Question 1

Which of the following explains why frictional unemployment exists?

Accepted Answer

A) Some workers have skills that have become obsolete. 
B) There are individuals who work part-time but prefer to work full-time. 
C) There are costs associated with searching for jobs. 
D) Policy makers have been unable to prevent recessions. 
A) Some workers have skills that have become obsolete. 
B) There are individuals who work part-time but prefer to work full-time. 
C) There are costs associated with searching for jobs. 
D) Policy makers have been unable to prevent recessions.

Question 2

Environmental regulation reduces the demand for West Virginia coal and the unemployment rate in West Virginia increases. This is an example of

Accepted Answer

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

Question 3

How much should a bank charge for a loan, if the anticipated inflation rate is 4 percent, and the bank wants to earn 3 percent on this $1,000,000 loan?

Accepted Answer

A) $30,000 
B) $40,000 
C) 7 percent 
D) 1 percent 
A) $30,000 
B) $40,000 
C) 7 percent 
D) 1 percent

Question 4

The broadest indication of economy-wide inflation is captured by the

Accepted Answer

A) Consumer Price Index. 
B) Gross Domestic Product (GDP)deflator. 
C) Producer Price Index. 
D) Personal Consumption Expenditure Index. 
A) Consumer Price Index. 
B) Gross Domestic Product (GDP)deflator. 
C) Producer Price Index. 
D) Personal Consumption Expenditure Index.

Question 5

Business fluctuations

Accepted Answer

A) influence unemployment but not inflation. 
B) influence inflation but not unemployment. 
C) can influence inflation and unemployment. 
D) have no influence on inflation and unemployment. 
A) influence unemployment but not inflation. 
B) influence inflation but not unemployment. 
C) can influence inflation and unemployment. 
D) have no influence on inflation and unemployment.

Question 6

Unemployment that is caused by business recessions is called

Accepted Answer

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

Question 7

Fully anticipated inflation occurs when

Accepted Answer

A) the actual inflation rate equals the anticipated inflation rate. 
B) the actual inflation rate is less than the anticipated inflation rate. 
C) the inflation rate is zero. 
D) the anticipated inflation rate and the unanticipated inflation rate are equal. 
A) the actual inflation rate equals the anticipated inflation rate. 
B) the actual inflation rate is less than the anticipated inflation rate. 
C) the inflation rate is zero. 
D) the anticipated inflation rate and the unanticipated inflation rate are equal.

Question 8

A recession may be defined as

Accepted Answer

A) a period during which the rate of growth of business activity is consistently less than its long-term trend. 
B) an increase in real economic output from one period to the next. 
C) no change in real economic output over a period of time. 
D) no change in the dollar (money)value of economic output over a period of time. 
A) a period during which the rate of growth of business activity is consistently less than its long-term trend. 
B) an increase in real economic output from one period to the next. 
C) no change in real economic output over a period of time. 
D) no change in the dollar (money)value of economic output over a period of time.

Question 9

Considering the data in the table shown above and 2010 as the base year, what is the inflation rate between years 2010 and 2015?

Accepted Answer

A) 0.0 percent 
B) 41.7 percent 
C) 17.1 percent 
D) 3.4 percent 
A) 0.0 percent 
B) 41.7 percent 
C) 17.1 percent 
D) 3.4 percent

Question 10

To prevent frictional unemployment, we would have to

Accepted Answer

A) make sure that market demand for goods is stable over time. 
B) eliminate the business cycle. 
C) prevent people from leaving their jobs before finding another job. 
D) make sure everyone went to college. 
A) make sure that market demand for goods is stable over time. 
B) eliminate the business cycle. 
C) prevent people from leaving their jobs before finding another job. 
D) make sure everyone went to college.

Question 11

Which one of the following statements is TRUE?

Accepted Answer

A) The existence of unemployment places the economy at a point inside its production possibilities curve. 
B) The unemployment rate is the percentage of the population not working. 
C) To be counted as part of the labor force, an individual must be working more than 40 hours a week. 
D) The sum of wages lost by all unemployed workers gives an accurate, comprehensive estimate of the total cost of unemployment. 
A) The existence of unemployment places the economy at a point inside its production possibilities curve. 
B) The unemployment rate is the percentage of the population not working. 
C) To be counted as part of the labor force, an individual must be working more than 40 hours a week. 
D) The sum of wages lost by all unemployed workers gives an accurate, comprehensive estimate of the total cost of unemployment.

Question 12

In 2015, the price for a market basket of consumer goods is $1,600. In the base year, the cost of the identical market basket was $1,000. The price index in this case is

Accepted Answer

A) 16.0. 
B) 130.0. 
C) 200.0. 
D) 160.0. 
A) 16.0. 
B) 130.0. 
C) 200.0. 
D) 160.0.

Question 13

Seasonal unemployment is

Accepted Answer

A) due to the fact that workers must search for appropriate job offers. 
B) a result of a poor match of worker's abilities and skills with current requirements of employers. 
C) a result of business recessions that occur when aggregate demand is insufficient to create full employment. 
D) a result of the seasonal pattern of work in specific industries. 
A) due to the fact that workers must search for appropriate job offers. 
B) a result of a poor match of worker's abilities and skills with current requirements of employers. 
C) a result of business recessions that occur when aggregate demand is insufficient to create full employment. 
D) a result of the seasonal pattern of work in specific industries.

