Question 1

If unemployment in the United States was approximately 5 percent, most economists would believe that the economy was

Accepted Answer

A)  experiencing abnormally high unemployment. 
B)  at or near full employment. 
C)  experiencing an abnormally high labor force participation rate. 
D)  in the midst of a strong economic boom. 
A)  experiencing abnormally high unemployment. 
B)  at or near full employment. 
C)  experiencing an abnormally high labor force participation rate. 
D)  in the midst of a strong economic boom.

Question 2

During an economic boom period, the actual rate of unemployment will be

Accepted Answer

A)  less than the natural rate of unemployment. 
B)  greater than the natural rate of unemployment. 
C)  equal to the natural rate of unemployment. 
D)  unaffected by the economic expansion. 
A)  less than the natural rate of unemployment. 
B)  greater than the natural rate of unemployment. 
C)  equal to the natural rate of unemployment. 
D)  unaffected by the economic expansion.

Question 3

The civilian labor force includes those individuals who are

Accepted Answer

A)  unemployed and looking for work. 
B)  staying home to care for other family members. 
C)  attending school and not working at a job. 
D)  retired. 
A)  unemployed and looking for work. 
B)  staying home to care for other family members. 
C)  attending school and not working at a job. 
D)  retired.

Question 4

The natural rate of unemployment

Accepted Answer

A)  is due to cyclical business conditions. 
B)  results from normal dynamic changes given the institutional arrangements of the economy. 
C)  results from both frictional and cyclical economic conditions. 
D)  is present when the economy is at the peak of an economic boom. 
A)  is due to cyclical business conditions. 
B)  results from normal dynamic changes given the institutional arrangements of the economy. 
C)  results from both frictional and cyclical economic conditions. 
D)  is present when the economy is at the peak of an economic boom.

Question 5

Evaluate the economic validity of the following statement: "Unemployed resources would not exist if the economy were operating efficiently."

Accepted Answer

This statement is false. It fails to rec

Question 6

Full employment means which of the following is zero?

Accepted Answer

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

Question 7

During an economic boom,

Accepted Answer

A)  the actual rate of unemployment will exceed the natural rate of unemployment. 
B)  the output of the economy will exceed its long-run potential output. 
C)  widespread unemployment will cause inflation to increase. 
D)  the actual rate of unemployment will equal the natural rate of unemployment. 
A)  the actual rate of unemployment will exceed the natural rate of unemployment. 
B)  the output of the economy will exceed its long-run potential output. 
C)  widespread unemployment will cause inflation to increase. 
D)  the actual rate of unemployment will equal the natural rate of unemployment.

Question 8

Which of the following is true of high and variable rates of inflation?

Accepted Answer

A)  When such rates are present, it will be difficult for people to accurately forecast next year's rate of inflation. 
B)  Inflation of this type will help promote economic growth and the efficient use of resources. 
C)  People will respond to such rates by spending more time producing and less time trying to protect their wealth and income from the uncertainty created by the inflation. 
D)  Inflation of this type will improve the information content delivered by market prices. 
A)  When such rates are present, it will be difficult for people to accurately forecast next year's rate of inflation. 
B)  Inflation of this type will help promote economic growth and the efficient use of resources. 
C)  People will respond to such rates by spending more time producing and less time trying to protect their wealth and income from the uncertainty created by the inflation. 
D)  Inflation of this type will improve the information content delivered by market prices.

Question 9

If the economy were at its potential output level, which of the following is not true?

Accepted Answer

A)  The actual unemployment rate would equal the natural rate. 
B)  There would be some cyclical unemployment. 
C)  There would be some frictional unemployment. 
D)  There would be some structural unemployment. 
A)  The actual unemployment rate would equal the natural rate. 
B)  There would be some cyclical unemployment. 
C)  There would be some frictional unemployment. 
D)  There would be some structural unemployment.

Question 10

A country with a civilian population of 120,000 (all over age 16) has 100,000 employed and 10,000 unemployed persons, of which 5,000 are frictionally unemployed and another 3,000 structurally unemployed.
a.What is the size of the labor force?
b.What is the actual unemployment rate?
c.What is the labor force participation rate?
d.What is the employment/population ratio?
e.What is the natural rate of unemployment?
f.Is this economy in a recession or a boom? Explain.

Accepted Answer

a.110,000
b.9.09 percent
c.91.

Question 11

Full employment is the rate of employment that results when

Accepted Answer

A)  all labor resources of an economy are employed. 
B)  there is efficient use of the labor force, with allowance made for normal unemployment due to dynamic changes and the structural conditions of the economy. 
C)  cyclical unemployment is between 4 and 5 percent of the labor force. 
D)  everybody who wants a job can find one. 
A)  all labor resources of an economy are employed. 
B)  there is efficient use of the labor force, with allowance made for normal unemployment due to dynamic changes and the structural conditions of the economy. 
C)  cyclical unemployment is between 4 and 5 percent of the labor force. 
D)  everybody who wants a job can find one.

Question 12

The difference between actual real GDP and potential GDP

Accepted Answer

A)  decreases as the unemployment rate rises. 
B)  increases as the unemployment rate rises. 
C)  increases as the employment rate rises. 
D)  decreases as the labor force increases. 
A)  decreases as the unemployment rate rises. 
B)  increases as the unemployment rate rises. 
C)  increases as the employment rate rises. 
D)  decreases as the labor force increases.

Question 13

Xavier is on layoff from his assembly-line job in Detroit, and he expects to return in about four weeks. During this time, he is vacationing in Florida. The Bureau of Labor Statistics would classify Xavier as

Accepted Answer

A)  employed. 
B)  unemployed. 
C)  not part of the labor force. 
D)  a temporary retiree. 
A)  employed. 
B)  unemployed. 
C)  not part of the labor force. 
D)  a temporary retiree.

Question 14

Maurice loses his job and decides to sit on the beach rather than looking for work the next few months. Other things the same, the unemployment rate

Accepted Answer

A)  increases, and the labor-force participation rate is unaffected. 
B)  increases, and the labor-force participation rate decreases. 
C)  decreases, and the labor-force participation rate increases. 
D)  decreases, and the labor-force participation rate decreases. 
A)  increases, and the labor-force participation rate is unaffected. 
B)  increases, and the labor-force participation rate decreases. 
C)  decreases, and the labor-force participation rate increases. 
D)  decreases, and the labor-force participation rate decreases.

Question 15

The unemployment rate equals the number of persons

Accepted Answer

A)  unemployed divided by the number employed. 
B)  unemployed divided by the number in the labor force. 
C)  unemployed divided by the population age 16 and over. 
D)  not working divided by the population age 16 and over. 
A)  unemployed divided by the number employed. 
B)  unemployed divided by the number in the labor force. 
C)  unemployed divided by the population age 16 and over. 
D)  not working divided by the population age 16 and over.

Question 16

The unemployment rate will decrease whenever there is

Accepted Answer

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

Question 17

How would the Bureau of Labor Statistics classify a person who is not working and refuses an offer of employment in order to keep looking for a better job?

Accepted Answer

A)  not in the labor force 
B)  unemployed 
C)  employed 
D)  a discouraged worker 
A)  not in the labor force 
B)  unemployed 
C)  employed 
D)  a discouraged worker

Question 18

Suppose the population (age 16 and over) of Columbia is 40 million; 2 million are unemployed, and 23 million hold jobs. What are the rates of unemployment and labor force participation of Columbia?

Accepted Answer

A)  Unemployment is 8 percent, and labor force participation is 62.5 percent. 
B)  Unemployment is 8.7 percent, and labor force participation is 92 percent. 
C)  Unemployment is 8.7 percent, and labor force participation is 62.5 percent. 
D)  Unemployment is 5 percent, and labor force participation is 57.5 percent. 
A)  Unemployment is 8 percent, and labor force participation is 62.5 percent. 
B)  Unemployment is 8.7 percent, and labor force participation is 92 percent. 
C)  Unemployment is 8.7 percent, and labor force participation is 62.5 percent. 
D)  Unemployment is 5 percent, and labor force participation is 57.5 percent.

Question 19

The 25 years prior to the crisis of 2008-2009 were

Accepted Answer

A)  characterized by more instability than the first 50 years of the twentieth century. 
B)  the most stable economic quarter of a century in American history. 
C)  characterized by more monetary and price instability than any era other than the 1970s. 
D)  a period of historically slow growth and high unemployment. 
A)  characterized by more instability than the first 50 years of the twentieth century. 
B)  the most stable economic quarter of a century in American history. 
C)  characterized by more monetary and price instability than any era other than the 1970s. 
D)  a period of historically slow growth and high unemployment.

Question 20

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

If unemployment in the United States was approximately 5 percent, most economists would believe that the economy was

During an economic boom period, the actual rate of unemployment will be

The civilian labor force includes those individuals who are

The natural rate of unemployment

Evaluate the economic validity of the following statement: "Unemployed resources would not exist if the economy were operating efficiently."

Full employment means which of the following is zero?

During an economic boom,

Which of the following is true of high and variable rates of inflation?

If the economy were at its potential output level, which of the following is not true?

Full employment is the rate of employment that results when

The difference between actual real GDP and potential GDP

Xavier is on layoff from his assembly-line job in Detroit, and he expects to return in about four weeks. During this time, he is vacationing in Florida. The Bureau of Labor Statistics would classify Xavier as

Maurice loses his job and decides to sit on the beach rather than looking for work the next few months. Other things the same, the unemployment rate

The unemployment rate equals the number of persons

The unemployment rate will decrease whenever there is

How would the Bureau of Labor Statistics classify a person who is not working and refuses an offer of employment in order to keep looking for a better job?

Suppose the population (age 16 and over) of Columbia is 40 million; 2 million are unemployed, and 23 million hold jobs. What are the rates of unemployment and labor force participation of Columbia?

The 25 years prior to the crisis of 2008-2009 were

Which one of the following persons would be considered unemployed?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 8: Economic Fluctuations, Unemployment, and Inflation

If unemployment in the United States was approximately 5 percent, most economists would believe that the economy was

During an economic boom period, the actual rate of unemployment will be

The civilian labor force includes those individuals who are

The natural rate of unemployment

Evaluate the economic validity of the following statement: "Unemployed resources would not exist if the economy were operating efficiently."

Full employment means which of the following is zero?

During an economic boom,

Which of the following is true of high and variable rates of inflation?

If the economy were at its potential output level, which of the following is not true?

Full employment is the rate of employment that results when

The difference between actual real GDP and potential GDP

Xavier is on layoff from his assembly-line job in Detroit, and he expects to return in about four weeks. During this time, he is vacationing in Florida. The Bureau of Labor Statistics would classify Xavier as

Maurice loses his job and decides to sit on the beach rather than looking for work the next few months. Other things the same, the unemployment rate

The unemployment rate equals the number of persons

The unemployment rate will decrease whenever there is

How would the Bureau of Labor Statistics classify a person who is not working and refuses an offer of employment in order to keep looking for a better job?

Suppose the population (age 16 and over) of Columbia is 40 million; 2 million are unemployed, and 23 million hold jobs. What are the rates of unemployment and labor force participation of Columbia?

The 25 years prior to the crisis of 2008-2009 were

Which one of the following persons would be considered unemployed?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters