Question 1

The phrase "too much money chasing too few goods" best describes:

Accepted Answer

A)  the GDP gap. 
B)  demand-pull inflation. 
C)  the inflation premium. 
D)  cost-push inflation. 
A)  the GDP gap. 
B)  demand-pull inflation. 
C)  the inflation premium. 
D)  cost-push inflation.

Question 2

If the nominal interest rate is 8 percent and the real interest rate is 5 percent,then the inflation premium is 13 percent.

Accepted Answer

A) True 
 B)False

Question 3

Suppose that lenders want to receive a real rate of interest of 5 percent,and that they expect inflation to remain steady at 2 percent in the coming years.Based on this,lenders should charge a nominal interest rate of:

Accepted Answer

A)  2 percent. 
B)  3 percent. 
C)  5 percent. 
D)  7 percent. 
A)  2 percent. 
B)  3 percent. 
C)  5 percent. 
D)  7 percent.

Question 4

The phase of the business cycle in which real GDP is at a minimum is called:

Accepted Answer

A)  the peak. 
B)  a recession. 
C)  the trough. 
D)  the underside. 
A)  the peak. 
B)  a recession. 
C)  the trough. 
D)  the underside.

Question 5

(Consider This)The feudal practice of clipping coins illustrates the idea of:

Accepted Answer

A)  taxation through inflation. 
B)  good money driving out bad money. 
C)  the derived demand for resources. 
D)  cost-push inflation. 
A)  taxation through inflation. 
B)  good money driving out bad money. 
C)  the derived demand for resources. 
D)  cost-push inflation.

Question 6

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

Accepted Answer

A)  Unexpected financial bubbles that eventually burst. 
B)  Shocks to the money supply by the nation's central bank. 
C)  Supply shocks caused by major innovations. 
D)  All of these are identified as causes of business cycle changes. 
A)  Unexpected financial bubbles that eventually burst. 
B)  Shocks to the money supply by the nation's central bank. 
C)  Supply shocks caused by major innovations. 
D)  All of these are identified as causes of business cycle changes.

Question 7

Assuming the total population is 100 million,the civilian labor force is 50 million,and 47 million workers are employed,the unemployment rate is:

Accepted Answer

A)  3 percent. 
B)  6 percent. 
C)  7 percent. 
D)  53 percent. 
A)  3 percent. 
B)  6 percent. 
C)  7 percent. 
D)  53 percent.

Question 8

Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B.Kyle will be considered as:

Accepted Answer

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

Question 9

Answer the question on the basis of the following information about a hypothetical economy: Full-Time Employed = $\mathbf { 8 0 }$
Part-Time Employed = 25
Unemployed $= 15$
Discouraged Workers = 5
Members of Underground Economy = 6
Consumer Price Index $= 110$ Refer to the given information.If the members of the underground economy are presently counted as part of the unemployed when in fact they are employed,the official unemployment rate is overstated by about:

Accepted Answer

A)  0 percentage points. 
B)  2 percentage points. 
C)  5 percentage points. 
D)  6 percentage points. 
A)  0 percentage points. 
B)  2 percentage points. 
C)  5 percentage points. 
D)  6 percentage points.

Question 10

Cost-push inflation:

Accepted Answer

A)  is caused by excessive total spending. 
B)  shifts the nation's production possibilities curve leftward. 
C)  moves the economy inward from its production possibilities curve. 
D)  is a mixed blessing because it has positive effects on real output and employment. 
A)  is caused by excessive total spending. 
B)  shifts the nation's production possibilities curve leftward. 
C)  moves the economy inward from its production possibilities curve. 
D)  is a mixed blessing because it has positive effects on real output and employment.

Question 11

Kara voluntarily quit her job as an insurance agent to return to school full time to earn an MBA degree.With degree in hand,she is now searching for a position in management.Kara presently is:

Accepted Answer

A)  cyclically unemployed. 
B)  structurally unemployed. 
C)  frictionally unemployed. 
D)  not a member of the labor force. 
A)  cyclically unemployed. 
B)  structurally unemployed. 
C)  frictionally unemployed. 
D)  not a member of the labor force.

Question 12

People who work part time,but desire to work full time,are considered to be officially unemployed.

Accepted Answer

A) True 
 B)False

Question 13

Answer the question on the basis of the following information about a hypothetical economy: Full-Time Employed = $\mathbf { 8 0 }$
Part-Time Employed = 25
Unemployed $= 15$
Discouraged Workers = 5
Members of Underground Economy = 6
Consumer Price Index $= 110$ Refer to the given information.The unemployment rate is:

Accepted Answer

A)  18.8 percent. 
B)  12.5 percent. 
C)  16.7 percent. 
D)  25 percent. 
A)  18.8 percent. 
B)  12.5 percent. 
C)  16.7 percent. 
D)  25 percent.

Question 14

If the consumer price index falls from 120 to 116 in a particular year,the economy has experienced:

Accepted Answer

A)  inflation of 4 percent. 
B)  inflation of 3.33 percent. 
C)  deflation of 3.33 percent. 
D)  deflation of 4 percent. 
A)  inflation of 4 percent. 
B)  inflation of 3.33 percent. 
C)  deflation of 3.33 percent. 
D)  deflation of 4 percent.

Question 15

Which of the following would most likely move the economy into a recession in the short term?

Accepted Answer

A)  Invention of a new product that most consumers want to buy. 
B)  Innovations in management that enhance worker productivity. 
C)  The central bank printing less money than was anticipated. 
D)  Congress passing a reduction in personal income tax rates. 
A)  Invention of a new product that most consumers want to buy. 
B)  Innovations in management that enhance worker productivity. 
C)  The central bank printing less money than was anticipated. 
D)  Congress passing a reduction in personal income tax rates.

Question 16

The natural rate of unemployment is the:

Accepted Answer

A)  unemployment rate experienced at the depth of a depression. 
B)  full-employment unemployment rate. 
C)  unemployment rate experienced by the least-skilled workers in the economy. 
D)  unemployment rate experienced by the most-skilled workers in the economy. 
A)  unemployment rate experienced at the depth of a depression. 
B)  full-employment unemployment rate. 
C)  unemployment rate experienced by the least-skilled workers in the economy. 
D)  unemployment rate experienced by the most-skilled workers in the economy.

Question 17

During a severe recession,we would expect output to fall the most in:

Accepted Answer

A)  the health care industry. 
B)  the clothing industry. 
C)  agriculture. 
D)  the construction industry. 
A)  the health care industry. 
B)  the clothing industry. 
C)  agriculture. 
D)  the construction industry.

Question 18

(Consider This)The main point of the Consider This box on clipping coins is that:

Accepted Answer

A)  decreases in the money supply cause deflation. 
B)  decreases in tax rates often increase tax revenues. 
C)  inflation imposes a "hidden tax" on those who hold money. 
D)  demand creates its own supply. 
A)  decreases in the money supply cause deflation. 
B)  decreases in tax rates often increase tax revenues. 
C)  inflation imposes a "hidden tax" on those who hold money. 
D)  demand creates its own supply.

Question 19

Susie has lost her job in a Vermont textile plant because of import competition.She intends to take a short course in electronics and move to Oregon,where she anticipates that a new job will be available.We can say that Susie is faced with:

Accepted Answer

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

Question 20

Part-time workers who want full-time work are counted as:

Accepted Answer

A)  unemployed and therefore the official unemployment rate may overstate the level of unemployment. 
B)  unemployed and therefore the official unemployment rate may understate the level of unemployment. 
C)  fully employed and therefore the official unemployment rate may overstate the level of unemployment. 
D)  fully employed and therefore the official unemployment rate may understate the level of unemployment. 
A)  unemployed and therefore the official unemployment rate may overstate the level of unemployment. 
B)  unemployed and therefore the official unemployment rate may understate the level of unemployment. 
C)  fully employed and therefore the official unemployment rate may overstate the level of unemployment. 
D)  fully employed and therefore the official unemployment rate may understate the level of unemployment.

The phrase "too much money chasing too few goods" best describes:

If the nominal interest rate is 8 percent and the real interest rate is 5 percent,then the inflation premium is 13 percent.

Suppose that lenders want to receive a real rate of interest of 5 percent,and that they expect inflation to remain steady at 2 percent in the coming years.Based on this,lenders should charge a nominal interest rate of:

The phase of the business cycle in which real GDP is at a minimum is called:

(Consider This)The feudal practice of clipping coins illustrates the idea of:

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

Assuming the total population is 100 million,the civilian labor force is 50 million,and 47 million workers are employed,the unemployment rate is:

Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B.Kyle will be considered as:

Cost-push inflation:

Kara voluntarily quit her job as an insurance agent to return to school full time to earn an MBA degree.With degree in hand,she is now searching for a position in management.Kara presently is:

People who work part time,but desire to work full time,are considered to be officially unemployed.

If the consumer price index falls from 120 to 116 in a particular year,the economy has experienced:

Which of the following would most likely move the economy into a recession in the short term?

The natural rate of unemployment is the:

During a severe recession,we would expect output to fall the most in:

(Consider This)The main point of the Consider This box on clipping coins is that:

Susie has lost her job in a Vermont textile plant because of import competition.She intends to take a short course in electronics and move to Oregon,where she anticipates that a new job will be available.We can say that Susie is faced with:

Part-time workers who want full-time work are counted as:

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

The phrase "too much money chasing too few goods" best describes:

If the nominal interest rate is 8 percent and the real interest rate is 5 percent,then the inflation premium is 13 percent.

Suppose that lenders want to receive a real rate of interest of 5 percent,and that they expect inflation to remain steady at 2 percent in the coming years.Based on this,lenders should charge a nominal interest rate of:

The phase of the business cycle in which real GDP is at a minimum is called:

(Consider This)The feudal practice of clipping coins illustrates the idea of:

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

Assuming the total population is 100 million,the civilian labor force is 50 million,and 47 million workers are employed,the unemployment rate is:

Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B.Kyle will be considered as:

Cost-push inflation:

Kara voluntarily quit her job as an insurance agent to return to school full time to earn an MBA degree.With degree in hand,she is now searching for a position in management.Kara presently is:

People who work part time,but desire to work full time,are considered to be officially unemployed.

If the consumer price index falls from 120 to 116 in a particular year,the economy has experienced:

Which of the following would most likely move the economy into a recession in the short term?

The natural rate of unemployment is the:

During a severe recession,we would expect output to fall the most in:

(Consider This)The main point of the Consider This box on clipping coins is that:

Susie has lost her job in a Vermont textile plant because of import competition.She intends to take a short course in electronics and move to Oregon,where she anticipates that a new job will be available.We can say that Susie is faced with:

Part-time workers who want full-time work are counted as:

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