Question 14

What is a price index?
 How do the CPI, the PPI, the PCE Index and the GDP deflator differ?

Accepted Answer

A price index is the cost of today's mar

Question 15

In a small country, the adult population equals 10,000. There are 3,000 people unemployed and 4,000 people are employed. The labor force participation rate equals

Accepted Answer

A) 70 percent. 
B) 57 percent. 
C) 40 percent. 
D) an undetermined amount given the lack of information. 
A) 70 percent. 
B) 57 percent. 
C) 40 percent. 
D) an undetermined amount given the lack of information.

Question 16

The purchasing power of the dollar

Accepted Answer

A) increases as the price of basic goods and services increases. 
B) is the amount of goods and services that can be purchased with the dollar. 
C) has been rising in the United States since 1945. 
D) has remained unchanged in the last 20 years. 
A) increases as the price of basic goods and services increases. 
B) is the amount of goods and services that can be purchased with the dollar. 
C) has been rising in the United States since 1945. 
D) has remained unchanged in the last 20 years.

Question 17

Over the last 100 years in the United States, unemployment reached its highest rate

Accepted Answer

A) in the 1920s. 
B) in the 1930s. 
C) in the 1970s. 
D) in the 1980s. 
A) in the 1920s. 
B) in the 1930s. 
C) in the 1970s. 
D) in the 1980s.

Question 18

Suppose that last week 100,000 people lost their jobs or quit. We can say that

Accepted Answer

A) the number of unemployed increased by 100,000 people. 
B) the number of unemployed increased by less than 100,000 people because we should not count those who quit their jobs. 
C) the 100,000 people represent a flow known as job departures. 
D) the 100,000 people represent a stock known as the new unemployed. 
A) the number of unemployed increased by 100,000 people. 
B) the number of unemployed increased by less than 100,000 people because we should not count those who quit their jobs. 
C) the 100,000 people represent a flow known as job departures. 
D) the 100,000 people represent a stock known as the new unemployed.

Question 19

-According to the above table, in the base period (Year 1), the price index is

Accepted Answer

A) 100. 
B) 213.3. 
C) 46.9. 
D) 180. 
A) 100. 
B) 213.3. 
C) 46.9. 
D) 180.

Question 20

The Consumer Price Index measures

Accepted Answer

A) the average of raw material prices paid by producing firms. 
B) the level of prices with respect to goods and services purchased by a typical consumer in urban areas. 
C) the average of the prices of all goods produced in a country and goods imported from other countries. 
D) hourly wage rates of manufacturing workers. 
A) the average of raw material prices paid by producing firms. 
B) the level of prices with respect to goods and services purchased by a typical consumer in urban areas. 
C) the average of the prices of all goods produced in a country and goods imported from other countries. 
D) hourly wage rates of manufacturing workers.

Which of the following explains why frictional unemployment exists?

Environmental regulation reduces the demand for West Virginia coal and the unemployment rate in West Virginia increases. This is an example of

How much should a bank charge for a loan, if the anticipated inflation rate is 4 percent, and the bank wants to earn 3 percent on this $1,000,000 loan?

The broadest indication of economy-wide inflation is captured by the

Business fluctuations

Unemployment that is caused by business recessions is called

Fully anticipated inflation occurs when

A recession may be defined as

Considering the data in the table shown above and 2010 as the base year, what is the inflation rate between years 2010 and 2015?

To prevent frictional unemployment, we would have to

Which one of the following statements is TRUE?

In 2015, the price for a market basket of consumer goods is $1,600. In the base year, the cost of the identical market basket was $1,000. The price index in this case is

Seasonal unemployment is

What is a price index? How do the CPI, the PPI, the PCE Index and the GDP deflator differ?

In a small country, the adult population equals 10,000. There are 3,000 people unemployed and 4,000 people are employed. The labor force participation rate equals

The purchasing power of the dollar

Over the last 100 years in the United States, unemployment reached its highest rate

Suppose that last week 100,000 people lost their jobs or quit. We can say that

-According to the above table, in the base period (Year 1), the price index is

The Consumer Price Index measures

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 7: The Macroeconomy: Unemployment, Inflation, and Deflation

Which of the following explains why frictional unemployment exists?

Environmental regulation reduces the demand for West Virginia coal and the unemployment rate in West Virginia increases. This is an example of

How much should a bank charge for a loan, if the anticipated inflation rate is 4 percent, and the bank wants to earn 3 percent on this $1,000,000 loan?

The broadest indication of economy-wide inflation is captured by the

Business fluctuations

Unemployment that is caused by business recessions is called

Fully anticipated inflation occurs when

A recession may be defined as

Considering the data in the table shown above and 2010 as the base year, what is the inflation rate between years 2010 and 2015?

To prevent frictional unemployment, we would have to

Which one of the following statements is TRUE?

In 2015, the price for a market basket of consumer goods is $1,600. In the base year, the cost of the identical market basket was $1,000. The price index in this case is

Seasonal unemployment is

What is a price index? How do the CPI, the PPI, the PCE Index and the GDP deflator differ?

In a small country, the adult population equals 10,000. There are 3,000 people unemployed and 4,000 people are employed. The labor force participation rate equals

The purchasing power of the dollar

Over the last 100 years in the United States, unemployment reached its highest rate

Suppose that last week 100,000 people lost their jobs or quit. We can say that

-According to the above table, in the base period (Year 1), the price index is

The Consumer Price Index measures

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters