Question 1

Economists use the phrase "business cycle" when referring to fluctuations in

Accepted Answer

A)  the rate of real output and employment. 
B)  interest rates. 
C)  the consumer price index. 
D)  the general level of prices. 
A)  the rate of real output and employment. 
B)  interest rates. 
C)  the consumer price index. 
D)  the general level of prices.

Question 2

Figure 8-1   In Figure 8-1, 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 3

Over the past century, the growth rate of real GDP in the United States has averaged approximately

Accepted Answer

A)  1 percent. 
B)  3 percent. 
C)  6 percent. 
D)  10 percent. 
A)  1 percent. 
B)  3 percent. 
C)  6 percent. 
D)  10 percent.

Question 4

Discuss the dangers of inflation; that is, why may it hurt an economy?

Accepted Answer

The three biggest dangers of inflation a

Question 5

How would the Bureau of Labor Statistics classify a college graduate who is not currently working but recently turned down an offer for employment at $10 an hour in order to keep looking for a better job?

Accepted Answer

A)  not in the labor force 
B)  employed 
C)  unemployed 
D)  on temporary absence from school 
A)  not in the labor force 
B)  employed 
C)  unemployed 
D)  on temporary absence from school

Question 6

Each month, the Bureau of Labor Statistics calculates unemployment by

Accepted Answer

A)  surveying all workers in the economy. 
B)  surveying a random sample of households. 
C)  making projections based on census data. 
D)  surveying large business and government employers. 
A)  surveying all workers in the economy. 
B)  surveying a random sample of households. 
C)  making projections based on census data. 
D)  surveying large business and government employers.

Question 7

The natural rate of unemployment

Accepted Answer

A)  increases sharply during a recession but declines significantly during a business expansion. 
B)  is the unemployment rate accompanying the economy's maximum sustainable output. 
C)  is generally less than the unemployment rate associated with the economy's full-employment rate of output. 
D)  is present when the economy operates at approximately 94 percent of its potential GDP. 
A)  increases sharply during a recession but declines significantly during a business expansion. 
B)  is the unemployment rate accompanying the economy's maximum sustainable output. 
C)  is generally less than the unemployment rate associated with the economy's full-employment rate of output. 
D)  is present when the economy operates at approximately 94 percent of its potential GDP.

Question 8

Cyclical unemployment

Accepted Answer

A)  is caused by changes in the business cycle. 
B)  results from imperfect search activities in matching qualified employees with employers. 
C)  results from institutional factors that make it difficult for some workers to find jobs. 
D)  will probably go up as a result of improvements in online job searching. 
A)  is caused by changes in the business cycle. 
B)  results from imperfect search activities in matching qualified employees with employers. 
C)  results from institutional factors that make it difficult for some workers to find jobs. 
D)  will probably go up as a result of improvements in online job searching.

Question 9

Which of the following about inflation is true?

Accepted Answer

A)  Anticipated inflation is an increase in the price level that comes as a surprise, at least to most individuals. 
B)  Unanticipated inflation is a change in the price level that is widely expected. 
C)  Decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy. 
D)  Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers. 
A)  Anticipated inflation is an increase in the price level that comes as a surprise, at least to most individuals. 
B)  Unanticipated inflation is a change in the price level that is widely expected. 
C)  Decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy. 
D)  Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers.

Question 10

Older Americans living on a pension and therefore on a fixed income, tend to be made

Accepted Answer

A)  better off when prices rise. 
B)  better off when the inflation rate rises. 
C)  worse off when prices rise. 
D)  worse off when prices fall. 
A)  better off when prices rise. 
B)  better off when the inflation rate rises. 
C)  worse off when prices rise. 
D)  worse off when prices fall.

Question 11

Regarding inflation, which of the following is a true statement?

Accepted Answer

A)  Unanticipated inflation is a change in the general level of prices that catches most decision makers by surprise. 
B)  High and variable rates of inflation are easy for decision makers to forecast accurately. 
C)  High and variable rates of inflation can increase GDP by reducing investment. 
D)  When decision-makers are able to anticipate slow, steady rates of inflation, prices become more unstable and there is a negative impact on the level of prosperity. 
A)  Unanticipated inflation is a change in the general level of prices that catches most decision makers by surprise. 
B)  High and variable rates of inflation are easy for decision makers to forecast accurately. 
C)  High and variable rates of inflation can increase GDP by reducing investment. 
D)  When decision-makers are able to anticipate slow, steady rates of inflation, prices become more unstable and there is a negative impact on the level of prosperity.

Question 12

The natural rate of unemployment is not zero because

Accepted Answer

A)  some workers will always have few skills. 
B)  unemployment will always rise during the recessionary phase of the business cycle. 
C)  the economy is characterized by dynamic change and imperfect information. 
D)  not every member of society is capable of participating in the labor force. 
A)  some workers will always have few skills. 
B)  unemployment will always rise during the recessionary phase of the business cycle. 
C)  the economy is characterized by dynamic change and imperfect information. 
D)  not every member of society is capable of participating in the labor force.

Question 13

The economy's potential output is

Accepted Answer

A)  the maximum output that could be achieved temporarily during a time of economic boom. 
B)  the minimum output that could be achieved during a recession. 
C)  present when 100 percent of the labor force is employed. 
D)  the maximum sustainable output of the economy given its resources. 
A)  the maximum output that could be achieved temporarily during a time of economic boom. 
B)  the minimum output that could be achieved during a recession. 
C)  present when 100 percent of the labor force is employed. 
D)  the maximum sustainable output of the economy given its resources.

Question 14

A decrease in aggregate demand and the subsequent cutbacks in production lead to

Accepted Answer

A)  frictional unemployment. 
B)  cyclical unemployment. 
C)  cost-push unemployment. 
D)  structural unemployment. 
E)  transitory unemployment. 
A)  frictional unemployment. 
B)  cyclical unemployment. 
C)  cost-push unemployment. 
D)  structural unemployment. 
E)  transitory unemployment.

Question 15

When the inflation rate of a country is high over a lengthy time period,

Accepted Answer

A)  the year-to-year variability in the rate of inflation is generally small. 
B)  the year-to-year variability in the rate of inflation is generally large. 
C)  decision makers will be able to forecast future rates of inflation accurately. 
D)  there is no reason to believe that the inflation will exert harmful side effects on real output and the prosperity of the country. 
A)  the year-to-year variability in the rate of inflation is generally small. 
B)  the year-to-year variability in the rate of inflation is generally large. 
C)  decision makers will be able to forecast future rates of inflation accurately. 
D)  there is no reason to believe that the inflation will exert harmful side effects on real output and the prosperity of the country.

Question 16

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

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

Suppose that the consumer price index at year-end 2008 was 140 and by year-end 2009 had risen to 150. What was the inflation rate during 2009?

Accepted Answer

A)  7.1 percent 
B)  10 percent 
C)  14.2 percent 
D)  50 percent 
A)  7.1 percent 
B)  10 percent 
C)  14.2 percent 
D)  50 percent

Question 19

Gabriela, a brilliant new Ph.D. in economics, has turned down many job offers because she hopes eventually to teach at one of the top ten universities in her field. The type of unemployment she is experiencing is

Accepted Answer

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

Question 20

When people speak of the labor force participation rate, they are actually talking about the percentage of

Accepted Answer

A)  people not working but actively seeking work. 
B)  people who are working. 
C)  new entrants into the labor force. 
D)  working-age people who are either working or seeking work. 
A)  people not working but actively seeking work. 
B)  people who are working. 
C)  new entrants into the labor force. 
D)  working-age people who are either working or seeking work.

Economists use the phrase "business cycle" when referring to fluctuations in

Figure 8-1 In Figure 8-1, point E represents:

Over the past century, the growth rate of real GDP in the United States has averaged approximately

Discuss the dangers of inflation; that is, why may it hurt an economy?

How would the Bureau of Labor Statistics classify a college graduate who is not currently working but recently turned down an offer for employment at $10 an hour in order to keep looking for a better job?

Each month, the Bureau of Labor Statistics calculates unemployment by

The natural rate of unemployment

Cyclical unemployment

Which of the following about inflation is true?

Older Americans living on a pension and therefore on a fixed income, tend to be made

Regarding inflation, which of the following is a true statement?

The natural rate of unemployment is not zero because

The economy's potential output is

A decrease in aggregate demand and the subsequent cutbacks in production lead to

When the inflation rate of a country is high over a lengthy time period,

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

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

Suppose that the consumer price index at year-end 2008 was 140 and by year-end 2009 had risen to 150. What was the inflation rate during 2009?

Gabriela, a brilliant new Ph.D. in economics, has turned down many job offers because she hopes eventually to teach at one of the top ten universities in her field. The type of unemployment she is experiencing is

When people speak of the labor force participation rate, they are actually talking about the percentage of

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

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Exam 8: Economic Fluctuations, Unemployment, and Inflation

Economists use the phrase "business cycle" when referring to fluctuations in

Figure 8-1 In Figure 8-1, point E represents:

Over the past century, the growth rate of real GDP in the United States has averaged approximately

Discuss the dangers of inflation; that is, why may it hurt an economy?

How would the Bureau of Labor Statistics classify a college graduate who is not currently working but recently turned down an offer for employment at $10 an hour in order to keep looking for a better job?

Each month, the Bureau of Labor Statistics calculates unemployment by

The natural rate of unemployment

Cyclical unemployment

Which of the following about inflation is true?

Older Americans living on a pension and therefore on a fixed income, tend to be made

Regarding inflation, which of the following is a true statement?

The natural rate of unemployment is not zero because

The economy's potential output is

A decrease in aggregate demand and the subsequent cutbacks in production lead to

When the inflation rate of a country is high over a lengthy time period,

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

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

Suppose that the consumer price index at year-end 2008 was 140 and by year-end 2009 had risen to 150. What was the inflation rate during 2009?

Gabriela, a brilliant new Ph.D. in economics, has turned down many job offers because she hopes eventually to teach at one of the top ten universities in her field. The type of unemployment she is experiencing is

When people speak of the labor force participation rate, they are actually talking about the percentage of

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