Question 1

If actual GDP is $340 billion and there is a positive GDP gap of $20 billion,potential GDP is:

Accepted Answer

A)  $360 billion. 
B)  $660 billion. 
C)  $320 billion. 
D)  $20 billion. 
A)  $360 billion. 
B)  $660 billion. 
C)  $320 billion. 
D)  $20 billion.

Question 2

If actual GDP is less than potential GDP:

Accepted Answer

A)  potential GDP will fall. 
B)  the price level will rise. 
C)  investment spending will fall. 
D)  the actual unemployment rate will be higher than the natural unemployment rate. 
A)  potential GDP will fall. 
B)  the price level will rise. 
C)  investment spending will fall. 
D)  the actual unemployment rate will be higher than the natural unemployment rate.

Question 3

Compared to other industrial nations,inflation rates in the United States are:

Accepted Answer

A)  significantly higher. 
B)  significantly lower. 
C)  significantly higher than those in Europe and significantly lower than those in Japan. 
D)  neither significantly higher nor significantly lower. 
A)  significantly higher. 
B)  significantly lower. 
C)  significantly higher than those in Europe and significantly lower than those in Japan. 
D)  neither significantly higher nor significantly lower.

Question 4

Cost-push inflation may be caused by:

Accepted Answer

A)  a decline in per unit production costs. 
B)  a decrease in wage rates. 
C)  a negative supply shock. 
D)  an increase in resource availability. 
A)  a decline in per unit production costs. 
B)  a decrease in wage rates. 
C)  a negative supply shock. 
D)  an increase in resource availability.

Question 5

During a period of hyperinflation:

Accepted Answer

A)  creditors gain because their loans are repaid with dollars of higher value. 
B)  people tend to hold goods rather than money. 
C)  income is redistributed away from borrowers. 
D)  the real value of the national currency rises. 
A)  creditors gain because their loans are repaid with dollars of higher value. 
B)  people tend to hold goods rather than money. 
C)  income is redistributed away from borrowers. 
D)  the real value of the national currency rises.

Question 6

If actual GDP is $500 billion and there is a negative GDP gap of $10 billion,potential GDP is:

Accepted Answer

A)  $510 billion. 
B)  $490 billion. 
C)  $10 billion. 
D)  $990 billion. 
A)  $510 billion. 
B)  $490 billion. 
C)  $10 billion. 
D)  $990 billion.

Question 7

The annual rate of inflation can be found by subtracting:

Accepted Answer

A)  the real income from the nominal income. 
B)  last year's price index from this year's price index. 
C)  this year's price index from last year's price index and dividing the difference by this year's price index. 
D)  last year's price index from this year's price index and dividing the difference by last year's price index. 
A)  the real income from the nominal income. 
B)  last year's price index from this year's price index. 
C)  this year's price index from last year's price index and dividing the difference by this year's price index. 
D)  last year's price index from this year's price index and dividing the difference by last year's price index.

Question 8

The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:

Accepted Answer

A)  military goods and capital goods. 
B)  services and nondurable consumer goods. 
C)  clothing and education. 
D)  capital goods and durable consumer goods. 
A)  military goods and capital goods. 
B)  services and nondurable consumer goods. 
C)  clothing and education. 
D)  capital goods and durable consumer goods.

Question 9

Who is least likely to be hurt by unanticipated inflation?

Accepted Answer

A)  A disabled laborer who is living off accumulated savings. 
B)  An owner of a small business. 
C)  A secretary. 
D)  A pensioned steelworker. 
A)  A disabled laborer who is living off accumulated savings. 
B)  An owner of a small business. 
C)  A secretary. 
D)  A pensioned steelworker.

Question 10

Which of the following formulas is correct? Percentage change in:

Accepted Answer

A)  price level approximates percentage change in real income minus percentage change in nominal income. 
B)  real income approximates percentage change in nominal income minus percentage change in price level. 
C)  nominal income approximates percentage change in price level minus percentage change in real income. 
D)  real income approximates percentage change in price level minus percentage change in nominal income. 
A)  price level approximates percentage change in real income minus percentage change in nominal income. 
B)  real income approximates percentage change in nominal income minus percentage change in price level. 
C)  nominal income approximates percentage change in price level minus percentage change in real income. 
D)  real income approximates percentage change in price level minus percentage change in nominal income.

Question 11

Recurring upswings and downswings in an economy's real GDP over time are called:

Accepted Answer

A)  recessions. 
B)  business cycles. 
C)  output yo-yos. 
D)  total product oscillations. 
A)  recessions. 
B)  business cycles. 
C)  output yo-yos. 
D)  total product oscillations.

