Question 1

Under which one of the following situations would you be better off?

Accepted Answer

A) You have $10,000 in your savings account paying 5 percent per year and unanticipated inflation is 8 percent per year. 
B) You have paid $500 for a $1,000 U.S. savings bond that matures in 10 years and unanticipated inflation is 10 percent per year. 
C) You lend a friend $1,000 at 6 percent to be repaid in one year and unanticipated inflation is 7 percent during the year. 
D) You borrowed $2,500 at 7 percent to pay for this year's college expenses and unanticipated inflation is 12 percent during the year. 
A) You have $10,000 in your savings account paying 5 percent per year and unanticipated inflation is 8 percent per year. 
B) You have paid $500 for a $1,000 U.S. savings bond that matures in 10 years and unanticipated inflation is 10 percent per year. 
C) You lend a friend $1,000 at 6 percent to be repaid in one year and unanticipated inflation is 7 percent during the year. 
D) You borrowed $2,500 at 7 percent to pay for this year's college expenses and unanticipated inflation is 12 percent during the year.

Question 2

The unemployment rate will decrease when

Accepted Answer

A) the duration of unemployment increases. 
B) the average workweek falls from 40 to 39 hours. 
C) the age of the labor force increases. 
D) people get discouraged and quit looking for work. 
A) the duration of unemployment increases. 
B) the average workweek falls from 40 to 39 hours. 
C) the age of the labor force increases. 
D) people get discouraged and quit looking for work.

Question 3

-Refer the above figure. Stage "2" of the economy is called

Accepted Answer

A) a contraction. 
B) a peak. 
C) a trough. 
D) an expansion. 
A) a contraction. 
B) a peak. 
C) a trough. 
D) an expansion.

Question 4

Unemployment that results from business recessions that occur when aggregate demand is insufficient to create full employment is

Accepted Answer

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

Question 5

Contractions are characterized by

Accepted Answer

A) increases in the rate of growth of economic activity. 
B) an upward movement toward a peak in economic activity. 
C) a downward movement toward a trough in economic activity. 
D) a long period in which no cycles are observed in economic activity. 
A) increases in the rate of growth of economic activity. 
B) an upward movement toward a peak in economic activity. 
C) a downward movement toward a trough in economic activity. 
D) a long period in which no cycles are observed in economic activity.

Question 6

Since 1950, it can be observed that the female participation rate in our labor force has

Accepted Answer

A) increased. 
B) decreased. 
C) stayed constant. 
D) moved erratically up and down. 
A) increased. 
B) decreased. 
C) stayed constant. 
D) moved erratically up and down.

Question 7

To be considered officially unemployed, a person must be at least 16 years old

Accepted Answer

A) and not working. 
B) and not in school and not working. 
C) and be a discouraged worker. 
D) and not working but is actively seeking employment. 
A) and not working. 
B) and not in school and not working. 
C) and be a discouraged worker. 
D) and not working but is actively seeking employment.

Question 8

A person who is currently not working and has stopped looking for a job because he or she is convinced there is no job available is classified as a

Accepted Answer

A) discouraged worker. 
B) disgruntled worker. 
C) depressed worker. 
D) dissatisfied worker. 
A) discouraged worker. 
B) disgruntled worker. 
C) depressed worker. 
D) dissatisfied worker.

Question 9

Debtors gain and creditors lose when

Accepted Answer

A) the anticipated rate of inflation is greater than the actual rate of inflation. 
B) the anticipated rate of inflation is less than the actual rate of inflation. 
C) the anticipated rate of inflation is the same as the unanticipated rate of inflation. 
D) the unanticipated rate of inflation is zero. 
A) the anticipated rate of inflation is greater than the actual rate of inflation. 
B) the anticipated rate of inflation is less than the actual rate of inflation. 
C) the anticipated rate of inflation is the same as the unanticipated rate of inflation. 
D) the unanticipated rate of inflation is zero.

Question 10

-According to the above table, in Year 3, the price index for widgets is

Accepted Answer

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

Question 11

-Using the above table, the employment rate is

Accepted Answer

A) 65.6 percent. 
B) 48.5 percent. 
C) 95.0 percent. 
D) 69.1 percent. 
A) 65.6 percent. 
B) 48.5 percent. 
C) 95.0 percent. 
D) 69.1 percent.

Question 12

Full employment does not necessarily mean that every adult has a job because

Accepted Answer

A) students and homemakers are always looking for work. 
B) there are always some discouraged workers. 
C) policy makers never want to achieve full employment. 
D) there are transaction costs in finding a job in the labor market. 
A) students and homemakers are always looking for work. 
B) there are always some discouraged workers. 
C) policy makers never want to achieve full employment. 
D) there are transaction costs in finding a job in the labor market.

