Exam 11: The Business Cycle, Unemployment, and Inflation

The Big Mac Index shows the price of a Big Mac in different countries, stated in that country's currency.

The natural rate of unemployment would decline if

______ are variables that change before the real GDP changes, and thus give a signal when a turning point in the economy may occur.

Cyclical unemployment is fluctuating unemployment that coincides with the

What caused the collapse of the German economy after World War I?

Most economists believe that a change in the stock of capital goods is the immediate determinant of domestic output and employment.

If the U.S. economy encounters a recession, which industry would likely reduce output by the smallest proportion?

High unemployment rates in Europe are believed to be due to all of the following government practices except

Some part-time workers work less than a full week because they cannot find a suitable full-time job. Therefore, the official unemployment statistics tend to overestimate the extent of unemployment in the economy.

Investors criticize the federal income tax system because they must pay taxes

The economist's notion of full employment is the

The unemployment rate is the number of people unemployed divided by the total population of the nation.

In 1985, the U.S. government indexed the federal personal income tax system. With indexing, households are pushed into a higher tax bracket only if their nominal income

A decline in total spending in the economy leads to

Jim lost his job as a pipefitter and he was unable to find another job. He gave up looking for a job and now he spends his days watching poker tournament reruns on television. The U.S. Department of Labor considers Jim to be

The Consumer Price Index

The leading economic indicators are variables, such as the money supply and building permits, that change before the real GDP changes, and thus signal when a turning point in the economy may occur.

Inflation occurs when

The purchases of which of the following goods is most sensitive to the business cycle?

The actual degree of unemployment in the economy tends to be underestimated by the official unemployment rate because it