Question 1

People actively looking for work who CANNOT find jobs because of an insufficiency of aggregate demand are examples of ________ unemployment.

Accepted Answer

A)  frictional 
B)  structural 
C)  cyclical 
D)  inflationary 
E)  residual 
A)  frictional 
B)  structural 
C)  cyclical 
D)  inflationary 
E)  residual C

Question 2

The view that unemployment becomes increasingly severe as machinery is substituted for labor is most closely associated with

Accepted Answer

A)  Ernst Say. 
B)  Maynard Keynes. 
C)  Eric Mill. 
D)  Karl Marx. 
E)  Adam Smith. 
A)  Ernst Say. 
B)  Maynard Keynes. 
C)  Eric Mill. 
D)  Karl Marx. 
E)  Adam Smith. D

Question 3

If the money supply is fixed,increases in the price level reduce

Accepted Answer

A)  interest rates. 
B)  imports. 
C)  the rate of inflation. 
D)  total real output purchased. 
E)  the average money cost of each transaction. 
A)  interest rates. 
B)  imports. 
C)  the rate of inflation. 
D)  total real output purchased. 
E)  the average money cost of each transaction. D

Question 4

Deviations in national output around potential output are called a

Accepted Answer

A)  business cycle. 
B)  price index. 
C)  Keynesian equilibrium. 
D)  market phase. 
E)  theory. 
A)  business cycle. 
B)  price index. 
C)  Keynesian equilibrium. 
D)  market phase. 
E)  theory.

Question 5

In general,a business cycle goes through its phases in the following sequence:

Accepted Answer

A)  trough, peak, expansion, recession. 
B)  recession, trough, expansion, peak. 
C)  trough, recession, expansion, peak. 
D)  trough, expansion, recession, peak. 
E)  expansion, recession, trough, peak. 
A)  trough, peak, expansion, recession. 
B)  recession, trough, expansion, peak. 
C)  trough, recession, expansion, peak. 
D)  trough, expansion, recession, peak. 
E)  expansion, recession, trough, peak.

Question 6

An economist who argues that a free market economy,if left to itself,is strong enough to recover from any economic crisis reflects

Accepted Answer

A)  Keynesian analysis. 
B)  a strong Marxist influence. 
C)  the classical view. 
D)  the post-Marxian-Keynesian synthesis. 
E)  his or her own original view, with no apparent relationship to the thinking of other economists. 
A)  Keynesian analysis. 
B)  a strong Marxist influence. 
C)  the classical view. 
D)  the post-Marxian-Keynesian synthesis. 
E)  his or her own original view, with no apparent relationship to the thinking of other economists.

Question 7

People unemployed because they lack the necessary qualifications to fill available jobs are examples of ________ unemployment.

Accepted Answer

A)  frictional 
B)  structural 
C)  cyclical 
D)  inflationary 
E)  residual 
A)  frictional 
B)  structural 
C)  cyclical 
D)  inflationary 
E)  residual

Question 8

During a period when total spending is too high relative to potential output,the economy experiences

Accepted Answer

A)  excessive unemployment. 
B)  falling average prices. 
C)  a glut. 
D)  a Great Crash. 
E)  inflation. 
A)  excessive unemployment. 
B)  falling average prices. 
C)  a glut. 
D)  a Great Crash. 
E)  inflation.

Question 9

Since 1945,the average annual unemployment rate in the United States has

Accepted Answer

A)  varied from 10 to 20 percent. 
B)  increased steadily from 2 to 12 percent. 
C)  varied from slightly under 3 to over 9 percent. 
D)  decreased steadily from 10 to slightly under 7 percent. 
E)  not varied by more than 3 percentage points over the entire period. 
A)  varied from 10 to 20 percent. 
B)  increased steadily from 2 to 12 percent. 
C)  varied from slightly under 3 to over 9 percent. 
D)  decreased steadily from 10 to slightly under 7 percent. 
E)  not varied by more than 3 percentage points over the entire period.

Question 10

An aggregate supply curve

Accepted Answer

A)  becomes horizontal at full employment. 
B)  slopes downward and to the right during periods of unemployment. 
C)  can be derived by adding up the supply curves for all individual commodities. 
D)  is constructed on the assumptions that the money supply is fixed and there is full employment of resources. 
E)  is constructed by allowing all commodity prices to vary. 
A)  becomes horizontal at full employment. 
B)  slopes downward and to the right during periods of unemployment. 
C)  can be derived by adding up the supply curves for all individual commodities. 
D)  is constructed on the assumptions that the money supply is fixed and there is full employment of resources. 
E)  is constructed by allowing all commodity prices to vary.

Question 11

The following question are based on the following diagrams in which D₀ and S₀ refer to the initial aggregate demand and short-run aggregate supply curves:
  
-Economic conditions during World War II are best illustrated by diagram

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E. 
A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E.

Question 12

The gap between actual and potential output

Accepted Answer

A)  is a measure of the costs of inflation. 
B)  is a measure of what it costs society to tolerate less than full employment. 
C)  is necessary to ensure economic efficiency. 
D)  has always been positive. 
E)  is calculated as 3 × (unemployment rate - 0.055) × potential GDP. 
A)  is a measure of the costs of inflation. 
B)  is a measure of what it costs society to tolerate less than full employment. 
C)  is necessary to ensure economic efficiency. 
D)  has always been positive. 
E)  is calculated as 3 × (unemployment rate - 0.055) × potential GDP.

Question 13

Preceding the Great Crash of 1929,the country enjoyed a period of relative economic prosperity.This prosperity was largely attributable to

Accepted Answer

A)  stronger growth in agriculture than the country had seen in years. 
B)  demand for manufactured goods to replace those that were worn or outdated. 
C)  after-effects of the high production years preceding World War I. 
D)  government policies that stimulated growth through taxation and investment. 
E)  the fact that wages and prices were rising exponentially. 
A)  stronger growth in agriculture than the country had seen in years. 
B)  demand for manufactured goods to replace those that were worn or outdated. 
C)  after-effects of the high production years preceding World War I. 
D)  government policies that stimulated growth through taxation and investment. 
E)  the fact that wages and prices were rising exponentially.

Question 14

Which of the following events shifts the short-run aggregate supply curve to the right?

Accepted Answer

A)  technological improvements 
B)  increases in input prices 
C)  reductions in the amounts of available labor and capital 
D)  increases in consumer and government spending 
E)  significant shortages of important raw materials 
A)  technological improvements 
B)  increases in input prices 
C)  reductions in the amounts of available labor and capital 
D)  increases in consumer and government spending 
E)  significant shortages of important raw materials

Question 15

In general,an increase in productive capacity

Accepted Answer

A)  leaves the aggregate demand and supply curves unchanged. 
B)  causes the aggregate supply curve to become vertical. 
C)  causes the aggregate demand curve to become horizontal. 
D)  shifts the aggregate demand curve to the left and pushes up price levels. 
E)  shifts the aggregate supply curve to the right and increases real output. 
A)  leaves the aggregate demand and supply curves unchanged. 
B)  causes the aggregate supply curve to become vertical. 
C)  causes the aggregate demand curve to become horizontal. 
D)  shifts the aggregate demand curve to the left and pushes up price levels. 
E)  shifts the aggregate supply curve to the right and increases real output.

Question 16

A major purpose of Keynes's General Theory was to explain

Accepted Answer

A)  how a less-than-full employment equilibrium was possible in a capitalist economy. 
B)  the automatic mechanisms in a capitalist society that generate a high level of employment. 
C)  how supply creates its own demand. 
D)  the close interrelationships between the savers and investors in any society. 
E)  why Marx's predictions about capitalism were inevitable. 
A)  how a less-than-full employment equilibrium was possible in a capitalist economy. 
B)  the automatic mechanisms in a capitalist society that generate a high level of employment. 
C)  how supply creates its own demand. 
D)  the close interrelationships between the savers and investors in any society. 
E)  why Marx's predictions about capitalism were inevitable.

Question 17

The following question are based on the following diagram:
  
-The trough of the cycle is best characterized by letter

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E. 
A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E.

Question 18

If the aggregate demand and supply curves intersect in the positively sloped range of the aggregate supply curve,a decrease in aggregate demand decreases

Accepted Answer

A)  the price level but not total real output. 
B)  total real output but not the price level. 
C)  both total real output and the price level. 
D)  neither total real output nor the price level. 
E)  total employment while increasing the price level. 
A)  the price level but not total real output. 
B)  total real output but not the price level. 
C)  both total real output and the price level. 
D)  neither total real output nor the price level. 
E)  total employment while increasing the price level.

Question 19

The level of real national output produced at each price level is called a(n)

Accepted Answer

A)  aggregate supply curve. 
B)  production possibilities curve. 
C)  aggregate production function. 
D)  capital output ratio. 
E)  product-price yield curve. 
A)  aggregate supply curve. 
B)  production possibilities curve. 
C)  aggregate production function. 
D)  capital output ratio. 
E)  product-price yield curve.

Question 20

In the short run,increases in product prices increase firms' ________ per unit.

Accepted Answer

A)  production costs 
B)  employment 
C)  sales 
D)  capacity 
E)  profit 
A)  production costs 
B)  employment 
C)  sales 
D)  capacity 
E)  profit

Exam 16: Business Fluctuations and Unemployment

People actively looking for work who CANNOT find jobs because of an insufficiency of aggregate demand are examples of ________ unemployment.

The view that unemployment becomes increasingly severe as machinery is substituted for labor is most closely associated with

If the money supply is fixed,increases in the price level reduce

Deviations in national output around potential output are called a

In general,a business cycle goes through its phases in the following sequence:

An economist who argues that a free market economy,if left to itself,is strong enough to recover from any economic crisis reflects

People unemployed because they lack the necessary qualifications to fill available jobs are examples of ________ unemployment.

During a period when total spending is too high relative to potential output,the economy experiences

Since 1945,the average annual unemployment rate in the United States has

An aggregate supply curve

The following question are based on the following diagrams in which D₀ and S₀ refer to the initial aggregate demand and short-run aggregate supply curves: -Economic conditions during World War II are best illustrated by diagram

The gap between actual and potential output

Preceding the Great Crash of 1929,the country enjoyed a period of relative economic prosperity.This prosperity was largely attributable to

Which of the following events shifts the short-run aggregate supply curve to the right?

In general,an increase in productive capacity

A major purpose of Keynes's General Theory was to explain

The following question are based on the following diagram: -The trough of the cycle is best characterized by letter

If the aggregate demand and supply curves intersect in the positively sloped range of the aggregate supply curve,a decrease in aggregate demand decreases

The level of real national output produced at each price level is called a(n)

In the short run,increases in product prices increase firms' ________ per unit.

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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