Question 1

The term "recovery" refers to the maximum point of the business cycle.

Accepted Answer

A) True 
 B)False

Question 2

The ____ phase of the business cycle follows a recession.

Accepted Answer

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

Question 3

The number of people officially unemployed is not the same as the number of people who can't find a job because:

Accepted Answer

A)  the armed forces is included. 
B)  some people have jobs but continue to look for a better one. 
C)  some people who can't find a job become discouraged and quit looking. 
D)  none of the above. 
A)  the armed forces is included. 
B)  some people have jobs but continue to look for a better one. 
C)  some people who can't find a job become discouraged and quit looking. 
D)  none of the above.

Question 4

The unemployment rate will increase whenever there is a(n):

Accepted Answer

A)  increase in the number of persons classified as unemployed. 
B)  increase in the number of unemployed persons relative to the size of the labor force. 
C)  increase in the size of the U.S. population and there is no change in the number of persons classified as employed. 
D)  reduction in the size of the labor force. 
E)  reduction in the size of the civilian labor force while the number of unemployed decreases. 
A)  increase in the number of persons classified as unemployed. 
B)  increase in the number of unemployed persons relative to the size of the labor force. 
C)  increase in the size of the U.S. population and there is no change in the number of persons classified as employed. 
D)  reduction in the size of the labor force. 
E)  reduction in the size of the civilian labor force while the number of unemployed decreases.

Question 5

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 6

The civilian labor force consists of all the:

Accepted Answer

A)  people in the economy who are not retired. 
B)  people in the economy over 16 years of age. 
C)  adults in the economy between 18 and 65 years old who are able to work. 
D)  noninstitutionalized adults in the economy who hold jobs or are looking for them. 
E)  citizens in the economy who are graduates of high school. 
A)  people in the economy who are not retired. 
B)  people in the economy over 16 years of age. 
C)  adults in the economy between 18 and 65 years old who are able to work. 
D)  noninstitutionalized adults in the economy who hold jobs or are looking for them. 
E)  citizens in the economy who are graduates of high school.

Question 7

Exhibit 12-3  Unemployment categories   According to data in Exhibit 12-3 and assuming the total number of workers is 8,400, the unemployment rate is:

Accepted Answer

A)  14 percent. 
B)  15 percent. 
C)  16 percent. 
D)  19 percent. 
E)  24 percent. 
A)  14 percent. 
B)  15 percent. 
C)  16 percent. 
D)  19 percent. 
E)  24 percent.

Question 8

An individual who is employed part time, but is looking for a full-time job is classified as:

Accepted Answer

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

Question 9

Exhibit 12-2  Unemployment categories   The unemployment rate for the economy in Exhibit 12-2 is:

Accepted Answer

A)  28 percent. 
B)  30.5 percent. 
C)  31.7 percent. 
D)  12.8 percent. 
E)  21.5 percent. 
A)  28 percent. 
B)  30.5 percent. 
C)  31.7 percent. 
D)  12.8 percent. 
E)  21.5 percent.

Question 10

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

Question 11

The natural rate of unemployment occurs if there is no:

Accepted Answer

A)  unemployment. 
B)  frictional unemployment. 
C)  structural unemployment. 
D)  cyclical unemployment. 
A)  unemployment. 
B)  frictional unemployment. 
C)  structural unemployment. 
D)  cyclical unemployment.

Question 12

Elisa Kilhafer, a housewife in St. Louis, Missouri, who claims on a Bureau of Labor Statistics (BLS) survey that she is neither gainfully employed nor looking for work, is, according to the BLS,

Accepted Answer

A)  considered retired. 
B)  counted as unemployed. 
C)  considered reemployable. 
D)  counted as a member of the labor force. 
E)  not counted as a member of the labor force. 
A)  considered retired. 
B)  counted as unemployed. 
C)  considered reemployable. 
D)  counted as a member of the labor force. 
E)  not counted as a member of the labor force.

Question 13

Whom does the Bureau of Labor Statistics include in the discouraged workers group?

Accepted Answer

A)  All those between 16 and 65 who are neither disabled nor in an institution and are also neither employed nor seeking employment. 
B)  Civilian labor force members who have chosen early retirement because they dislike their work or think the pay is too low. 
C)  Members of the noninstitutional population who say they want to be employed but aren't searching for a job. 
D)  Members of the civilian labor force who are looking for a job but cannot find one. 
E)  Anyone in the population who is not working. 
A)  All those between 16 and 65 who are neither disabled nor in an institution and are also neither employed nor seeking employment. 
B)  Civilian labor force members who have chosen early retirement because they dislike their work or think the pay is too low. 
C)  Members of the noninstitutional population who say they want to be employed but aren't searching for a job. 
D)  Members of the civilian labor force who are looking for a job but cannot find one. 
E)  Anyone in the population who is not working.

