Question 1

Higher unemployment insurance benefits tend to increase unemployment because they

Accepted Answer

A) reduce the opportunity cost of job search and,hence,increase the search time. 
B) increase the opportunity cost of job search and,hence,increase the search time. 
C) reduce the opportunity cost of job search and,hence,decrease the search time. 
D) increase the opportunity cost of job search and,hence,decrease the search time. 
A) reduce the opportunity cost of job search and,hence,increase the search time. 
B) increase the opportunity cost of job search and,hence,increase the search time. 
C) reduce the opportunity cost of job search and,hence,decrease the search time. 
D) increase the opportunity cost of job search and,hence,decrease the search time.

Question 2

During the last several decades the labor force participation rate

Accepted Answer

A) of women has increased substantially. 
B) of men has increased substantially. 
C) of women has steadily declined. 
D) of both men and women has steadily declined. 
A) of women has increased substantially. 
B) of men has increased substantially. 
C) of women has steadily declined. 
D) of both men and women has steadily declined.

Question 3

The actual rate of unemployment will generally

Accepted Answer

A) increase as an economy enters a boom. 
B) decrease as an economy enters a boom. 
C) exceed the natural rate of unemployment during a boom. 
D) do both a and c. 
A) increase as an economy enters a boom. 
B) decrease as an economy enters a boom. 
C) exceed the natural rate of unemployment during a boom. 
D) do both a and c.

Question 4

If a system of personal savings accounts replaced the current unemployment insurance program,the incentive for unemployed workers to

Accepted Answer

A) switch occupations would decrease. 
B) continue searching for a job would decrease. 
C) turn down available jobs would increase. 
D) move to a new location would decrease. 
A) switch occupations would decrease. 
B) continue searching for a job would decrease. 
C) turn down available jobs would increase. 
D) move to a new location would decrease.

Question 5

The type of unemployment resulting from the fact that labor market information is less than perfect is called

Accepted Answer

A) frictional unemployment. 
B) natural unemployment. 
C) cyclical unemployment. 
D) structural unemployment. 
A) frictional unemployment. 
B) natural unemployment. 
C) cyclical unemployment. 
D) structural unemployment.

Question 6

Jamal (now age 54)lost his job.He has very specialized skills that are no longer in demand.Jamal's unemployment is best classified as

Accepted Answer

A) cyclical. 
B) structural. 
C) seasonal. 
D) frictional. 
E) voluntary. 
A) cyclical. 
B) structural. 
C) seasonal. 
D) frictional. 
E) voluntary.

Question 7

During an economic boom,

Accepted Answer

A) the actual rate of unemployment will exceed the natural rate of unemployment. 
B) the output of the economy will exceed its long-run potential output. 
C) widespread unemployment will cause inflation to increase. 
D) the actual rate of unemployment will equal the natural rate of unemployment. 
A) the actual rate of unemployment will exceed the natural rate of unemployment. 
B) the output of the economy will exceed its long-run potential output. 
C) widespread unemployment will cause inflation to increase. 
D) the actual rate of unemployment will equal the natural rate of unemployment.

Question 8

Actual GDP will be below potential GDP

Accepted Answer

A) when the economy is at full employment. 
B) during an economic boom. 
C) when resources are fully utilized. 
D) during a recession. 
A) when the economy is at full employment. 
B) during an economic boom. 
C) when resources are fully utilized. 
D) during a recession.

Question 9

After a particular loan has been paid off,neither the borrower nor the lender has lost purchasing power.Therefore,it must be true that actual inflation was

Accepted Answer

A) greater than expected inflation. 
B) equal to expected inflation. 
C) less than expected inflation. 
D) greater than the nominal rate of interest. 
A) greater than expected inflation. 
B) equal to expected inflation. 
C) less than expected inflation. 
D) greater than the nominal rate of interest.

Question 10

Use the data below to answer the following question(s).
Table 8-2
  
-Refer to Table 8-2.What is the labor force participation rate of the economy?

Accepted Answer

A) 70 percent 
B) 76 percent 
C) 80 percent 
D) 95 percent 
A) 70 percent 
B) 76 percent 
C) 80 percent 
D) 95 percent

Question 11

Teenage unemployment is substantially higher than unemployment among prime-age workers because teenagers

Accepted Answer

A) are more likely to switch jobs and move into and out of the labor force. 
B) are less likely to be in the labor force than are older workers since many teenagers are still in school. 
C) are more likely to be in the armed forces,therefore,they're counted as unemployed. 
D) generally think they can find jobs that are available only to experienced,highly skilled workers if they just search diligently enough. 
A) are more likely to switch jobs and move into and out of the labor force. 
B) are less likely to be in the labor force than are older workers since many teenagers are still in school. 
C) are more likely to be in the armed forces,therefore,they're counted as unemployed. 
D) generally think they can find jobs that are available only to experienced,highly skilled workers if they just search diligently enough.

Question 12

When information about potential jobs is costly to acquire and individuals must spend time searching for jobs,which type of unemployment will result?

Accepted Answer

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

Question 13

Suppose an economy is operating at its maximum sustainable output rate.Neither recession nor economic boom are present.Which of the following would be true?

