Question 1

Deflation is defined as a situation in which

Accepted Answer

A)  the rate of inflation is below 2 percent. 
B)  the average of all prices of goods and services in an economy is falling. 
C)  the value of the dollar is rising relative to other currencies. 
D)  the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter. 
A)  the rate of inflation is below 2 percent. 
B)  the average of all prices of goods and services in an economy is falling. 
C)  the value of the dollar is rising relative to other currencies. 
D)  the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter.

Question 2

If there is unemployment and all businesses are operating at less than full capacity, then

Accepted Answer

A)  there are too many workers, and some people ought to leave the labor force. 
B)  we are not experiencing a net social cost to unemployment because it is offset by the capacity levels of the factories. 
C)  society is producing inside its production possibilities curve. 
D)  society is at the wrong point on the production possibilities curve. 
A)  there are too many workers, and some people ought to leave the labor force. 
B)  we are not experiencing a net social cost to unemployment because it is offset by the capacity levels of the factories. 
C)  society is producing inside its production possibilities curve. 
D)  society is at the wrong point on the production possibilities curve.

Question 3

Corrina just graduated from college, is unemployed, and looking for her first real job. This is an example of

Accepted Answer

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

Question 4

The largest major change in the U.S. labor force participation rate during the last few decades has been

Accepted Answer

A)  the number of prisoners dropping out of the labor force. 
B)  the increase in the number of working women. 
C)  the decrease in the number of working women. 
D)  the increase in the number of illegal immigrants in the United States. 
A)  the number of prisoners dropping out of the labor force. 
B)  the increase in the number of working women. 
C)  the decrease in the number of working women. 
D)  the increase in the number of illegal immigrants in the United States.

Question 5

Full employment is not zero unemployment because

Accepted Answer

A)  there are statistical errors when determining the unemployment rate that cannot be overcome. 
B)  there is "normal" friction in the economy made up of those workers who are between jobs and those new entrants to the labor force. 
C)  there are undocumented workers in the economy who are not counted by the Bureau of Labor Statistics. 
D)  government workers are not counted in the labor force. 
A)  there are statistical errors when determining the unemployment rate that cannot be overcome. 
B)  there is "normal" friction in the economy made up of those workers who are between jobs and those new entrants to the labor force. 
C)  there are undocumented workers in the economy who are not counted by the Bureau of Labor Statistics. 
D)  government workers are not counted in the labor force.

Question 6

The fact that a number of lifeguards lose their jobs at the end of each summer would be counted as

Accepted Answer

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

Question 7

If the Bureau of Labor Statistics changed the way it calculates the consumer price index (CPI) so as to take into account product quality changes and the changing mix of products and services purchased by the average family, the result would most likely

Accepted Answer

A)  show a higher rate of inflation. 
B)  show a lower rate of inflation. 
C)  cause an increase in Social Security payments. 
D)  cause higher wage increases for union employees with contracts that specify automatic wage boosts when the CPI rises. 
A)  show a higher rate of inflation. 
B)  show a lower rate of inflation. 
C)  cause an increase in Social Security payments. 
D)  cause higher wage increases for union employees with contracts that specify automatic wage boosts when the CPI rises.

Question 8

The period between the trough and the peak of a business fluctuation is called

Accepted Answer

A)  the growth phase. 
B)  the spreading out. 
C)  the development. 
D)  the expansion. 
A)  the growth phase. 
B)  the spreading out. 
C)  the development. 
D)  the expansion.

Question 9

In a small country, the adult population equals 5,000. There are 4,000 people in the labor force and 3,000 people are employed. The labor force participation rate equals

Accepted Answer

A)  25 percent. 
B)  80 percent. 
C)  30 percent. 
D)  an undetermined amount given the lack of information. 
A)  25 percent. 
B)  80 percent. 
C)  30 percent. 
D)  an undetermined amount given the lack of information.

Question 10

Costs of unemployment include

Accepted Answer

A)  structural unemployment. 
B)  the output lost due to the fact that the economy is not running at full employment. 
C)  reduction in the labor force. 
D)  higher wages. 
A)  structural unemployment. 
B)  the output lost due to the fact that the economy is not running at full employment. 
C)  reduction in the labor force. 
D)  higher wages.

Question 11

Describe the major types of unemployment.

Accepted Answer

Frictional unemployment is the continuou

Question 12

What is the business cycle? How "cyclical" is it? What causes the business cycle?

Accepted Answer

The business cycle refers to the ups and

Question 13

All of the following are considered to be unemployed EXCEPT

Accepted Answer

A)  job leavers. 
B)  discouraged workers. 
C)  job reentrants. 
D)  new job entrants. 
A)  job leavers. 
B)  discouraged workers. 
C)  job reentrants. 
D)  new job entrants.

Question 14

A lifeguard who is out of work in the winter is

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

Which one of the following is true?

Accepted Answer

A)  The nominal rate of interest is the real rate plus the anticipated rate of inflation. 
B)  The real rate of interest is the nominal rate plus the anticipated rate of inflation. 
C)  Increases in anticipated inflation increase the real interest rate. 
D)  Increases in the CPI increase the real interest rate. 
A)  The nominal rate of interest is the real rate plus the anticipated rate of inflation. 
B)  The real rate of interest is the nominal rate plus the anticipated rate of inflation. 
C)  Increases in anticipated inflation increase the real interest rate. 
D)  Increases in the CPI increase the real interest rate.

Question 16

Unemployment is a ________ concept, measuring the ________.

Accepted Answer

A)  flow; number of people who are first entering the labor force. 
B)  flow; number of people who lost their jobs within the last week. 
C)  stock; number of people who are not working. 
D)  stock; number of people at a point in time who are not working but who are looking for work. 
A)  flow; number of people who are first entering the labor force. 
B)  flow; number of people who lost their jobs within the last week. 
C)  stock; number of people who are not working. 
D)  stock; number of people at a point in time who are not working but who are looking for work.

Question 17

-In the table shown above, the total cost of the market basket in 2010 was

Accepted Answer

A)  $6.00. 
B)  $8.50. 
C)  $60.00. 
D)  $85.00. 
A)  $6.00. 
B)  $8.50. 
C)  $60.00. 
D)  $85.00.

Question 18

Why is there a resource cost associated with inflation?

Accepted Answer

A)  because unemployment increases when there is inflation 
B)  because most workers end up working fewer hours during periods of inflation 
C)  because consumers, workers, and firms devote resources to protecting themselves from the financial costs of inflation 
D)  because the existence of inflation discourages people from placing their savings in interest-bearing accounts, where it is needed to fund capital investment 
A)  because unemployment increases when there is inflation 
B)  because most workers end up working fewer hours during periods of inflation 
C)  because consumers, workers, and firms devote resources to protecting themselves from the financial costs of inflation 
D)  because the existence of inflation discourages people from placing their savings in interest-bearing accounts, where it is needed to fund capital investment

Question 19

Business fluctuations in the United States are

Accepted Answer

A)  smooth and steady. 
B)  predictable. 
C)  controllable. 
D)  irregular and unpredictable. 
A)  smooth and steady. 
B)  predictable. 
C)  controllable. 
D)  irregular and unpredictable.

Question 20

Last year a CD had a price of $12 and this year it is $15. Which of the following does NOT express this price change accurately?

Accepted Answer

A)  Price rose by 25 percent. 
B)  Price rose by $3. 
C)  If this year is the base year, the index number for last year would be 80. 
D)  If last year is the base year, the index number for this year would be 80. 
A)  Price rose by 25 percent. 
B)  Price rose by $3. 
C)  If this year is the base year, the index number for last year would be 80. 
D)  If last year is the base year, the index number for this year would be 80.

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

Deflation is defined as a situation in which

If there is unemployment and all businesses are operating at less than full capacity, then

Corrina just graduated from college, is unemployed, and looking for her first real job. This is an example of

The largest major change in the U.S. labor force participation rate during the last few decades has been

Full employment is not zero unemployment because

The fact that a number of lifeguards lose their jobs at the end of each summer would be counted as

If the Bureau of Labor Statistics changed the way it calculates the consumer price index (CPI) so as to take into account product quality changes and the changing mix of products and services purchased by the average family, the result would most likely

The period between the trough and the peak of a business fluctuation is called

In a small country, the adult population equals 5,000. There are 4,000 people in the labor force and 3,000 people are employed. The labor force participation rate equals

Costs of unemployment include

Describe the major types of unemployment.

What is the business cycle? How "cyclical" is it? What causes the business cycle?

All of the following are considered to be unemployed EXCEPT

A lifeguard who is out of work in the winter is

Which one of the following is true?

Unemployment is a ________ concept, measuring the ________.

-In the table shown above, the total cost of the market basket in 2010 was

Why is there a resource cost associated with inflation?

Business fluctuations in the United States are

Last year a CD had a price of $12 and this year it is $15. Which of the following does NOT express this price change accurately?

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

Filters

Unemployment is a concept, measuring the .