Question 1

The smaller the underground economy the more will be the overstatement of the official unemployment rate.

Accepted Answer

A) True 
 B)False

Question 2

he figure given below represents the business cycle of an economy.
Figure 7.1
  
-Refer to Figure 7.1. At point D, lagging economic indicators should show that:

Accepted Answer

A)  real GDP is expanding. 
B)  real GDP falls to zero. 
C)  real GDP is contracting. 
D)  real GDP growth is zero. 
E)  real GDP growth will be positive over time. 
A)  real GDP is expanding. 
B)  real GDP falls to zero. 
C)  real GDP is contracting. 
D)  real GDP growth is zero. 
E)  real GDP growth will be positive over time.

Question 3

Structural unemployment will decline if:

Accepted Answer

A)  more seasonal work becomes available. 
B)  the government increases taxes to support more welfare programs. 
C)  consumer spending on new technology decreases. 
D)  computerized job-search systems are improved. 
E)  retrained workers can move to areas where new jobs are available. 
A)  more seasonal work becomes available. 
B)  the government increases taxes to support more welfare programs. 
C)  consumer spending on new technology decreases. 
D)  computerized job-search systems are improved. 
E)  retrained workers can move to areas where new jobs are available.

Question 4

Underemployed workers include individuals who are employed in tasks that do not fully utilize their productive potential.

Accepted Answer

A) True 
 B)False

Question 5

Scenario 7.1
Of 1,350 people surveyed, 318 are not working.
The status of those not working is as follows:
122 full-time students
29 discouraged workers
18 in long-term-care facilities
21 seeking employment and age 16 or older
50 retirees
63 under age 16
15 working in the underground economy and not looking for a "real" job
Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. If any two individuals who were actively looking for a job, got tired of not finding one and decided to become full-time students, then:

Accepted Answer

A)  the official unemployment rate would remain unchanged. 
B)  the U.S. Bureau of Labor Statistics would have to be informed immediately. 
C)  the official unemployment rate would increase. 
D)  the number officially in the labor force would remain unchanged. 
E)  the official unemployment rate would decrease. 
A)  the official unemployment rate would remain unchanged. 
B)  the U.S. Bureau of Labor Statistics would have to be informed immediately. 
C)  the official unemployment rate would increase. 
D)  the number officially in the labor force would remain unchanged. 
E)  the official unemployment rate would decrease.

Question 6

Suppose Jess resigns from her low paying job. After looking for a new job for two weeks she is highly frustrated and gives up looking for a better-paying job. According to the U.S. Bureau of Labor Statistics, Jess would:

Accepted Answer

A)  be considered unemployed. 
B)  be considered employed. 
C)  be considered temporarily unemployed. 
D)  not be considered as a part of the labor force. 
E)  be considered as seasonally unemployed. 
A)  be considered unemployed. 
B)  be considered employed. 
C)  be considered temporarily unemployed. 
D)  not be considered as a part of the labor force. 
E)  be considered as seasonally unemployed.

Question 7

Demand-pull inflation is caused by:

Accepted Answer

A)  high unemployment of resources in the economy. 
B)  increase in tax rates by the government. 
C)  trade unions' pressure for wage hike. 
D)  increased spending when the economy is producing at maximum capacity. 
E)  the supply side of the market. 
A)  high unemployment of resources in the economy. 
B)  increase in tax rates by the government. 
C)  trade unions' pressure for wage hike. 
D)  increased spending when the economy is producing at maximum capacity. 
E)  the supply side of the market.

Question 8

Unemployment data in the U.S. are published by the:

Accepted Answer

A)  Bureau of Economic Analysis. 
B)  Bureau of Labor Statistics. 
C)  Department of Commerce. 
D)  Bureau of Federal Intelligence. 
E)  Internal Revenue Service. 
A)  Bureau of Economic Analysis. 
B)  Bureau of Labor Statistics. 
C)  Department of Commerce. 
D)  Bureau of Federal Intelligence. 
E)  Internal Revenue Service.

Question 9

What does it mean if the purchasing power in 1950 was $4.15 relative to the 1982 base year?

Accepted Answer

A)  It took $4.15 in 1950 to buy what $1 bought in 1982. 
B)  The average price level in 1982 was five times as high as in 1950. 
C)  $4.15 in 1950 had the same nominal money value as $1 in 1982. 
D)  It took $4.15 in 1982 to buy what $1 bought in 1950. 
E)  Nominal prices have increased by more than 400 percent between 1950 and 1982, but the real value of money has not changed. 
A)  It took $4.15 in 1950 to buy what $1 bought in 1982. 
B)  The average price level in 1982 was five times as high as in 1950. 
C)  $4.15 in 1950 had the same nominal money value as $1 in 1982. 
D)  It took $4.15 in 1982 to buy what $1 bought in 1950. 
E)  Nominal prices have increased by more than 400 percent between 1950 and 1982, but the real value of money has not changed.

Question 10

The NBER focuses primarily on the value of real GDP while deciding whether an economic contraction is a recession, because it is measured monthly and allows the identification of the month in which business-cycle turning points occur.

Accepted Answer

A) True 
 B)False

Question 11

Scenario 7.2
Suppose it has been recently predicted that in the year 2020, the total number of residents in the United States will be 315.5 million, the number of residents under 16 years of age will be 85 million, the number of institutionalized adults will be 17 million, the number of adults not actively looking for work will be 39 million, and the number of unemployed will be 21.5 million.
-Refer to the data in Scenario 7.2. What will be the size of the labor force in the United States in the year 2020?

Accepted Answer

A)  153 million 
B)  294 million 
C)  174.5 million 
D)  198 million 
E)  315.5 million 
A)  153 million 
B)  294 million 
C)  174.5 million 
D)  198 million 
E)  315.5 million

Question 12

Rapid increases in military spending by the federal government without accompanying increases in real output could be a cause of cost-push inflation.

Accepted Answer

A) True 
 B)False

Question 13

The purchasing power of one dollar is equal to _____.

Accepted Answer

A)  real GDP divided by nominal GDP 
B)  nominal GDP divided by real GDP 
C)  1 minus the average price level 
D)  the reciprocal of the average price level 
E)  the implicit GDP deflator divided by the CPI 
A)  real GDP divided by nominal GDP 
B)  nominal GDP divided by real GDP 
C)  1 minus the average price level 
D)  the reciprocal of the average price level 
E)  the implicit GDP deflator divided by the CPI

Question 14

If an economy operates on its production possibilities frontier, the natural unemployment rate must be:

Accepted Answer

A)  zero. 
B)  positive. 
C)  negative. 
D)  at 1 percent. 
E)  at 5 percent. 
A)  zero. 
B)  positive. 
C)  negative. 
D)  at 1 percent. 
E)  at 5 percent.

Question 15

Frictional and structural unemployment are always present in a dynamic economy.

Accepted Answer

A) True 
 B)False

Question 16

To be counted as part of the labor force, a person must:

Accepted Answer

A)  be less than 65 years old. 
B)  have worked at some time in the past. 
C)  be employed in some productive activity. 
D)  be working or actively looking for work. 
E)  be above 16 years of age. 
A)  be less than 65 years old. 
B)  have worked at some time in the past. 
C)  be employed in some productive activity. 
D)  be working or actively looking for work. 
E)  be above 16 years of age.

Question 17

Which of the following people does an economist consider underemployed?

Accepted Answer

A)  Someone who prefers to spend more time on leisure and less time on wage-earning activities 
B)  A person who is working fewer hours at wage-earning activities than she or he desires 
C)  A rock star who voluntarily chooses to work part-time 
D)  Someone who is in prison and is willing to work from his cell 
E)  A gardener who hates plants but still does the job because he or she has no other skills 
A)  Someone who prefers to spend more time on leisure and less time on wage-earning activities 
B)  A person who is working fewer hours at wage-earning activities than she or he desires 
C)  A rock star who voluntarily chooses to work part-time 
D)  Someone who is in prison and is willing to work from his cell 
E)  A gardener who hates plants but still does the job because he or she has no other skills

Question 18

Which of the following is not a coincident indicator of the business cycle?

Accepted Answer

A)  Unemployment claims 
B)  Payroll employment 
C)  Industrial production 
D)  Personal income 
E)  Manufacturing and trade sales 
A)  Unemployment claims 
B)  Payroll employment 
C)  Industrial production 
D)  Personal income 
E)  Manufacturing and trade sales

Question 19

How is recession defined by the National Bureau of Economic Research [NBER]?

Accepted Answer

A)  Two consecutive quarters of declining GDP 
B)  A significant decline in total output, income, employment, and trade for six months to one year 
C)  A dramatic decline in unemployment for less than six months 
D)  A sharp increase in money supply and the market rate of interest 
E)  A significant decline in stock prices over three consecutive quarters of a business year 
A)  Two consecutive quarters of declining GDP 
B)  A significant decline in total output, income, employment, and trade for six months to one year 
C)  A dramatic decline in unemployment for less than six months 
D)  A sharp increase in money supply and the market rate of interest 
E)  A significant decline in stock prices over three consecutive quarters of a business year

Question 20

Demand-pull inflation is more likely to occur when the economy is producing at maximum capacity.

Accepted Answer

A) True 
 B)False

The smaller the underground economy the more will be the overstatement of the official unemployment rate.

he figure given below represents the business cycle of an economy. Figure 7.1 -Refer to Figure 7.1. At point D, lagging economic indicators should show that:

Structural unemployment will decline if:

Underemployed workers include individuals who are employed in tasks that do not fully utilize their productive potential.

Suppose Jess resigns from her low paying job. After looking for a new job for two weeks she is highly frustrated and gives up looking for a better-paying job. According to the U.S. Bureau of Labor Statistics, Jess would:

Demand-pull inflation is caused by:

Unemployment data in the U.S. are published by the:

What does it mean if the purchasing power in 1950 was $4.15 relative to the 1982 base year?

The NBER focuses primarily on the value of real GDP while deciding whether an economic contraction is a recession, because it is measured monthly and allows the identification of the month in which business-cycle turning points occur.

Rapid increases in military spending by the federal government without accompanying increases in real output could be a cause of cost-push inflation.

The purchasing power of one dollar is equal to _____.

If an economy operates on its production possibilities frontier, the natural unemployment rate must be:

Frictional and structural unemployment are always present in a dynamic economy.

To be counted as part of the labor force, a person must:

Which of the following people does an economist consider underemployed?

Which of the following is not a coincident indicator of the business cycle?

How is recession defined by the National Bureau of Economic Research [NBER]?

Demand-pull inflation is more likely to occur when the economy is producing at maximum capacity.

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

The smaller the underground economy the more will be the overstatement of the official unemployment rate.

he figure given below represents the business cycle of an economy. Figure 7.1 -Refer to Figure 7.1. At point D, lagging economic indicators should show that:

Structural unemployment will decline if:

Underemployed workers include individuals who are employed in tasks that do not fully utilize their productive potential.

Suppose Jess resigns from her low paying job. After looking for a new job for two weeks she is highly frustrated and gives up looking for a better-paying job. According to the U.S. Bureau of Labor Statistics, Jess would:

Demand-pull inflation is caused by:

Unemployment data in the U.S. are published by the:

What does it mean if the purchasing power in 1950 was $4.15 relative to the 1982 base year?

The NBER focuses primarily on the value of real GDP while deciding whether an economic contraction is a recession, because it is measured monthly and allows the identification of the month in which business-cycle turning points occur.

Rapid increases in military spending by the federal government without accompanying increases in real output could be a cause of cost-push inflation.

The purchasing power of one dollar is equal to _____.

If an economy operates on its production possibilities frontier, the natural unemployment rate must be:

Frictional and structural unemployment are always present in a dynamic economy.

To be counted as part of the labor force, a person must:

Which of the following people does an economist consider underemployed?

Which of the following is not a coincident indicator of the business cycle?

How is recession defined by the National Bureau of Economic Research [NBER]?

Demand-pull inflation is more likely to occur when the economy is producing at maximum capacity.

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