Accepted Answer

A) The economy would be considered at full employment. 
B) Actual GDP would exceed potential GDP. 
C) Actual unemployment will be less than the natural rate of unemployment. 
D) One hundred percent of the labor force is employed. 
A) The economy would be considered at full employment. 
B) Actual GDP would exceed potential GDP. 
C) Actual unemployment will be less than the natural rate of unemployment. 
D) One hundred percent of the labor force is employed.

Question 14

Althea,a brilliant new Ph.D.in economics,has turned down many job offers because she hopes eventually to teach at one of the top 10 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 15

The best definition of inflation is

Accepted Answer

A) a temporary increase in prices. 
B) an increase in the price of one important commodity such as food. 
C) a persistent increase in the general level of prices as measured by a price index. 
D) an increase in the purchasing power of the dollar. 
A) a temporary increase in prices. 
B) an increase in the price of one important commodity such as food. 
C) a persistent increase in the general level of prices as measured by a price index. 
D) an increase in the purchasing power of the dollar.

Question 16

Use the data below to answer the following question(s).
Table 8-2
  
-Refer to Table 8-2.What is the unemployment rate of the economy?

Accepted Answer

A) 4 percent 
B) 5 percent 
C) 5.3 percent 
D) 7.1 percent 
A) 4 percent 
B) 5 percent 
C) 5.3 percent 
D) 7.1 percent

Question 17

Which of the following is true?

Accepted Answer

A) The unemployment rates of the major European economies have been lower than that of the United States during the last decade. 
B) Compared to the U.S. ,European labor markets are characterized by less extensive regulation and less generous unemployment benefits. 
C) High unemployment rates over lengthy time periods are indicative of structural factors that are adversely affecting the natural rate of unemployment. 
D) The natural rate of unemployment decreases when youthful workers expand as a proportion of the workforce. 
A) The unemployment rates of the major European economies have been lower than that of the United States during the last decade. 
B) Compared to the U.S. ,European labor markets are characterized by less extensive regulation and less generous unemployment benefits. 
C) High unemployment rates over lengthy time periods are indicative of structural factors that are adversely affecting the natural rate of unemployment. 
D) The natural rate of unemployment decreases when youthful workers expand as a proportion of the workforce.

Question 18

Which of the following is true?

Accepted Answer

A) Frictional unemployment implies a lack of available jobs. 
B) During a recession,cyclical unemployment will be low. 
C) When an economy is at full employment,actual unemployment will be less than the natural rate of unemployment. 
D) When actual GDP equals potential GDP,the actual unemployment rate will equal the economy's natural rate of unemployment. 
A) Frictional unemployment implies a lack of available jobs. 
B) During a recession,cyclical unemployment will be low. 
C) When an economy is at full employment,actual unemployment will be less than the natural rate of unemployment. 
D) When actual GDP equals potential GDP,the actual unemployment rate will equal the economy's natural rate of unemployment.

Question 19

In 2003,the number of persons employed in the U.S.was 137.7 million,while the number unemployed was 8.8 million.The U.S.unemployment rate during the year was

Accepted Answer

A) 4.0 percent. 
B) 5.0 percent. 
C) 6.0 percent 
D) 6.4 percent. 
A) 4.0 percent. 
B) 5.0 percent. 
C) 6.0 percent 
D) 6.4 percent.

Question 20

John has been without a job for 12 months and quit searching for work about three months ago.The Bureau of Labor Statistics would classify John as

Accepted Answer

A) employed. 
B) unemployed. 
C) not part of the labor force. 
D) on layoff. 
A) employed. 
B) unemployed. 
C) not part of the labor force. 
D) on layoff.

Exam 8: Economic Fluctuations, unemployment, and Inflation

Higher unemployment insurance benefits tend to increase unemployment because they

During the last several decades the labor force participation rate

The actual rate of unemployment will generally

If a system of personal savings accounts replaced the current unemployment insurance program,the incentive for unemployed workers to

The type of unemployment resulting from the fact that labor market information is less than perfect is called

Jamal (now age 54)lost his job.He has very specialized skills that are no longer in demand.Jamal's unemployment is best classified as

During an economic boom,

Actual GDP will be below potential GDP

After a particular loan has been paid off,neither the borrower nor the lender has lost purchasing power.Therefore,it must be true that actual inflation was

Use the data below to answer the following question(s). Table 8-2 -Refer to Table 8-2.What is the labor force participation rate of the economy?

Teenage unemployment is substantially higher than unemployment among prime-age workers because teenagers

When information about potential jobs is costly to acquire and individuals must spend time searching for jobs,which type of unemployment will result?

Suppose an economy is operating at its maximum sustainable output rate.Neither recession nor economic boom are present.Which of the following would be true?

Althea,a brilliant new Ph.D.in economics,has turned down many job offers because she hopes eventually to teach at one of the top 10 universities in her field.The type of unemployment she is experiencing is

The best definition of inflation is

Use the data below to answer the following question(s). Table 8-2 -Refer to Table 8-2.What is the unemployment rate of the economy?

Which of the following is true?

Which of the following is true?

In 2003,the number of persons employed in the U.S.was 137.7 million,while the number unemployed was 8.8 million.The U.S.unemployment rate during the year was

John has been without a job for 12 months and quit searching for work about three months ago.The Bureau of Labor Statistics would classify John as

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Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney 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

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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