Question 13

The business cycle phase that must come before the peak is a(n)

Accepted Answer

A) trough. 
B) expansion. 
C) recession. 
D) contraction. 
A) trough. 
B) expansion. 
C) recession. 
D) contraction.

Question 14

Throughout U.S. history, inflation has been highest

Accepted Answer

A) right after a recession. 
B) right before a recession. 
C) during periods of war. 
D) during Republican administrations. 
A) right after a recession. 
B) right before a recession. 
C) during periods of war. 
D) during Republican administrations.

Question 15

A period of time in which the overall pace of business activity is falling is known as

Accepted Answer

A) inflation. 
B) deflation. 
C) an expansion. 
D) a contraction. 
A) inflation. 
B) deflation. 
C) an expansion. 
D) a contraction.

Question 16

An increase in the labor force participation rate

Accepted Answer

A) implies that the unemployment rate must fall. 
B) implies that the unemployment rate must rise. 
C) means there are more discouraged workers. 
D) is consistent with either a rise or a fall in the unemployment rate. 
A) implies that the unemployment rate must fall. 
B) implies that the unemployment rate must rise. 
C) means there are more discouraged workers. 
D) is consistent with either a rise or a fall in the unemployment rate.

Question 17

An economy recovering from a recession moves

Accepted Answer

A) up from its trough to a period of expansion. 
B) up from its peak to a period of expansion. 
C) down from its trough to a period of depression. 
D) down from its peak to a period of expansion. 
A) up from its trough to a period of expansion. 
B) up from its peak to a period of expansion. 
C) down from its trough to a period of depression. 
D) down from its peak to a period of expansion.

Question 18

When there is an increase in the duration of unemployment, the U.S. Congress typically responds by

Accepted Answer

A) lowering income taxes. 
B) extending unemployment benefits. 
C) encouraging unemployed U.S. workers to seek employment overseas. 
D) redefining "unemployed" so the unemployment rate does not look so bad. 
A) lowering income taxes. 
B) extending unemployment benefits. 
C) encouraging unemployed U.S. workers to seek employment overseas. 
D) redefining "unemployed" so the unemployment rate does not look so bad.

Question 19

In computing a price index,

Accepted Answer

A) the most recent year is always set equal to 100. 
B) both the quantities in the market basket and the prices change from year to year. 
C) the quantities in the market basket stay the same while the prices differ. 
D) the base year must be one for which the inflation rate was zero. 
A) the most recent year is always set equal to 100. 
B) both the quantities in the market basket and the prices change from year to year. 
C) the quantities in the market basket stay the same while the prices differ. 
D) the base year must be one for which the inflation rate was zero.

Question 20

The value of money for buying goods and services is known as

Accepted Answer

A) inflation. 
B) nomination. 
C) nominal income. 
D) purchasing power. 
A) inflation. 
B) nomination. 
C) nominal income. 
D) purchasing power.

Under which one of the following situations would you be better off?

The unemployment rate will decrease when

-Refer the above figure. Stage "2" of the economy is called

Unemployment that results from business recessions that occur when aggregate demand is insufficient to create full employment is

Contractions are characterized by

Since 1950, it can be observed that the female participation rate in our labor force has

To be considered officially unemployed, a person must be at least 16 years old

A person who is currently not working and has stopped looking for a job because he or she is convinced there is no job available is classified as a

Debtors gain and creditors lose when

-According to the above table, in Year 3, the price index for widgets is

-Using the above table, the employment rate is

Full employment does not necessarily mean that every adult has a job because

The business cycle phase that must come before the peak is a(n)

Throughout U.S. history, inflation has been highest

A period of time in which the overall pace of business activity is falling is known as

An increase in the labor force participation rate

An economy recovering from a recession moves

When there is an increase in the duration of unemployment, the U.S. Congress typically responds by

In computing a price index,

The value of money for buying goods and services is known as

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

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

Under which one of the following situations would you be better off?

The unemployment rate will decrease when

-Refer the above figure. Stage "2" of the economy is called

Unemployment that results from business recessions that occur when aggregate demand is insufficient to create full employment is

Contractions are characterized by

Since 1950, it can be observed that the female participation rate in our labor force has

To be considered officially unemployed, a person must be at least 16 years old

A person who is currently not working and has stopped looking for a job because he or she is convinced there is no job available is classified as a

Debtors gain and creditors lose when

-According to the above table, in Year 3, the price index for widgets is

-Using the above table, the employment rate is

Full employment does not necessarily mean that every adult has a job because

The business cycle phase that must come before the peak is a(n)

Throughout U.S. history, inflation has been highest

A period of time in which the overall pace of business activity is falling is known as

An increase in the labor force participation rate

An economy recovering from a recession moves

When there is an increase in the duration of unemployment, the U.S. Congress typically responds by

In computing a price index,

The value of money for buying goods and services is known as

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