which of the following is true of hyperinflation?

In the 1990s, the unemployment rates in the U.S. were higher than that in the European nations.

Which if the following is most likely to result if the Congress passes the living wage law?

Assume you borrow $1,000 on credit cards at an annual interest rate of 10 percent. If the inflation rate is 12 percent during the year and the debt has to be paid back in 12 months, then:

The figure given below reports the GDP gap experienced by a country for four years in billions of dollars. Figure 7.2 -Refer to Figure 7.2. Which time period is most likely to be associated with an economic expansion?

Which of the following statements about the GDP gap is not true?

Which of the following statements regarding the unemployment rates in the U.S. between 1971 and 2002 is true?

A worker who loses his or her job as a consequence of a decline in aggregate demand in the economy is experiencing:

Which of the following is true about workers who experience structural unemployment?

he figure given below represents the business cycle of an economy. Figure 7.1 -Refer to Figure 7.1. The overall upward trend in real GDP reflected by this figure implies that:

Which of the following monthly data series are closely observed by the Business Cycle Dating Committee of the NBER?

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters