Question 1

Full employment,which is always expected to occur,consists of the frictionally and cyclically unemployed.

Accepted Answer

A) True 
 B)False

Question 2

A general rule is that economy is experiencing a recession when:

Accepted Answer

A)  real GDP declines for at least three months. 
B)  real GDP declines for at least nine months. 
C)  nominal GDP declines for at least nine months. 
D)  real GDP declines for at least six months. 
E)  nominal GDP declines for at least six months. 
A)  real GDP declines for at least three months. 
B)  real GDP declines for at least nine months. 
C)  nominal GDP declines for at least nine months. 
D)  real GDP declines for at least six months. 
E)  nominal GDP declines for at least six months.

Question 3

The increase in unemployment associated with a recession is called:

Accepted Answer

A)  structural unemployment. 
B)  frictional unemployment. 
C)  discouraged unemployment. 
D)  cyclical unemployment. 
E)  temporary unemployment. 
A)  structural unemployment. 
B)  frictional unemployment. 
C)  discouraged unemployment. 
D)  cyclical unemployment. 
E)  temporary unemployment.

Question 4

Business cycles vary greatly in duration and intensity.

Accepted Answer

A) True 
 B)False

Question 5

Sally lost her job when her company went out of business because of a recession.This is an example of:

Accepted Answer

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

Question 6

To what does the "GDP gap" refer?

Accepted Answer

A)  The difference between real and nominal GDP. 
B)  The difference between this year's real GDP and last year's GDP. 
C)  The difference between "full-employment" real GDP and actual real GDP. 
D)  The difference between real GDP in the prior trough and real GDP in a current trough of the business cycle. 
A)  The difference between real and nominal GDP. 
B)  The difference between this year's real GDP and last year's GDP. 
C)  The difference between "full-employment" real GDP and actual real GDP. 
D)  The difference between real GDP in the prior trough and real GDP in a current trough of the business cycle.

Question 7

The business cycle is the periodic but recurrent fluctuations in real GDP.

Accepted Answer

A) True 
 B)False

Question 8

A principal cause of the business cycle is the changes in total spending that occur in the overall economy.

Accepted Answer

A) True 
 B)False

Question 9

Frictional unemployment refers to:

Accepted Answer

A)  people who are out of work and have no job skills. 
B)  short periods of unemployment needed to match jobs and job seekers. 
C)  people who spend relatively long periods out of work. 
D)  unemployment related to the ups and downs of the business cycle. 
A)  people who are out of work and have no job skills. 
B)  short periods of unemployment needed to match jobs and job seekers. 
C)  people who spend relatively long periods out of work. 
D)  unemployment related to the ups and downs of the business cycle.

Question 10

Which of the following is not a way to become officially unemployed?

Accepted Answer

A)  Quit your job to look for a better job in another part of the country. 
B)  Be fired from your job. 
C)  Look for a job after being out of the civilian labor force for five years. 
D)  Retire. 
E)  Look for a job only for the period in the summer that you are out of school. 
A)  Quit your job to look for a better job in another part of the country. 
B)  Be fired from your job. 
C)  Look for a job after being out of the civilian labor force for five years. 
D)  Retire. 
E)  Look for a job only for the period in the summer that you are out of school.

Question 11

Cyclical unemployment:

Accepted Answer

A)  causes unemployment statistics to be understated. 
B)  causes unemployment statistics to be overstated. 
C)  occurs because of recessions. 
D)  occurs because of technological innovations in production. 
E)  only occurs with a zero inflation rate. 
A)  causes unemployment statistics to be understated. 
B)  causes unemployment statistics to be overstated. 
C)  occurs because of recessions. 
D)  occurs because of technological innovations in production. 
E)  only occurs with a zero inflation rate.

Question 12

The primary cause of frictional unemployment is:

Accepted Answer

A)  discouraged workers who give up looking for work. 
B)  fluctuations in aggregate demand. 
C)  the lack of training and marketable qualifications in job seekers. 
D)  inaccurate information about job opportunities. 
A)  discouraged workers who give up looking for work. 
B)  fluctuations in aggregate demand. 
C)  the lack of training and marketable qualifications in job seekers. 
D)  inaccurate information about job opportunities.

