Question 1

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 2

The labor force participation rate includes

Accepted Answer

A)  only those who are employed. 
B)  only those employed but looking for a job. 
C)  both employed workers and discouraged workers not seeking jobs. 
D)  both employed workers and those unemployed but seeking employment. 
A)  only those who are employed. 
B)  only those employed but looking for a job. 
C)  both employed workers and discouraged workers not seeking jobs. 
D)  both employed workers and those unemployed but seeking employment.

Question 3

The market basket cost $300 in 2013, while it cost $250 in the base year. Therefore, the price index for 2013 is

Accepted Answer

A)  83. 
B)  120. 
C)  80. 
D)  cannot be calculated because the inflation rate is not given. 
A)  83. 
B)  120. 
C)  80. 
D)  cannot be calculated because the inflation rate is not given.

Question 4

A recession causes a decrease in the demand for housing, resulting in substantial layoffs in the construction industry. This is an example of

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 5

A job leaver 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 6

-If 2010 is the base year in the table shown above, what is the price index for the year 2015?

Accepted Answer

A)  100.0 
B)  114.7 
C)  147.1 
D)  141.7 
A)  100.0 
B)  114.7 
C)  147.1 
D)  141.7

Question 7

Last year the price of a dozen eggs was $1, and this year the price is $1.30. Which of the following does NOT express this price change accurately?

Accepted Answer

A)  The price increased 30 percent. 
B)  The price increased by 30 cents. 
C)  If last year was the base year, the index number for this year would be 130. 
D)  If this year is the base year, the index number for last year would be 130. 
A)  The price increased 30 percent. 
B)  The price increased by 30 cents. 
C)  If last year was the base year, the index number for this year would be 130. 
D)  If this year is the base year, the index number for last year would be 130.

Question 8

Which of the following is NOT a measure of the general level of prices?

Accepted Answer

A)  Consumer Price Index 
B)  Producer Price Index 
C)  GDP Deflator 
D)  Personal Sales Deflator Index 
A)  Consumer Price Index 
B)  Producer Price Index 
C)  GDP Deflator 
D)  Personal Sales Deflator Index

Question 9

In the base year the price index

Accepted Answer

A)  will be between 1 and 100. 
B)  will always equal 100. 
C)  equals 100 times the cost of the market basket in the base year. 
D)  will equal the year. 
A)  will be between 1 and 100. 
B)  will always equal 100. 
C)  equals 100 times the cost of the market basket in the base year. 
D)  will equal the year.

Question 10

To be counted in the labor force,

Accepted Answer

A)  a person has to be working at least 40 hours per week. 
B)  a person has to be at least 16 or older, have a job, or if unemployed has to be actively seeking employment. 
C)  a person, irrespective of his or her age, has to be working or, if out of work, actively seeking employment. 
D)  a person has to be over 16 years of age, irrespective of whether she or he is actively seeking work. 
A)  a person has to be working at least 40 hours per week. 
B)  a person has to be at least 16 or older, have a job, or if unemployed has to be actively seeking employment. 
C)  a person, irrespective of his or her age, has to be working or, if out of work, actively seeking employment. 
D)  a person has to be over 16 years of age, irrespective of whether she or he is actively seeking work.

Question 11

-Using the above table, the unemployment rate X is

Accepted Answer

A)  2.6 percent. 
B)  5.0 percent. 
C)  3.5 percent. 
D)  2.1 percent. 
A)  2.6 percent. 
B)  5.0 percent. 
C)  3.5 percent. 
D)  2.1 percent.

Question 12

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 13

-Refer to the above figure. The points between A and B are known as

Accepted Answer

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

Question 14

Since 1950, the labor force participation rate in the United States

Accepted Answer

A)  of men and women both increased. 
B)  of men increased and women decreased. 
C)  of men and women both decreased. 
D)  of men decreased and for women increased. 
A)  of men and women both increased. 
B)  of men increased and women decreased. 
C)  of men and women both decreased. 
D)  of men decreased and for women increased.

Question 15

The rate of unemployment is found by

Accepted Answer

A)  dividing the number unemployed by the number of people in the labor force. 
B)  dividing the number unemployed by the number employed. 
C)  dividing the number employed by the number of people in the labor force. 
D)  dividing the number employed by the number unemployed. 
A)  dividing the number unemployed by the number of people in the labor force. 
B)  dividing the number unemployed by the number employed. 
C)  dividing the number employed by the number of people in the labor force. 
D)  dividing the number employed by the number unemployed.

Question 16

Historically speaking, business fluctuations in an economy were more commonly referred to as

Accepted Answer

A)  inflationary pressures. 
B)  economic growth. 
C)  the GDP deflator. 
D)  business cycles. 
A)  inflationary pressures. 
B)  economic growth. 
C)  the GDP deflator. 
D)  business cycles.

Question 17

Inflation is best described as a situation in which

Accepted Answer

A)  relative prices are changing. 
B)  some prices are rising faster than others. 
C)  relative prices are changing, but the purchasing power of the dollar is unchanged. 
D)  the average of all prices are on a sustained rise over a period of time. 
A)  relative prices are changing. 
B)  some prices are rising faster than others. 
C)  relative prices are changing, but the purchasing power of the dollar is unchanged. 
D)  the average of all prices are on a sustained rise over a period of time.

Question 18

Suppose that unemployment increases because the government requires employers to provide more funds for their employees' retirement programs. The increase in unemployment is most likely a result of an increase in

Accepted Answer

A)  frictional unemployment. 
B)  structural unemployment. 
C)  the natural rate of unemployment. 
D)  cyclical unemployment. 
A)  frictional unemployment. 
B)  structural unemployment. 
C)  the natural rate of unemployment. 
D)  cyclical unemployment.

Question 19

-Refer to the above figure. The points between B and C are known as

Accepted Answer

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

Question 20

When economy-wide business fluctuations are negative, they are referred to as

Accepted Answer

A)  contractions/recessions. 
B)  booms. 
C)  expansions. 
D)  peaks. 
A)  contractions/recessions. 
B)  booms. 
C)  expansions. 
D)  peaks.

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

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

The labor force participation rate includes

The market basket cost $300 in 2013, while it cost $250 in the base year. Therefore, the price index for 2013 is

A recession causes a decrease in the demand for housing, resulting in substantial layoffs in the construction industry. This is an example of

A job leaver is an individual

-If 2010 is the base year in the table shown above, what is the price index for the year 2015?

Last year the price of a dozen eggs was $1, and this year the price is $1.30. Which of the following does NOT express this price change accurately?

Which of the following is NOT a measure of the general level of prices?

In the base year the price index

To be counted in the labor force,

-Using the above table, the unemployment rate X is

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

-Refer to the above figure. The points between A and B are known as

Since 1950, the labor force participation rate in the United States

The rate of unemployment is found by

Historically speaking, business fluctuations in an economy were more commonly referred to as

Inflation is best described as a situation in which

Suppose that unemployment increases because the government requires employers to provide more funds for their employees' retirement programs. The increase in unemployment is most likely a result of an increase in

-Refer to the above figure. The points between B and C are known as

When economy-wide business fluctuations are negative, they are referred to 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

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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