Question 1

Innovations such as the microchip and the Internet lead to business cycle variations because:

Accepted Answer

A)  they cause prices to be sticky. 
B)  significant innovations occur irregularly and unexpectedly. 
C)  the central bank will often change the money supply in response. 
D)  they cause prices to be flexible. 
A)  they cause prices to be sticky. 
B)  significant innovations occur irregularly and unexpectedly. 
C)  the central bank will often change the money supply in response. 
D)  they cause prices to be flexible. B

Question 2

The presence of discouraged workers:

Accepted Answer

A)  increases the size of the labor force but does not affect the unemployment rate. 
B)  reduces the size of the labor force but does not affect the unemployment rate. 
C)  may cause the official unemployment rate to understate the true amount of unemployment. 
D)  may cause the official unemployment rate to overstate the true amount of unemployment. 
A)  increases the size of the labor force but does not affect the unemployment rate. 
B)  reduces the size of the labor force but does not affect the unemployment rate. 
C)  may cause the official unemployment rate to understate the true amount of unemployment. 
D)  may cause the official unemployment rate to overstate the true amount of unemployment. C

Question 3

Most economists agree that the immediate determinant of the volume of output and employment is the:

Accepted Answer

A)  composition of consumer spending. 
B)  ratio of public goods to private goods production. 
C)  level of total spending. 
D)  size of the labor force. 
A)  composition of consumer spending. 
B)  ratio of public goods to private goods production. 
C)  level of total spending. 
D)  size of the labor force. C

Question 4

For every 1 percentage point that the actual unemployment rate exceeds the natural rate,a 2 percentage point negative GDP gap occurs.This is a statement of:

Accepted Answer

A)  Taylor's rule. 
B)  Okun's law. 
C)  Say's law. 
D)  the Coase theorem. 
A)  Taylor's rule. 
B)  Okun's law. 
C)  Say's law. 
D)  the Coase theorem.

Question 5

A lender need not be penalized by inflation if the:

Accepted Answer

A)  long-term rate of inflation is less than the short-term rate of inflation. 
B)  short-term rate of inflation is less than the long-term rate of inflation. 
C)  lender correctly anticipates inflation and increases the nominal interest rate accordingly. 
D)  inflation is unanticipated by both borrower and lender. 
A)  long-term rate of inflation is less than the short-term rate of inflation. 
B)  short-term rate of inflation is less than the long-term rate of inflation. 
C)  lender correctly anticipates inflation and increases the nominal interest rate accordingly. 
D)  inflation is unanticipated by both borrower and lender.

Question 6

Cost-push inflation:

Accepted Answer

A)  reduces real output. 
B)  increases real output. 
C)  reduces the unemployment rate. 
D)  raises the natural rate of unemployment. 
A)  reduces real output. 
B)  increases real output. 
C)  reduces the unemployment rate. 
D)  raises the natural rate of unemployment.

Question 7

Unanticipated inflation helps some groups in the economy.

Accepted Answer

A) True 
 B)False

Question 8

(Consider This)Which of the following best explains why unemployment rises significantly during a recession?

Accepted Answer

A)  Wages are sticky both upward and downward. 
B)  Wages are flexible both upward and downward. 
C)  Wages are flexible upward but sticky downward. 
D)  Wages are sticky upward but flexible downward. 
A)  Wages are sticky both upward and downward. 
B)  Wages are flexible both upward and downward. 
C)  Wages are flexible upward but sticky downward. 
D)  Wages are sticky upward but flexible downward.

Question 9

Which of the following statements is true about causes of business cycle fluctuations?

Accepted Answer

A)  Economists all agree that supply shocks are the cause of most business cycle fluctuations. 
B)  Economists all agree that productivity shocks are the cause of most business cycle changes. 
C)  Economists all agree that monetary changes are primarily responsible for business cycle fluctuations. 
D)  There are a wide range of theories as to the underlying causes of business cycle movements. 
A)  Economists all agree that supply shocks are the cause of most business cycle fluctuations. 
B)  Economists all agree that productivity shocks are the cause of most business cycle changes. 
C)  Economists all agree that monetary changes are primarily responsible for business cycle fluctuations. 
D)  There are a wide range of theories as to the underlying causes of business cycle movements.

Question 10

Inflation initiated by increases in wages or other resource prices is labeled:

Accepted Answer

A)  demand-pull inflation. 
B)  demand-push inflation. 
C)  cost-push inflation. 
D)  cost-pull inflation. 
A)  demand-pull inflation. 
B)  demand-push inflation. 
C)  cost-push inflation. 
D)  cost-pull inflation.

Question 11

Real income can be determined by:

Accepted Answer

A)  dividing the price level by nominal income. 
B)  inflating nominal income for inflation. 
C)  dividing the annual rate of inflation into the number "70." 
D)  deflating nominal income for inflation. 
A)  dividing the price level by nominal income. 
B)  inflating nominal income for inflation. 
C)  dividing the annual rate of inflation into the number "70." 
D)  deflating nominal income for inflation.

Question 12

Wait unemployment and search unemployment are both types of:

Accepted Answer

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

Question 13

Answer the question on the basis of the following information for a specific year in a hypothetical economy for which Okun's law is applicable: Potential Real GDP = $\$ 200$ Billion
Natural Rate of Unemployment $= 6$ Percent
Actual Rate of Unemployment $= 12$ Percent Refer to the given data.If the unemployment rate in the economy fell to 6 percent,we could conclude that:

Accepted Answer

A)  only structural unemployment remained. 
B)  the economy's production possibilities curve shifted outward. 
C)  the economy had moved from a point inside its production possibilities curve to a point on or very near the curve. 
D)  nominal GDP would rise,but real GDP would fall. 
A)  only structural unemployment remained. 
B)  the economy's production possibilities curve shifted outward. 
C)  the economy had moved from a point inside its production possibilities curve to a point on or very near the curve. 
D)  nominal GDP would rise,but real GDP would fall.

Question 14

The labor force includes:

Accepted Answer

A)  employed workers and persons who are officially unemployed. 
B)  employed workers but excludes persons who are officially unemployed. 
C)  full-time workers but excludes part-time workers. 
D)  permanent employees but excludes temporary employees. 
A)  employed workers and persons who are officially unemployed. 
B)  employed workers but excludes persons who are officially unemployed. 
C)  full-time workers but excludes part-time workers. 
D)  permanent employees but excludes temporary employees.

Question 15

Demand-pull inflation:

Accepted Answer

A)  occurs when total spending in the economy is excessive. 
B)  is measured differently than cost-push inflation. 
C)  can be present even during an economic depression. 
D)  is also called "hyperinflation." 
A)  occurs when total spending in the economy is excessive. 
B)  is measured differently than cost-push inflation. 
C)  can be present even during an economic depression. 
D)  is also called "hyperinflation."

Question 16

Unanticipated inflation benefits debtors at the expense of creditors.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is correct?

Accepted Answer

A)  During the Great Recession,unemployment rates for men rose above those of women. 
B)  Unemployment rates for African-American and white workers are approximately the same. 
C)  Teenagers experience approximately the same unemployment rates as do adults. 
D)  Laborers are less vulnerable to unemployment than are professional workers. 
A)  During the Great Recession,unemployment rates for men rose above those of women. 
B)  Unemployment rates for African-American and white workers are approximately the same. 
C)  Teenagers experience approximately the same unemployment rates as do adults. 
D)  Laborers are less vulnerable to unemployment than are professional workers.

Question 18

Okun's law:

Accepted Answer

A)  measures the trade-off between the rate of inflation and the rate of unemployment. 
B)  indicates the number of years it will take for a constant rate of inflation to double the price level. 
C)  quantifies the relationship between nominal and real incomes. 
D)  shows the relationship between the unemployment rate and the size of the negative GDP gap. 
A)  measures the trade-off between the rate of inflation and the rate of unemployment. 
B)  indicates the number of years it will take for a constant rate of inflation to double the price level. 
C)  quantifies the relationship between nominal and real incomes. 
D)  shows the relationship between the unemployment rate and the size of the negative GDP gap.

Question 19

The unemployment rate is the:

Accepted Answer

A)  ratio of unemployed to employed workers. 
B)  number of employed workers minus the number of workers who are not in the labor force. 
C)  percentage of the labor force that is unemployed. 
D)  percentage of the total population that is unemployed. 
A)  ratio of unemployed to employed workers. 
B)  number of employed workers minus the number of workers who are not in the labor force. 
C)  percentage of the labor force that is unemployed. 
D)  percentage of the total population that is unemployed.

Question 20

The GDP gap measures the difference between:

Accepted Answer

A)  NDP and GDP. 
B)  NI and PI. 
C)  actual GDP and potential GDP. 
D)  nominal GDP and real GDP. 
A)  NDP and GDP. 
B)  NI and PI. 
C)  actual GDP and potential GDP. 
D)  nominal GDP and real GDP.

Innovations such as the microchip and the Internet lead to business cycle variations because:

The presence of discouraged workers:

Most economists agree that the immediate determinant of the volume of output and employment is the:

For every 1 percentage point that the actual unemployment rate exceeds the natural rate,a 2 percentage point negative GDP gap occurs.This is a statement of:

A lender need not be penalized by inflation if the:

Cost-push inflation:

Unanticipated inflation helps some groups in the economy.

(Consider This)Which of the following best explains why unemployment rises significantly during a recession?

Which of the following statements is true about causes of business cycle fluctuations?

Inflation initiated by increases in wages or other resource prices is labeled:

Real income can be determined by:

Wait unemployment and search unemployment are both types of:

The labor force includes:

Demand-pull inflation:

Unanticipated inflation benefits debtors at the expense of creditors.

Which of the following is correct?

Okun's law:

The unemployment rate is the:

The GDP gap measures the difference between:

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

Filters

Exam 28: Business Cycles, Unemployment, and Inflation

Innovations such as the microchip and the Internet lead to business cycle variations because:

The presence of discouraged workers:

Most economists agree that the immediate determinant of the volume of output and employment is the:

For every 1 percentage point that the actual unemployment rate exceeds the natural rate,a 2 percentage point negative GDP gap occurs.This is a statement of:

A lender need not be penalized by inflation if the:

Cost-push inflation:

Unanticipated inflation helps some groups in the economy.

(Consider This)Which of the following best explains why unemployment rises significantly during a recession?

Which of the following statements is true about causes of business cycle fluctuations?

Inflation initiated by increases in wages or other resource prices is labeled:

Real income can be determined by:

Wait unemployment and search unemployment are both types of:

The labor force includes:

Demand-pull inflation:

Unanticipated inflation benefits debtors at the expense of creditors.

Which of the following is correct?

Okun's law:

The unemployment rate is the:

The GDP gap measures the difference between:

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

Filters