Question 1

The purchasing power of one dollar is equal to _____.

Accepted Answer

A)  real GDP divided by nominal GDP 
B)  nominal GDP divided by real GDP 
C)  1 minus the average price level 
D)  the reciprocal of the average price level 
E)  the implicit GDP deflator divided by the CPI 
A)  real GDP divided by nominal GDP 
B)  nominal GDP divided by real GDP 
C)  1 minus the average price level 
D)  the reciprocal of the average price level 
E)  the implicit GDP deflator divided by the CPI

Question 2

Structural unemployment will decline if:

Accepted Answer

A)  more seasonal work becomes available. 
B)  the government increases taxes to support more welfare programs. 
C)  consumer spending on new technology decreases. 
D)  computerized job-search systems are improved. 
E)  retrained workers can move to areas where new jobs are available. 
A)  more seasonal work becomes available. 
B)  the government increases taxes to support more welfare programs. 
C)  consumer spending on new technology decreases. 
D)  computerized job-search systems are improved. 
E)  retrained workers can move to areas where new jobs are available.

Question 3

A recent economics graduate is looking for a position as an industrial economist. During the period this individual starts looking for a job and ultimately finds one, he may be classified as:

Accepted Answer

A)  seasonally unemployed. 
B)  frictionally unemployed. 
C)  cyclically unemployed. 
D)  structurally unemployed. 
E)  occasionally unemployed. 
A)  seasonally unemployed. 
B)  frictionally unemployed. 
C)  cyclically unemployed. 
D)  structurally unemployed. 
E)  occasionally unemployed.

Question 4

Which of the following led to an introduction of a new currency in Argentina in the mid 1980s?

Accepted Answer

A)  An economic depression 
B)  A misguided political situation 
C)  Social instability 
D)  Hyperinflation 
E)  A prolonged deflation 
A)  An economic depression 
B)  A misguided political situation 
C)  Social instability 
D)  Hyperinflation 
E)  A prolonged deflation

Question 5

Rapid increases in military spending by the federal government without accompanying increases in real output could be a cause of cost-push inflation.

Accepted Answer

A) True 
 B)False

Question 6

Unexpected inflation redistributes income:

Accepted Answer

A)  away from workers with cost-of-living adjustments, benefiting employers. 
B)  away from renters, benefiting landlords. 
C)  away from poor people, benefiting the rich. 
D)  away from people with fixed incomes, benefiting people with fixed costs. 
E)  away from debtors, benefiting creditors. 
A)  away from workers with cost-of-living adjustments, benefiting employers. 
B)  away from renters, benefiting landlords. 
C)  away from poor people, benefiting the rich. 
D)  away from people with fixed incomes, benefiting people with fixed costs. 
E)  away from debtors, benefiting creditors.

Question 7

Scenario 7.1?Of 1,350 people surveyed, 318 are not working.?The status of those not working is as follows:?122 full-time students?29 discouraged workers?18 in long-term-care facilities?21 seeking employment and aged 16 or older?50 retirees?63 under age 16
15 working in the underground economy and not looking for a "real" job?Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. According to the data provided, the number of people officially in the labor force is:

Accepted Answer

A)  1,053. 
B)  1,350. 
C)  1,032. 
D)  1,045. 
E)  1,011. 
A)  1,053. 
B)  1,350. 
C)  1,032. 
D)  1,045. 
E)  1,011.

Question 8

Because there is no way to account for them, the official unemployment rate does not include discouraged workers. What would happen to the unemployment rate if, because of a program that gave them new hope, all discouraged workers suddenly begin reporting themselves as ready to work?

Accepted Answer

A)  The official unemployment rate would remain unchanged. 
B)  The size of the labor force would increase. 
C)  The size of the labor force would remain unchanged. 
D)  The official unemployment rate would decrease. 
E)  The size of the underground economy would shrink. 
A)  The official unemployment rate would remain unchanged. 
B)  The size of the labor force would increase. 
C)  The size of the labor force would remain unchanged. 
D)  The official unemployment rate would decrease. 
E)  The size of the underground economy would shrink.