Question 14

Since World War II, the average length of recessions in the United States has been:

Accepted Answer

A)  2 months. 
B)  11 months. 
C)  2 years. 
D)  3 1/2 years. 
A)  2 months. 
B)  11 months. 
C)  2 years. 
D)  3 1/2 years.

Question 15

Suppose the official unemployment rate is 10 percent. We can conclude without question that:

Accepted Answer

A)  the same 10 percent of the people in the economy were out of work for the entire ear. 
B)  one of every 10 people in the civilian labor force is currently unemployed. 
C)  the same 10 percent of the people in the civilian labor force were out of work for the entire year. 
D)  every person in the civilian labor force was out of work for 10 percent of the year. 
E)  10 percent of the people in the economy were out of work for 10 percent of the year. 
A)  the same 10 percent of the people in the economy were out of work for the entire ear. 
B)  one of every 10 people in the civilian labor force is currently unemployed. 
C)  the same 10 percent of the people in the civilian labor force were out of work for the entire year. 
D)  every person in the civilian labor force was out of work for 10 percent of the year. 
E)  10 percent of the people in the economy were out of work for 10 percent of the year.

Question 16

To what does the "GDP gap" refer?

Accepted Answer

A)  The difference between real and nominal GDP. 
B)  The difference between this year's real GDP and last year's GDP. 
C)  The difference between "full-employment" real GDP and actual real GDP. 
D)  The difference between real GDP in the prior trough and real GDP in a current trough of the business cycle. 
A)  The difference between real and nominal GDP. 
B)  The difference between this year's real GDP and last year's GDP. 
C)  The difference between "full-employment" real GDP and actual real GDP. 
D)  The difference between real GDP in the prior trough and real GDP in a current trough of the business cycle.

Question 17

When people become unemployed because of a higher minimum wage, this type of unemployment is called:

Accepted Answer

A)  frictional. 
B)  structural. 
C)  cyclical. 
D)  abnormal. 
A)  frictional. 
B)  structural. 
C)  cyclical. 
D)  abnormal.

Question 18

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 19

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

Accepted Answer

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

Question 20

The unemployment rate will decrease whenever there is a(n):

Accepted Answer

A)  increase in the number of persons classified as unemployed. 
B)  decrease in the number of unemployed relative to the size of the labor force. 
C)  decrease in the size of the population and there is no change in the number of persons classified as employed. 
D)  reduction in the size of the labor force. 
E)  decrease in the number of unemployed and the population does not change. 
A)  increase in the number of persons classified as unemployed. 
B)  decrease in the number of unemployed relative to the size of the labor force. 
C)  decrease in the size of the population and there is no change in the number of persons classified as employed. 
D)  reduction in the size of the labor force. 
E)  decrease in the number of unemployed and the population does not change.

Exam 12: Business Cycles and Unemployment

The term "recovery" refers to the maximum point of the business cycle.

The ____ phase of the business cycle follows a recession.

The number of people officially unemployed is not the same as the number of people who can't find a job because:

The unemployment rate will increase whenever there is a(n):

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

The civilian labor force consists of all the:

Exhibit 12-3 Unemployment categories According to data in Exhibit 12-3 and assuming the total number of workers is 8,400, the unemployment rate is:

An individual who is employed part time, but is looking for a full-time job is classified as:

Exhibit 12-2 Unemployment categories The unemployment rate for the economy in Exhibit 12-2 is:

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

The natural rate of unemployment occurs if there is no:

Elisa Kilhafer, a housewife in St. Louis, Missouri, who claims on a Bureau of Labor Statistics (BLS) survey that she is neither gainfully employed nor looking for work, is, according to the BLS,

Whom does the Bureau of Labor Statistics include in the discouraged workers group?

Since World War II, the average length of recessions in the United States has been:

Suppose the official unemployment rate is 10 percent. We can conclude without question that:

To what does the "GDP gap" refer?

When people become unemployed because of a higher minimum wage, this type of unemployment is called:

Retired persons are officially classified as:

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

The unemployment rate will decrease whenever there is a(n):

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

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

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters