Question 1

Which of the following is a lagging indicator?

Accepted Answer

A) Outstanding commercial loans. 
B) Duration of unemployment. 
C) Prime rate. 
D) All of these. 
A) Outstanding commercial loans. 
B) Duration of unemployment. 
C) Prime rate. 
D) All of these.

Question 2

How do the Bureau of Labor Statistics and the Bureau of the Census estimate U.S. unemployment each month?

Accepted Answer

A) They contact each state's unemployment office and gather data on new claims for unemployment. 
B) They randomly survey about 60,000 U.S. households to determine how many people are in the labor force, and what proportion of them is unemployed. 
C) They track released prisoners. These agencies adjust released prisoner employment unemployment rate proxy (PURP). 
D) None of the above are correct. 
A) They contact each state's unemployment office and gather data on new claims for unemployment. 
B) They randomly survey about 60,000 U.S. households to determine how many people are in the labor force, and what proportion of them is unemployed. 
C) They track released prisoners. These agencies adjust released prisoner employment unemployment rate proxy (PURP). 
D) None of the above are correct.

Question 3

Which of the following is not a lagging indicator?

Accepted Answer

A) Duration of unemployment. 
B) Stock prices. 
C) Outstanding commercial and industrial loans. 
D) Prime rate. 
A) Duration of unemployment. 
B) Stock prices. 
C) Outstanding commercial and industrial loans. 
D) Prime rate.

Question 4

A long and deep recession in the business cycle is:

Accepted Answer

A) unemployment. 
B) a trough. 
C) a recession. 
D) a depression 
E) unavoidable. 
A) unemployment. 
B) a trough. 
C) a recession. 
D) a depression 
E) unavoidable.

Question 5

Which of the following is not a way to become officially unemployed?

Accepted Answer

A) Quit your job to look for a better job in another part of the country. 
B) Be fired from your job. 
C) Look for a job after being out of the civilian labor force for five years. 
D) Retire. 
E) Look for a job only for the period in the summer that you are out of school. 
A) Quit your job to look for a better job in another part of the country. 
B) Be fired from your job. 
C) Look for a job after being out of the civilian labor force for five years. 
D) Retire. 
E) Look for a job only for the period in the summer that you are out of school.

Question 6

Consider a broom factory that permanently closes because of foreign competition. If the broom factory's workers cannot find new jobs because their skills are no longer marketable, then they are classified as:

Accepted Answer

A) seasonally unemployed. 
B) frictionally unemployed. 
C) structurally unemployed. 
D) cyclically unemployed. 
A) seasonally unemployed. 
B) frictionally unemployed. 
C) structurally unemployed. 
D) cyclically unemployed.

Question 7

A discouraged worker is one who:

Accepted Answer

A) is underqualified for the current job. 
B) dislikes the current job but is afraid to quit. 
C) drops out of the civilian labor force because he\she cannot find a job. 
D) quits his\her job because the possibility of advancement was very low. 
E) is overqualified for the current job. 
A) is underqualified for the current job. 
B) dislikes the current job but is afraid to quit. 
C) drops out of the civilian labor force because he\she cannot find a job. 
D) quits his\her job because the possibility of advancement was very low. 
E) is overqualified for the current job.

Question 8

The official unemployment rate can be criticized for both understating and overstating the true number of unemployed.

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following persons would be considered unemployed?

Accepted Answer

A) A person not working who has given up searching for a job. 
B) A part-time worker looking for a full-time job. 
C) A construction worker who was laid off due to cold weather. 
D) A full-time college student who is not a member of the labor force. 
A) A person not working who has given up searching for a job. 
B) A part-time worker looking for a full-time job. 
C) A construction worker who was laid off due to cold weather. 
D) A full-time college student who is not a member of the labor force.

Question 10

The type of unemployment that occurs because of a recession is called:

Accepted Answer

A) frictional unemployment. 
B) seasonal unemployment. 
C) natural unemployment. 
D) cyclical unemployment. 
A) frictional unemployment. 
B) seasonal unemployment. 
C) natural unemployment. 
D) cyclical unemployment.

Question 11

In a dynamic economy under ideal conditions:

Accepted Answer

A) the unemployment rate should be near zero. 
B) some unemployment would be present due to workers temporarily being out of work while changing jobs. 
C) unemployment would tend to move upward slightly as prices increased. 
D) unemployment would tend to move slightly downward as unemployment compensation benefits increased. 
A) the unemployment rate should be near zero. 
B) some unemployment would be present due to workers temporarily being out of work while changing jobs. 
C) unemployment would tend to move upward slightly as prices increased. 
D) unemployment would tend to move slightly downward as unemployment compensation benefits increased.

Question 12

Which of the following is not a variable in the index of leading indicators?

