Question 1

Full employment is

Accepted Answer

A)  zero unemployment. 
B)  when the unemployment level is reduced to the goal set by Congress. 
C)  the unemployment level when the normal friction in the economy is taken in account. 
D)  when all adults looking for work can find full time occupation. 
A)  zero unemployment. 
B)  when the unemployment level is reduced to the goal set by Congress. 
C)  the unemployment level when the normal friction in the economy is taken in account. 
D)  when all adults looking for work can find full time occupation.

Question 2

The official dating of recessions is done by

Accepted Answer

A)  the President. 
B)  the Congress. 
C)  the National Bureau of Economic Research. 
D)  the Council of Economic Advisors. 
A)  the President. 
B)  the Congress. 
C)  the National Bureau of Economic Research. 
D)  the Council of Economic Advisors.

Question 3

The real rate of interest is the

Accepted Answer

A)  nominal rate of interest minus the anticipated rate of inflation. 
B)  current rate actually paid by the borrower. 
C)  difference between the bank's lending and savings rates. 
D)  current rate which the government pays on its debt. 
A)  nominal rate of interest minus the anticipated rate of inflation. 
B)  current rate actually paid by the borrower. 
C)  difference between the bank's lending and savings rates. 
D)  current rate which the government pays on its debt.

Question 4

The definition of the adult population is those who are 16 years and older and who are

Accepted Answer

A)  employed or unemployed. 
B)  in the labor force. 
C)  in the labor force or not in the labor force. 
D)  not in the labor force. 
A)  employed or unemployed. 
B)  in the labor force. 
C)  in the labor force or not in the labor force. 
D)  not in the labor force.

Question 5

The government agency which has been given the task of calculating the Consumer Price Index (CPI) is

Accepted Answer

A)  the Bureau of Economic Research. 
B)  the Department of State. 
C)  the Council of Economic Advisors. 
D)  the Bureau of Labor Statistics. 
A)  the Bureau of Economic Research. 
B)  the Department of State. 
C)  the Council of Economic Advisors. 
D)  the Bureau of Labor Statistics.

Question 6

-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 7

Typically, nominal interest rates and anticipated inflation rates

Accepted Answer

A)  move in opposite directions. 
B)  are not related. 
C)  move in the same direction. 
D)  are such that the nominal rate is one-half the anticipated rate. 
A)  move in opposite directions. 
B)  are not related. 
C)  move in the same direction. 
D)  are such that the nominal rate is one-half the anticipated rate.

Question 8

The real rate of interest is defined as

Accepted Answer

A)  zero. 
B)  the nominal rate of interest. 
C)  the nominal rate of interest minus the anticipated inflation rate. 
D)  the nominal rate of interest plus the anticipated inflation rate. 
A)  zero. 
B)  the nominal rate of interest. 
C)  the nominal rate of interest minus the anticipated inflation rate. 
D)  the nominal rate of interest plus the anticipated inflation rate.

Question 9

Jasime voluntarily quit her job and is now searching for a new position. Jasime is classified as a

Accepted Answer

A)  job loser. 
B)  job reentrant. 
C)  job leaver. 
D)  new entrant. 
A)  job loser. 
B)  job reentrant. 
C)  job leaver. 
D)  new entrant.

Question 10

What are the four criteria used by the Bureau of Labor Statistics to determine whether an individual is unemployed or not?

Accepted Answer

First are job losers, who became unemplo

Question 11

Suppose the population of El Campo is 120,000. Of the population 16 years and older, 50,000 are employed, 10,000 have never worked and are not looking for work, 5,000 are not working and are looking for work, and 15,000 are retired and not looking for work. The number unemployed equals

Accepted Answer

A)  5,000. 
B)  10,000. 
C)  15,000. 
D)  20,000. 
A)  5,000. 
B)  10,000. 
C)  15,000. 
D)  20,000.

Question 12

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 13

The GDP deflator is not a fixed-quantity price index, but the CPI is. What is the significance of this fact?

Accepted Answer

A)  The GDP deflator does not include enough items in its market basket. 
B)  A base year cannot be defined for the GDP deflator. 
C)  The GDP deflator reflects not only changes in prices, but also changes in consumption patterns as consumers substitute between goods. 
D)  The GDP deflator overstates the true rate of inflation, whereas the CPI understates it. 
A)  The GDP deflator does not include enough items in its market basket. 
B)  A base year cannot be defined for the GDP deflator. 
C)  The GDP deflator reflects not only changes in prices, but also changes in consumption patterns as consumers substitute between goods. 
D)  The GDP deflator overstates the true rate of inflation, whereas the CPI understates it.

Question 14

The population is 1,200 million, the labor force is 150 million, and the number of unemployed is 15 million. What is the unemployment rate?

Accepted Answer

A)  7.5 percent 
B)  4.3 percent 
C)  10 percent 
D)  5 percent 
A)  7.5 percent 
B)  4.3 percent 
C)  10 percent 
D)  5 percent

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

Typically during a recession,

Accepted Answer

A)  incomes fall, and unemployment falls. 
B)  incomes and unemployment rise. 
C)  incomes fall, and unemployment rises. 
D)  incomes increase, and unemployment falls. 
A)  incomes fall, and unemployment falls. 
B)  incomes and unemployment rise. 
C)  incomes fall, and unemployment rises. 
D)  incomes increase, and unemployment falls.

Question 17

Fred recently lost his job as a teller at the bank. The bank explained that they were replacing Frank and others with ATM machines. Fred falls into a category of unemployment known as

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 18

An increase in the price of electricity, ceteris paribus, indicates that

Accepted Answer

A)  the purchasing power of money is decreasing. 
B)  the purchasing power of money is increasing. 
C)  electricity is relatively more scarce than it was before. 
D)  inflation is increasing. 
A)  the purchasing power of money is decreasing. 
B)  the purchasing power of money is increasing. 
C)  electricity is relatively more scarce than it was before. 
D)  inflation is increasing.

Question 19

How has the pattern of fluctuations in overall U.S. business activity changed since World War II?

Accepted Answer

A)  It has become less volatile. 
B)  Expansions have been eliminated. 
C)  Contractions have been eliminated. 
D)  Recessions have been eliminated. 
A)  It has become less volatile. 
B)  Expansions have been eliminated. 
C)  Contractions have been eliminated. 
D)  Recessions have been eliminated.

Question 20

Who is likely to be helped by unanticipated inflation?

Accepted Answer

A)  lenders 
B)  borrowers 
C)  all consumers 
D)  all producers 
A)  lenders 
B)  borrowers 
C)  all consumers 
D)  all producers

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

Full employment is

The official dating of recessions is done by

The real rate of interest is the

The definition of the adult population is those who are 16 years and older and who are

The government agency which has been given the task of calculating the Consumer Price Index (CPI) is

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

Typically, nominal interest rates and anticipated inflation rates

The real rate of interest is defined as

Jasime voluntarily quit her job and is now searching for a new position. Jasime is classified as a

What are the four criteria used by the Bureau of Labor Statistics to determine whether an individual is unemployed or not?

Suppose the population of El Campo is 120,000. Of the population 16 years and older, 50,000 are employed, 10,000 have never worked and are not looking for work, 5,000 are not working and are looking for work, and 15,000 are retired and not looking for work. The number unemployed equals

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

The GDP deflator is not a fixed-quantity price index, but the CPI is. What is the significance of this fact?

The population is 1,200 million, the labor force is 150 million, and the number of unemployed is 15 million. What is the unemployment rate?

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

Typically during a recession,

Fred recently lost his job as a teller at the bank. The bank explained that they were replacing Frank and others with ATM machines. Fred falls into a category of unemployment known as

An increase in the price of electricity, ceteris paribus, indicates that

How has the pattern of fluctuations in overall U.S. business activity changed since World War II?

Who is likely to be helped by unanticipated inflation?

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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