Question 13

Which of the following is the correct formula for determining the civilian unemployment rate?

Accepted Answer

A)  [(the number of unemployed, working-age civilian seeking work)/(the number of civilian in the labor force)] x 100. 
B)  C + I + G + (X - M). 
C)  The total number of unemployed, working-age civilians seeking work. 
D)  (The number of civilian in the labor force) x 100. 
A)  [(the number of unemployed, working-age civilian seeking work)/(the number of civilian in the labor force)] x 100. 
B)  C + I + G + (X - M). 
C)  The total number of unemployed, working-age civilians seeking work. 
D)  (The number of civilian in the labor force) x 100.

Question 14

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 15

The period of declining growth in real GDP between the peak of the business cycle and the trough is called a:

Accepted Answer

A)  recessionary phase. 
B)  recovery. 
C)  expansionary phase. 
D)  stationary phase. 
A)  recessionary phase. 
B)  recovery. 
C)  expansionary phase. 
D)  stationary phase.

Question 16

Consider an economy made up of 100 people,60 of whom old jobs,10 of whom are looking for work,and 15 of whom are retired.The number counted as unemployed is:

Accepted Answer

A)  10. 
B)  15. 
C)  40. 
D)  30. 
E)  90. 
A)  10. 
B)  15. 
C)  40. 
D)  30. 
E)  90.

Question 17

Which of the following people would be classified as fictionally unemployed?

Accepted Answer

A)  Computer programmers who lost their jobs because of a recession. 
B)  Construction workers who are on temporary layoff. 
C)  Elementary school teachers who do not have summer jobs. 
D)  Textile workers who lost their jobs because of new foreign competition. 
A)  Computer programmers who lost their jobs because of a recession. 
B)  Construction workers who are on temporary layoff. 
C)  Elementary school teachers who do not have summer jobs. 
D)  Textile workers who lost their jobs because of new foreign competition.

Question 18

Sharon was being treated unfairly by her boss,so she stormed off the job and two days later found another position.For two days,Sharon experienced:

Accepted Answer

A)  cyclical unemployment. 
B)  structural unemployment. 
C)  seasonal unemployment. 
D)  frictional unemployment. 
E)  being out of the labor force. 
A)  cyclical unemployment. 
B)  structural unemployment. 
C)  seasonal unemployment. 
D)  frictional unemployment. 
E)  being out of the labor force.

Question 19

Recovery is the phase of the business cycle during which real GDP reaches its maximum.

Accepted Answer

A) True 
 B)False

Question 20

Which type of unemployment is experienced by a person who is laid off at an office because word processing equipment and software reduce the need for typists?

Accepted Answer

A)  Seasonal. 
B)  Cyclical. 
C)  Voluntary. 
D)  Structural. 
E)  Frictional. 
A)  Seasonal. 
B)  Cyclical. 
C)  Voluntary. 
D)  Structural. 
E)  Frictional.

Exam 12: Business Cycles and Unemployment

Full employment,which is always expected to occur,consists of the frictionally and cyclically unemployed.

A general rule is that economy is experiencing a recession when:

The increase in unemployment associated with a recession is called:

Business cycles vary greatly in duration and intensity.

Sally lost her job when her company went out of business because of a recession.This is an example of:

To what does the "GDP gap" refer?

The business cycle is the periodic but recurrent fluctuations in real GDP.

A principal cause of the business cycle is the changes in total spending that occur in the overall economy.

Frictional unemployment refers to:

Which of the following is not a way to become officially unemployed?

Cyclical unemployment:

The primary cause of frictional unemployment is:

Which of the following is the correct formula for determining the civilian unemployment rate?

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:

The period of declining growth in real GDP between the peak of the business cycle and the trough is called a:

Consider an economy made up of 100 people,60 of whom old jobs,10 of whom are looking for work,and 15 of whom are retired.The number counted as unemployed is:

Which of the following people would be classified as fictionally unemployed?

Sharon was being treated unfairly by her boss,so she stormed off the job and two days later found another position.For two days,Sharon experienced:

Recovery is the phase of the business cycle during which real GDP reaches its maximum.

Which type of unemployment is experienced by a person who is laid off at an office because word processing equipment and software reduce the need for typists?

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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