Accepted Answer

A) Average work week. 
B) Duration of unemployment. 
C) Employment claims. 
D) New businesses. 
A) Average work week. 
B) Duration of unemployment. 
C) Employment claims. 
D) New businesses.

Question 13

Retired persons are officially classified as:

Accepted Answer

A) unemployed. 
B) self-employed. 
C) underemployed. 
D) not in the labor force. 
A) unemployed. 
B) self-employed. 
C) underemployed. 
D) not in the labor force.

Question 14

The period during which real output falls during a business cycle is called:

Accepted Answer

A) peak. 
B) recession. 
C) recovery. 
D) trough. 
A) peak. 
B) recession. 
C) recovery. 
D) trough.

Question 15

When full employment is present in the United States:

Accepted Answer

A) the rate of unemployment will fall to zero. 
B) the actual rate of unemployment will be less than the natural rate of unemployment. 
C) approximately 95 percent of the adult population will be employed. 
D) approximately 95 percent of the labor force will be employed. 
A) the rate of unemployment will fall to zero. 
B) the actual rate of unemployment will be less than the natural rate of unemployment. 
C) approximately 95 percent of the adult population will be employed. 
D) approximately 95 percent of the labor force will be employed.

Question 16

Frictional unemployment refers to:

Accepted Answer

A) unemployment related to the ups and downs of the business cycle. 
B) workers who are between jobs. 
C) people who spend relatively long periods out of work. 
D) people who are out of work and have no job skills. 
A) unemployment related to the ups and downs of the business cycle. 
B) workers who are between jobs. 
C) people who spend relatively long periods out of work. 
D) people who are out of work and have no job skills.

Question 17

Full employment occurs when the rate of unemployment consists of:

Accepted Answer

A) structural plus frictional unemployment. 
B) cyclical plus frictional unemployment. 
C) structural, frictional, and cyclical unemployment. 
D) none of these. 
A) structural plus frictional unemployment. 
B) cyclical plus frictional unemployment. 
C) structural, frictional, and cyclical unemployment. 
D) none of these.

Question 18

If Sam Jackson voluntarily quits one job, possesses marketable skills, and expects to find a new job in a few weeks, then Mr. Jackson is considered:

Accepted Answer

A) frictionally unemployed. 
B) cyclically unemployed. 
C) seasonally unemployed. 
D) structurally unemployed. 
E) unwise to quit his job without already having another one. 
A) frictionally unemployed. 
B) cyclically unemployed. 
C) seasonally unemployed. 
D) structurally unemployed. 
E) unwise to quit his job without already having another one.

Question 19

Susan Greenberg, who works in a typewriter factory, becomes unemployed because people start buying personal computers instead of typewriters. Susan can best be described as:

Accepted Answer

A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) not part of the labor force. 
E) a discouraged worker. 
A) frictionally unemployed. 
B) structurally unemployed. 
C) cyclically unemployed. 
D) not part of the labor force. 
E) a discouraged worker.

Question 20

When the rate of cyclical unemployment is zero, the:

Accepted Answer

A) natural rate of unemployment must also be zero. 
B) rate of frictional unemployment must be negative. 
C) economy must have entered a recessionary stage. 
D) Keynesian aggregate supply curve must be horizontal. 
E) economy is considered to be at full employment. 
A) natural rate of unemployment must also be zero. 
B) rate of frictional unemployment must be negative. 
C) economy must have entered a recessionary stage. 
D) Keynesian aggregate supply curve must be horizontal. 
E) economy is considered to be at full employment.

Exam 6: Business Cycles and Unemployment

Which of the following is a lagging indicator?

How do the Bureau of Labor Statistics and the Bureau of the Census estimate U.S. unemployment each month?

Which of the following is not a lagging indicator?

A long and deep recession in the business cycle is:

Which of the following is not a way to become officially unemployed?

Consider a broom factory that permanently closes because of foreign competition. If the broom factory's workers cannot find new jobs because their skills are no longer marketable, then they are classified as:

A discouraged worker is one who:

The official unemployment rate can be criticized for both understating and overstating the true number of unemployed.

Which one of the following persons would be considered unemployed?

The type of unemployment that occurs because of a recession is called:

In a dynamic economy under ideal conditions:

Which of the following is not a variable in the index of leading indicators?

Retired persons are officially classified as:

The period during which real output falls during a business cycle is called:

When full employment is present in the United States:

Frictional unemployment refers to:

Full employment occurs when the rate of unemployment consists of:

If Sam Jackson voluntarily quits one job, possesses marketable skills, and expects to find a new job in a few weeks, then Mr. Jackson is considered:

Susan Greenberg, who works in a typewriter factory, becomes unemployed because people start buying personal computers instead of typewriters. Susan can best be described as:

When the rate of cyclical unemployment is zero, the:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

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