Question 1

Distinguish between a stock and a flow. How do these concepts relate to unemployment?

Accepted Answer

A stock is a quantity of something measu

Question 2

When an individual is frictionally unemployed, the unemployment arises from

Accepted Answer

A)  a short-term elimination of jobs because of a slowdown in business activity. 
B)  imperfect labor market information which requires individuals to search for appropriate employment. 
C)  the permanent elimination of jobs because of a change in the structure of the economy. 
D)  a reduction in the overall demand for labor's skills. 
A)  a short-term elimination of jobs because of a slowdown in business activity. 
B)  imperfect labor market information which requires individuals to search for appropriate employment. 
C)  the permanent elimination of jobs because of a change in the structure of the economy. 
D)  a reduction in the overall demand for labor's skills.

Question 3

Empirical evidence shows that the nominal interest rate typically rises at the same time the inflation rate increases. What does this suggest?

Accepted Answer

A)  The real rate of interest is zero. 
B)  Increases in the current inflation rate lead borrowers and lenders to expect that inflation in the future will be higher than previously thought. 
C)  Interest rate changes are the main component of the CPI. 
D)  Interest rate changes are the main component of the GDP deflator. 
A)  The real rate of interest is zero. 
B)  Increases in the current inflation rate lead borrowers and lenders to expect that inflation in the future will be higher than previously thought. 
C)  Interest rate changes are the main component of the CPI. 
D)  Interest rate changes are the main component of the GDP deflator.

Question 4

The highest measured rate of unemployment in the United States occurred during

Accepted Answer

A)  the post-WWII years. 
B)  the Panic of 1893. 
C)  the Carter administration. 
D)  the Great Depression. 
A)  the post-WWII years. 
B)  the Panic of 1893. 
C)  the Carter administration. 
D)  the Great Depression.

Question 5

Official unemployment rates may underestimate the true rate of unemployment because the official rate

Accepted Answer

A)  includes those workers who only work part time. 
B)  may include some individuals who are not actually in the labor force. 
C)  does not include individuals receiving any type of unemployment compensation. 
D)  fails to include discouraged workers. 
A)  includes those workers who only work part time. 
B)  may include some individuals who are not actually in the labor force. 
C)  does not include individuals receiving any type of unemployment compensation. 
D)  fails to include discouraged workers.

Question 6

What is meant by full employment? Why isn't the full employment rate zero? What causes frictional unemployment?

Accepted Answer

Full employment is the level of unemploy

Question 7

The cost of inflation to society includes I. The opportunity costs of resources used by people to protect themselves against inflation
II) The costs associated with recalculating prices

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 8

Which of the following people would be considered unemployed by the Bureau of Labor Statistics? I. Mrs. X retires from her job and does not look for another job.
II) Mr. Y was laid off from his job as a welder, but expects to be rehired in 8 months.

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 9

A new entrant is an individual

Accepted Answer

A)  in the labor force whose employment was involuntarily terminated. 
B)  who used to work full time but left the labor force and has now reentered it looking for a job. 
C)  in the labor force who quits voluntarily. 
D)  who has never held a full-time job lasting two weeks or longer but is now seeking employment. 
A)  in the labor force whose employment was involuntarily terminated. 
B)  who used to work full time but left the labor force and has now reentered it looking for a job. 
C)  in the labor force who quits voluntarily. 
D)  who has never held a full-time job lasting two weeks or longer but is now seeking employment.

Question 10

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 11

In sequential order, the four phases of the business cycle are

Accepted Answer

A)  trough, peak, expansion, contraction. 
B)  peak, contraction, trough, expansion. 
C)  expansion, contraction, peak, trough. 
D)  contraction, trough, peak, expansion. 
A)  trough, peak, expansion, contraction. 
B)  peak, contraction, trough, expansion. 
C)  expansion, contraction, peak, trough. 
D)  contraction, trough, peak, expansion.

Question 12

If a person loses her job because her abilities and skills are a poor match with current requirements of employers, this person is considered

Accepted Answer

A)  structurally unemployed. 
B)  frictionally unemployed. 
C)  a discouraged worker. 
D)  seasonally unemployed. 
A)  structurally unemployed. 
B)  frictionally unemployed. 
C)  a discouraged worker. 
D)  seasonally unemployed.

Question 13

When, over a sustained period of time, the growth of aggregate business activity falls below what is considered the normal growth rate, the economy necessarily experiences

Accepted Answer

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

Question 14

Unemployed U.S. residents who are, in effect, merely searching for work between jobs, are defined as

Accepted Answer

A)  frictionally unemployed. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  seasonally unemployed. 
A)  frictionally unemployed. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  seasonally unemployed.

Question 15

During an unanticipated inflation

Accepted Answer

A)  creditors are helped and debtors are hurt. 
B)  creditors are hurt and debtors are helped. 
C)  both creditors and debtors are hurt. 
D)  both creditors and debtors are helped. 
A)  creditors are helped and debtors are hurt. 
B)  creditors are hurt and debtors are helped. 
C)  both creditors and debtors are hurt. 
D)  both creditors and debtors are helped.

Question 16

In the United States, the labor-force participation rate since 1960 has been

Accepted Answer

A)  increasing for females. 
B)  declining for females. 
C)  declining for both males and females. 
D)  unchanged for both males and females. 
A)  increasing for females. 
B)  declining for females. 
C)  declining for both males and females. 
D)  unchanged for both males and females.

Question 17

A person who is employed in the construction industry may frequently experience

Accepted Answer

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

Question 18

For most people, the problems of inflation are caused by the fact that

Accepted Answer

A)  the inflation is unanticipated. 
B)  the inflation is anticipated. 
C)  the inflation rate causes the purchasing power of money to increase. 
D)  all prices change so there is no way to protect themselves against the decline in their wealth. 
A)  the inflation is unanticipated. 
B)  the inflation is anticipated. 
C)  the inflation rate causes the purchasing power of money to increase. 
D)  all prices change so there is no way to protect themselves against the decline in their wealth.

Question 19

The real rate of interest can be defined as the

Accepted Answer

A)  nominal interest rate less the anticipated rate of inflation. 
B)  anticipated rate of inflation less the nominal interest rate. 
C)  the market rate of interest expressed in today's dollars. 
D)  nominal rate of interest less the unanticipated rate of inflation. 
A)  nominal interest rate less the anticipated rate of inflation. 
B)  anticipated rate of inflation less the nominal interest rate. 
C)  the market rate of interest expressed in today's dollars. 
D)  nominal rate of interest less the unanticipated rate of inflation.

Question 20

One major reason that economists are concerned about unemployment is that

Accepted Answer

A)  unemployment always leads to frictional unemployment. 
B)  unemployment reduces the size of the labor force. 
C)  unemployment shifts the production possibilities curve outward. 
D)  the economy is producing less output than if there were full employment. 
A)  unemployment always leads to frictional unemployment. 
B)  unemployment reduces the size of the labor force. 
C)  unemployment shifts the production possibilities curve outward. 
D)  the economy is producing less output than if there were full employment.

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

Distinguish between a stock and a flow. How do these concepts relate to unemployment?

When an individual is frictionally unemployed, the unemployment arises from

Empirical evidence shows that the nominal interest rate typically rises at the same time the inflation rate increases. What does this suggest?

The highest measured rate of unemployment in the United States occurred during

Official unemployment rates may underestimate the true rate of unemployment because the official rate

What is meant by full employment? Why isn't the full employment rate zero? What causes frictional unemployment?

The cost of inflation to society includes I. The opportunity costs of resources used by people to protect themselves against inflation II) The costs associated with recalculating prices

Which of the following people would be considered unemployed by the Bureau of Labor Statistics? I. Mrs. X retires from her job and does not look for another job. II) Mr. Y was laid off from his job as a welder, but expects to be rehired in 8 months.

A new entrant is an individual

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

In sequential order, the four phases of the business cycle are

If a person loses her job because her abilities and skills are a poor match with current requirements of employers, this person is considered

When, over a sustained period of time, the growth of aggregate business activity falls below what is considered the normal growth rate, the economy necessarily experiences

Unemployed U.S. residents who are, in effect, merely searching for work between jobs, are defined as

During an unanticipated inflation

In the United States, the labor-force participation rate since 1960 has been

A person who is employed in the construction industry may frequently experience

For most people, the problems of inflation are caused by the fact that

The real rate of interest can be defined as the

One major reason that economists are concerned about unemployment is that

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

Measuring the Economys Performance

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

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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