Question 9

The GDP gap tends to increase when the economy shifts into recession.

Accepted Answer

A) True 
 B)False

Question 10

An increase in stock prices can be considered as an increase in:

Accepted Answer

A)  a leading indicator. 
B)  a coincident indicator. 
C)  the consumer price index. 
D)  the consumer leverage ratio. 
E)  a lagging indicator. 
A)  a leading indicator. 
B)  a coincident indicator. 
C)  the consumer price index. 
D)  the consumer leverage ratio. 
E)  a lagging indicator.

Question 11

According to the labor statistics of the United States, the _____ reported the highest unemployment rate between 1960 and 2008.

Accepted Answer

A)  Whites 
B)  Asians 
C)  African Americans 
D)  Hispanics 
E)  Latinos 
A)  Whites 
B)  Asians 
C)  African Americans 
D)  Hispanics 
E)  Latinos

Question 12

During periods of inflation:

Accepted Answer

A)  everyone's real income rises. 
B)  those people who have fixed incomes benefit. 
C)  those people whose nominal income rises faster than the general price level benefit. 
D)  those people who enter long-term wage agreements benefit. 
E)  those people who hold a lot of cash benefit. 
A)  everyone's real income rises. 
B)  those people who have fixed incomes benefit. 
C)  those people whose nominal income rises faster than the general price level benefit. 
D)  those people who enter long-term wage agreements benefit. 
E)  those people who hold a lot of cash benefit.

Question 13

Which of the following statements about frictional unemployment is true?

Accepted Answer

A)  It can be eliminated only in a free society. 
B)  It is a long-term unemployment. 
C)  It does not exist in developed economies. 
D)  It is also called structural unemployment. 
E)  It arises when people choose to change jobs. 
A)  It can be eliminated only in a free society. 
B)  It is a long-term unemployment. 
C)  It does not exist in developed economies. 
D)  It is also called structural unemployment. 
E)  It arises when people choose to change jobs.

Question 14

When there is an upward rise in the volume of economic activity, the economy is said to be in a recession.

Accepted Answer

A) True 
 B)False

Question 15

Other things equal, as the number of discouraged workers rises in an economy, the gap between potential and actual real GDP will widen.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is the closest example of structural unemployment?

Accepted Answer

A)  An accountant quitting her job to become an investment banker 
B)  An auto worker being fired for poor job performance 
C)  Workers in a firm manufacturing films for roll film cameras losing jobs due to the popularity of digital cameras 
D)  A consultant being laid off because poor economic conditions have depressed the market for consultants 
E)  A college graduate seeking his/her first job in the IT industry 
A)  An accountant quitting her job to become an investment banker 
B)  An auto worker being fired for poor job performance 
C)  Workers in a firm manufacturing films for roll film cameras losing jobs due to the popularity of digital cameras 
D)  A consultant being laid off because poor economic conditions have depressed the market for consultants 
E)  A college graduate seeking his/her first job in the IT industry

Question 17

The table given below reports the consumer price index in a country for four different years.
  
-Refer to Table 7.1. If a bicycle used to cost $90 in 1990, what did it cost in 2003 based on the inflation rate (rounded to the first decimal place)?

Accepted Answer

A)  $115.7 
B)  $118.1 
C)  $101.6 
D)  $130.5 
E)  $79.8 
A)  $115.7 
B)  $118.1 
C)  $101.6 
D)  $130.5 
E)  $79.8

Question 18

Which of the following is most likely to result if the Congress passes the living wage law?

Accepted Answer

A)  Cost-push inflation 
B)  Demand-pull inflation 
C)  Deflation 
D)  Recession 
E)  Stagnation 
A)  Cost-push inflation 
B)  Demand-pull inflation 
C)  Deflation 
D)  Recession 
E)  Stagnation

Question 19

The table given below lists the average price level in a country for four consecutive years.
  
-Refer to Table 7.2. Between 1993 and 1994, the annual inflation rate was _____ percent.

