Question 1

Variables that change before real GDP changes are measured by the:

Accepted Answer

A)  personal income index. 
B)  real GDP index. 
C)  forecasting gauge. 
D)  index of leading indicators. 
A)  personal income index. 
B)  real GDP index. 
C)  forecasting gauge. 
D)  index of leading indicators. D

Question 2

What is full employment? What are the different kinds of unemployment? What constitutes the natural (normal) rate of unemployment?

Accepted Answer

Full employment exists when approximately 95 percent of the civilian labor force is employed. This implies a natural rate of unemployment of approximately 5 percent. The natural rate of unemployment consists of the frictionally and structurally unemployed. The only other type of unemployment is cyclical unemployment.

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 B

Question 4

Exhibit 6-1 Business cycle
 
In Exhibit 6-1, the recovery phase of the business cycle can be represented by points:

Accepted Answer

A)  A. 
B)  C. 
C)  E to G. 
D)  C to E. 
A)  A. 
B)  C. 
C)  E to G. 
D)  C to E.

Question 5

Which one of the following people is not a member of the labor force?

Accepted Answer

A)  A full-time student who devotes all her time to her classes. 
B)  A person who works 30 hours a week at Burger King and goes to school at night. 
C)  The man who was fired last week and is searching for a new job. 
D)  A professional athlete. 
A)  A full-time student who devotes all her time to her classes. 
B)  A person who works 30 hours a week at Burger King and goes to school at night. 
C)  The man who was fired last week and is searching for a new job. 
D)  A professional athlete.

Question 6

The period of declining growth in real GDP between the peak of the business cycle and the trough is called a(n):

Accepted Answer

A)  recessionary phase. 
B)  expansionary. 
C)  recovery phase. 
D)  stationary phase. 
A)  recessionary phase. 
B)  expansionary. 
C)  recovery phase. 
D)  stationary phase.

Question 7

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

Question 8

Exhibit 16-2 Unemployment categories
 
Using the information in Exhibit 16-2, the natural rate of unemployment is

Accepted Answer

A)  2.8 percent. 
B)  10.3 percent. 
C)  11 percent. 
D)  21.5 percent. 
A)  2.8 percent. 
B)  10.3 percent. 
C)  11 percent. 
D)  21.5 percent.

Question 9

Martin Shore lost his job when General Motors closed down its local plant. He has been visiting the personnel offices of the other factories in the area, looking for a new job. He is:

Accepted Answer

A)  a member of the civilian labor force who is employed. 
B)  a member of the civilian labor force who is unemployed. 
C)  a member of the civilian labor force who is underemployed. 
D)  a discouraged worker who is not a member of the labor force. 
A)  a member of the civilian labor force who is employed. 
B)  a member of the civilian labor force who is unemployed. 
C)  a member of the civilian labor force who is underemployed. 
D)  a discouraged worker who is not a member of the labor force.

Question 10

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 11

The burden of unemployment is

Accepted Answer

A)  endured better by people with substantial savings. 
B)  fully measured by the monetary cost computed in the GDP gap. 
C)  borne equally by all unemployed people. 
D)  completely offset by the federal unemployment insurance program. 
A)  endured better by people with substantial savings. 
B)  fully measured by the monetary cost computed in the GDP gap. 
C)  borne equally by all unemployed people. 
D)  completely offset by the federal unemployment insurance program.

Question 12

Which of the following statements is true ?

Accepted Answer

A)  The four phases of the business cycle, in order, are: peak, recovery, trough, recession. 
B)  When unemployment is rising then real GDP is rising. 
C)  The economic problem typically associated with a recovery is rising unemployment. 
D)  Full employment exists in an economy when the unemployment rate equals the sum of frictional, and structural unemployment rates. 
A)  The four phases of the business cycle, in order, are: peak, recovery, trough, recession. 
B)  When unemployment is rising then real GDP is rising. 
C)  The economic problem typically associated with a recovery is rising unemployment. 
D)  Full employment exists in an economy when the unemployment rate equals the sum of frictional, and structural unemployment rates.

