Question 1

The costs of unemployment

Accepted Answer

A)  consist solely of potential output forgone by society. 
B)  may often include despair and damage to an individual's self-image. 
C)  pertain solely to frictional unemployment. 
D)  are permanently high according to the classical theory. 
E)  are almost impossible to quantify because there is little agreement as to a common definition of full employment. 
A)  consist solely of potential output forgone by society. 
B)  may often include despair and damage to an individual's self-image. 
C)  pertain solely to frictional unemployment. 
D)  are permanently high according to the classical theory. 
E)  are almost impossible to quantify because there is little agreement as to a common definition of full employment.

Question 2

The statement "supply creates its own demand" is often referred to as

Accepted Answer

A)  value added. 
B)  the general theory of employment. 
C)  hysteresis. 
D)  the natural rate of employment. 
E)  Say's law. 
A)  value added. 
B)  the general theory of employment. 
C)  hysteresis. 
D)  the natural rate of employment. 
E)  Say's law.

Question 3

While much of the U.S.business world was struggling with the problems of the Great Depression and clinging to the classical view that the country's economic problems would rectify themselves,John Maynard Keynes felt that the way out of the depression was to

Accepted Answer

A)  hold the lid on consumer demand while expanding production. 
B)  expand effective aggregate demand by using government's power to spend and tax. 
C)  make larger numbers of people employable. 
D)  limit government power to tax. 
E)  nationalize all basic industries as the first step toward socialism. 
A)  hold the lid on consumer demand while expanding production. 
B)  expand effective aggregate demand by using government's power to spend and tax. 
C)  make larger numbers of people employable. 
D)  limit government power to tax. 
E)  nationalize all basic industries as the first step toward socialism.

Question 4

The following question are based on the following diagram:
  
-The recession phase 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 5

The three generally recognized types of unemployment are

Accepted Answer

A)  voluntary, potential, and residual. 
B)  cyclical, frictional, and structural. 
C)  involuntary, temporary, and disciplinary. 
D)  teenage, female, and nonwhite. 
E)  classical, Keynesian, and post-Keynesian. 
A)  voluntary, potential, and residual. 
B)  cyclical, frictional, and structural. 
C)  involuntary, temporary, and disciplinary. 
D)  teenage, female, and nonwhite. 
E)  classical, Keynesian, and post-Keynesian.

Question 6

The phase of the business cycle in which output is highest relative to its potential level is the

Accepted Answer

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

Question 7

If the money supply is fixed,decreases in the price level

Accepted Answer

A)  reduce the total real output households and businesses want to purchase. 
B)  reduce the average money cost of each transaction. 
C) shift the aggregate demand curve upward and to the right. 
D)  shift the aggregate supply curve upward and to the left. 
E)  raise interest rates and reduce total business borrowing. 
A)  reduce the total real output households and businesses want to purchase. 
B)  reduce the average money cost of each transaction. 
C) shift the aggregate demand curve upward and to the right. 
D)  shift the aggregate supply curve upward and to the left. 
E)  raise interest rates and reduce total business borrowing.

Question 8

In the U.S.economy,each percentage point change in the unemployment rate is equivalent to ________ million people.

Accepted Answer

A)  8 
B)  5.1 
C)  3.2 
D)  1.5 
E)  0.5 
A)  8 
B)  5.1 
C)  3.2 
D)  1.5 
E)  0.5

Question 9

In the classical model,achieving a full-employment level of output

Accepted Answer

A)  requires a modest amount of government intervention. 
B)  is a temporary state resulting from flexible wages and prices. 
C)  is possible because competition bids wage rates down to the point where everyone who really wants a job can have one. 
D)  is based on the assumption that there is no saving in the economy because all the income created is spent. 
E)  becomes more and more difficult to attain as labor-saving technology throws more and more workers into unemployment. 
A)  requires a modest amount of government intervention. 
B)  is a temporary state resulting from flexible wages and prices. 
C)  is possible because competition bids wage rates down to the point where everyone who really wants a job can have one. 
D)  is based on the assumption that there is no saving in the economy because all the income created is spent. 
E)  becomes more and more difficult to attain as labor-saving technology throws more and more workers into unemployment.

Question 10

The business cycle

Accepted Answer

A)  tends to be regular in length and amplitude. 
B)  has little or no impact on the price level. 
C)  is in the recession phase when national output is rising to its potential level. 
D)  has higher rates of unemployment at the trough than at the peak. 
E)  has been a rare phenomenon since World War II. 
A)  tends to be regular in length and amplitude. 
B)  has little or no impact on the price level. 
C)  is in the recession phase when national output is rising to its potential level. 
D)  has higher rates of unemployment at the trough than at the peak. 
E)  has been a rare phenomenon since World War II.

Question 11

To construct an aggregate demand curve,one must assume that

Accepted Answer

A)  the quantity of money is fixed. 
B)  the price level is fixed. 
C)  interest rates are fixed. 
D)  real output is fixed. 
E)  aggregate supply is fixed. 
A)  the quantity of money is fixed. 
B)  the price level is fixed. 
C)  interest rates are fixed. 
D)  real output is fixed. 
E)  aggregate supply is fixed.