Accepted Answer

A)  2.4 
B)  2.7 
C)  3.8 
D)  6.0 
E)  8.5 
A)  2.4 
B)  2.7 
C)  3.8 
D)  6.0 
E)  8.5

Question 20

Technological advancements cause structural unemployment. However, they help in:

Accepted Answer

A)  lowering the rate of interest in the economy. 
B)  increasing the price level in the economy and hence make business more profitable for the firms. 
C)  improving living standards by giving consumers a greater variety of goods at lower costs. 
D)  raising government's tax revenue. 
E)  raising the aggregate income in the economy. 
A)  lowering the rate of interest in the economy. 
B)  increasing the price level in the economy and hence make business more profitable for the firms. 
C)  improving living standards by giving consumers a greater variety of goods at lower costs. 
D)  raising government's tax revenue. 
E)  raising the aggregate income in the economy.

The purchasing power of one dollar is equal to _____.

Structural unemployment will decline if:

A recent economics graduate is looking for a position as an industrial economist. During the period this individual starts looking for a job and ultimately finds one, he may be classified as:

Which of the following led to an introduction of a new currency in Argentina in the mid 1980s?

Rapid increases in military spending by the federal government without accompanying increases in real output could be a cause of cost-push inflation.

Unexpected inflation redistributes income:

Because there is no way to account for them, the official unemployment rate does not include discouraged workers. What would happen to the unemployment rate if, because of a program that gave them new hope, all discouraged workers suddenly begin reporting themselves as ready to work?

The GDP gap tends to increase when the economy shifts into recession.

An increase in stock prices can be considered as an increase in:

According to the labor statistics of the United States, the _____ reported the highest unemployment rate between 1960 and 2008.

During periods of inflation:

Which of the following statements about frictional unemployment is true?

When there is an upward rise in the volume of economic activity, the economy is said to be in a recession.

Other things equal, as the number of discouraged workers rises in an economy, the gap between potential and actual real GDP will widen.

Which of the following is the closest example of structural unemployment?

The table given below reports the consumer price index in a country for four different years. -Refer to Table 7.1. If a bicycle used to cost $90 in 1990, what did it cost in 2003 based on the inflation rate (rounded to the first decimal place)?

Which of the following is most likely to result if the Congress passes the living wage law?

The table given below lists the average price level in a country for four consecutive years. -Refer to Table 7.2. Between 1993 and 1994, the annual inflation rate was _____ percent.

Technological advancements cause structural unemployment. However, they help in:

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

Filters

Exam 7: Unemployment and Inflation

The purchasing power of one dollar is equal to _____.

Structural unemployment will decline if:

A recent economics graduate is looking for a position as an industrial economist. During the period this individual starts looking for a job and ultimately finds one, he may be classified as:

Which of the following led to an introduction of a new currency in Argentina in the mid 1980s?

Rapid increases in military spending by the federal government without accompanying increases in real output could be a cause of cost-push inflation.

Unexpected inflation redistributes income:

Because there is no way to account for them, the official unemployment rate does not include discouraged workers. What would happen to the unemployment rate if, because of a program that gave them new hope, all discouraged workers suddenly begin reporting themselves as ready to work?

The GDP gap tends to increase when the economy shifts into recession.

An increase in stock prices can be considered as an increase in:

According to the labor statistics of the United States, the _____ reported the highest unemployment rate between 1960 and 2008.

During periods of inflation:

Which of the following statements about frictional unemployment is true?

When there is an upward rise in the volume of economic activity, the economy is said to be in a recession.

Other things equal, as the number of discouraged workers rises in an economy, the gap between potential and actual real GDP will widen.

Which of the following is the closest example of structural unemployment?

The table given below reports the consumer price index in a country for four different years. -Refer to Table 7.1. If a bicycle used to cost $90 in 1990, what did it cost in 2003 based on the inflation rate (rounded to the first decimal place)?

Which of the following is most likely to result if the Congress passes the living wage law?

The table given below lists the average price level in a country for four consecutive years. -Refer to Table 7.2. Between 1993 and 1994, the annual inflation rate was _____ percent.

Technological advancements cause structural unemployment. However, they help in:

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

Filters