Question 13

Economists usually use the term "recession" to refer to:

Accepted Answer

A)  any slowdown in the growth of real GDP. 
B)  zero real GDP growth. 
C)  two or more consecutive quarters of declining real GDP. 
D)  a reduction in nominal GDP lasting more than six months. 
A)  any slowdown in the growth of real GDP. 
B)  zero real GDP growth. 
C)  two or more consecutive quarters of declining real GDP. 
D)  a reduction in nominal GDP lasting more than six months.

Question 14

Exhibit 6-1 Business cycle
 
In Exhibit 6-1, point E represents:

Accepted Answer

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

Question 15

Which of the following is a leading business cycle indicator?

Accepted Answer

A)  the unemployment rate 
B)  the volume of outstanding commercial loans 
C)  new building permits 
D)  personal income 
A)  the unemployment rate 
B)  the volume of outstanding commercial loans 
C)  new building permits 
D)  personal income

Question 16

Bob is unemployed because his skills have become obsolete due to technological advances. This is ____ unemployment.

Accepted Answer

A)  frictional 
B)  structural 
C)  cyclical 
D)  seasonal 
A)  frictional 
B)  structural 
C)  cyclical 
D)  seasonal

Question 17

Exhibit 16-2 Unemployment categories
 
Find the BLS's rate of unemployment from the following data: frictional unemployment = 150, structural unemployment = 200, cyclical unemployment = 225, discouraged workers = 25, underemployed workers = 75, fully employed workers = 850, total population = 2,000.

Accepted Answer

A)  17.5 percent 
B)  23.3 percent 
C)  38.3 percent 
D)  39.3 percent 
A)  17.5 percent 
B)  23.3 percent 
C)  38.3 percent 
D)  39.3 percent

Question 18

Consider an economy made up of 100 people, 60 of whom old jobs, 10 of whom are looking for work, and 15 of whom are retired. The number counted as unemployed is:

Accepted Answer

A)  10. 
B)  15. 
C)  40. 
D)  30. 
A)  10. 
B)  15. 
C)  40. 
D)  30.

Question 19

What generally causes the business cycle? What are the four phases of a single business cycle? What are the problems associated with the business cycle?

Accepted Answer

Changes in total spending (aggregate dem

Question 20

Which of the following is not a coincident indicator?

Accepted Answer

A)  personal income 
B)  industrial production 
C)  manufacturing and trade sales 
D)  average workweek 
A)  personal income 
B)  industrial production 
C)  manufacturing and trade sales 
D)  average workweek

Exam 16: Business Cycles and Unemployment

Variables that change before real GDP changes are measured by the:

What is full employment? What are the different kinds of unemployment? What constitutes the natural (normal) rate of unemployment?

Which of the following is not a lagging indicator?

Exhibit 6-1 Business cycle In Exhibit 6-1, the recovery phase of the business cycle can be represented by points:

Which one of the following people is not a member of the labor force?

The period of declining growth in real GDP between the peak of the business cycle and the trough is called a(n):

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:

Exhibit 16-2 Unemployment categories Using the information in Exhibit 16-2, the natural rate of unemployment is

Martin Shore lost his job when General Motors closed down its local plant. He has been visiting the personnel offices of the other factories in the area, looking for a new job. He is:

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:

The burden of unemployment is

Which of the following statements is true ?

Economists usually use the term "recession" to refer to:

Exhibit 6-1 Business cycle In Exhibit 6-1, point E represents:

Which of the following is a leading business cycle indicator?

Bob is unemployed because his skills have become obsolete due to technological advances. This is ____ unemployment.

Exhibit 16-2 Unemployment categories Find the BLS's rate of unemployment from the following data: frictional unemployment = 150, structural unemployment = 200, cyclical unemployment = 225, discouraged workers = 25, underemployed workers = 75, fully employed workers = 850, total population = 2,000.

Consider an economy made up of 100 people, 60 of whom old jobs, 10 of whom are looking for work, and 15 of whom are retired. The number counted as unemployed is:

What generally causes the business cycle? What are the four phases of a single business cycle? What are the problems associated with the business cycle?

Which of the following is not a coincident indicator?

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

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

Understanding Direct and Inverse Relationships between Variables

Filters