Question 12

The unemployment of anthracite coal miners following the conversion of home heating to oil and gas is an example of

Accepted Answer

A)  underemployment. 
B)  cyclical unemployment. 
C)  structural unemployment. 
D)  frictional unemployment. 
E)  unemployment caused by the short-run tradeoff between inflation and unemployment. 
A)  underemployment. 
B)  cyclical unemployment. 
C)  structural unemployment. 
D)  frictional unemployment. 
E)  unemployment caused by the short-run tradeoff between inflation and unemployment.

Question 13

Unemployment can result in substantial economic costs since

Accepted Answer

A)  unemployed people lose their self-esteem. 
B)  society's potential output becomes more expensive to distribute. 
C)  employed people have to work harder to compensate for those who are not working. 
D)  actual output is below potential output. 
E)  idle machinery must have its life span lengthened. 
A)  unemployed people lose their self-esteem. 
B)  society's potential output becomes more expensive to distribute. 
C)  employed people have to work harder to compensate for those who are not working. 
D)  actual output is below potential output. 
E)  idle machinery must have its life span lengthened.

Question 14

The labor force consists of

Accepted Answer

A)  those who are employed or actively seeking employment. 
B)  the entire population over 16 years of age. 
C)  only those who have full-time military or civilian jobs. 
D)  both those who have given up looking for work and those actively seeking work. 
E)  the difference between the total population and those who are unemployed. 
A)  those who are employed or actively seeking employment. 
B)  the entire population over 16 years of age. 
C)  only those who have full-time military or civilian jobs. 
D)  both those who have given up looking for work and those actively seeking work. 
E)  the difference between the total population and those who are unemployed.

Question 15

Since 1962,real GDP in the United States has

Accepted Answer

A)  grown steadily. 
B)  fluctuated. 
C)  not changed in per capita terms. 
D)  been consistently above potential GDP. 
E)  been subject to increasingly severe depressions. 
A)  grown steadily. 
B)  fluctuated. 
C)  not changed in per capita terms. 
D)  been consistently above potential GDP. 
E)  been subject to increasingly severe depressions.

Question 16

According to U.S.government figures,an unemployed person is one who

Accepted Answer

A)  has given up looking for a job. 
B)  only works part-time. 
C)  is actively seeking a job. 
D)  cannot be a member of the labor force. 
E)  works at jobs below his or her skills or abilities. 
A)  has given up looking for a job. 
B)  only works part-time. 
C)  is actively seeking a job. 
D)  cannot be a member of the labor force. 
E)  works at jobs below his or her skills or abilities.

Question 17

People temporarily out of work because they are changing jobs or looking for their first 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 18

A significant problem with U.S.unemployment figures is that they

Accepted Answer

A)  exclude people who are under 16 and actively looking for work. 
B)  change monthly, making measurement of the unemployment rate impossible. 
C)  exclude those who are self-employed. 
D)  are based on a selected sample of the population and miss counting large numbers of employed people. 
E)  do not indicate those who are underemployed or who have given up looking for work. 
A)  exclude people who are under 16 and actively looking for work. 
B)  change monthly, making measurement of the unemployment rate impossible. 
C)  exclude those who are self-employed. 
D)  are based on a selected sample of the population and miss counting large numbers of employed people. 
E)  do not indicate those who are underemployed or who have given up looking for work.

Question 19

The following question are based on the following diagram:
  
-Full employment of the economy's resources occurs when

Accepted Answer

A)  the price level drops below 200. 
B)  the price level is 200. 
C)  real output is $1,500 billion. 
D)  real output is $3,000 billion. 
E)  aggregate demand equals aggregate supply. 
A)  the price level drops below 200. 
B)  the price level is 200. 
C)  real output is $1,500 billion. 
D)  real output is $3,000 billion. 
E)  aggregate demand equals aggregate supply.

Question 20

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:
  
-The Great Depression is 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.

Exam 16: Business Fluctuations and Unemployment

The costs of unemployment

The statement "supply creates its own demand" is often referred to as

While much of the U.S.business world was struggling with the problems of the Great Depression and clinging to the classical view that the country's economic problems would rectify themselves,John Maynard Keynes felt that the way out of the depression was to

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

The three generally recognized types of unemployment are

The phase of the business cycle in which output is highest relative to its potential level is the

If the money supply is fixed,decreases in the price level

In the U.S.economy,each percentage point change in the unemployment rate is equivalent to ________ million people.

In the classical model,achieving a full-employment level of output

The business cycle

To construct an aggregate demand curve,one must assume that

The unemployment of anthracite coal miners following the conversion of home heating to oil and gas is an example of

Unemployment can result in substantial economic costs since

The labor force consists of

Since 1962,real GDP in the United States has

According to U.S.government figures,an unemployed person is one who

People temporarily out of work because they are changing jobs or looking for their first jobs are examples of ________ unemployment.

A significant problem with U.S.unemployment figures is that they

The following question are based on the following diagram: -Full employment of the economy's resources occurs when

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: -The Great Depression is best illustrated by diagram

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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