Question 12

The phase of the business cycle in which real GDP declines is called:

Accepted Answer

A)  the peak. 
B)  an expansion. 
C)  a recession. 
D)  the trough. 
A)  the peak. 
B)  an expansion. 
C)  a recession. 
D)  the trough.

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.The amount of output being forgone by the economy is:

Accepted Answer

A)  $12 billion. 
B)  $15 billion. 
C)  $18 billion. 
D)  $24 billion. 
A)  $12 billion. 
B)  $15 billion. 
C)  $18 billion. 
D)  $24 billion.

Question 14

Answer the question on the basis of the following information about the hypothetical economy of Scoob.All figures are in millions. $\begin{array} { l l } 
\text { Unemployed } & 7 \
\text { Total Population } & 145 \
\text { Employed } & 95 \
\text { Discouraged Workers } & 3
\end{array}$ Refer to the given information.The unemployment rate in Scoob is:

Accepted Answer

A)  2.5 percent. 
B)  3.2 percent. 
C)  5.0 percent. 
D)  6.9 percent. 
A)  2.5 percent. 
B)  3.2 percent. 
C)  5.0 percent. 
D)  6.9 percent.

Question 15

Between 1980 and 2000 the price level approximately doubled.The average annual rate of inflation over this 20-year period was about:

Accepted Answer

A)  5.5 percent. 
B)  4.7 percent. 
C)  3.5 percent. 
D)  2.8 percent. 
A)  5.5 percent. 
B)  4.7 percent. 
C)  3.5 percent. 
D)  2.8 percent.

Question 16

As applied to the price level,the "rule of 70" indicates that the number of years required for the price level to double can be found by:

Accepted Answer

A)  dividing 70 into the annual rate of inflation. 
B)  dividing the annual rate of inflation into 70. 
C)  subtracting the annual change in nominal incomes from 70. 
D)  multiplying the annual rate of inflation by 70. 
A)  dividing 70 into the annual rate of inflation. 
B)  dividing the annual rate of inflation into 70. 
C)  subtracting the annual change in nominal incomes from 70. 
D)  multiplying the annual rate of inflation by 70.

Question 17

A college graduate using the summer following graduation to search for a job would best be classified as:

Accepted Answer

A)  not officially a member of the labor force. 
B)  a part of structural unemployment. 
C)  a part of cyclical unemployment. 
D)  a part of frictional unemployment. 
A)  not officially a member of the labor force. 
B)  a part of structural unemployment. 
C)  a part of cyclical unemployment. 
D)  a part of frictional unemployment.

Question 18

The relationship between the size of the negative GDP gap and the unemployment rate is:

Accepted Answer

A)  direct. 
B)  inverse. 
C)  undefined. 
D)  direct during recession but inverse during expansion. 
A)  direct. 
B)  inverse. 
C)  undefined. 
D)  direct during recession but inverse during expansion.

Question 19

In which of the following cases would real income rise?

Accepted Answer

A)  Nominal income rises by 8 percent and the price level rises by 10 percent. 
B)  Nominal income rises by 2 percent and the price level remains unchanged. 
C)  Nominal income falls by 4 percent and the price level falls by 2 percent. 
D)  Real income will rise in all of these cases. 
A)  Nominal income rises by 8 percent and the price level rises by 10 percent. 
B)  Nominal income rises by 2 percent and the price level remains unchanged. 
C)  Nominal income falls by 4 percent and the price level falls by 2 percent. 
D)  Real income will rise in all of these cases.

Question 20

During the past ten years,the annual rate of inflation in the United States has averaged less than 1 percent.

Accepted Answer

A) True 
 B)False

If actual GDP is $340 billion and there is a positive GDP gap of $20 billion,potential GDP is:

If actual GDP is less than potential GDP:

Compared to other industrial nations,inflation rates in the United States are:

Cost-push inflation may be caused by:

During a period of hyperinflation:

If actual GDP is $500 billion and there is a negative GDP gap of $10 billion,potential GDP is:

The annual rate of inflation can be found by subtracting:

The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:

Who is least likely to be hurt by unanticipated inflation?

Which of the following formulas is correct? Percentage change in:

Recurring upswings and downswings in an economy's real GDP over time are called:

The phase of the business cycle in which real GDP declines is called:

Answer the question on the basis of the following information about the hypothetical economy of Scoob.All figures are in millions. Unemployed 7 Total Population 145 Employed 95 Discouraged Workers 3 Refer to the given information.The unemployment rate in Scoob is:

Between 1980 and 2000 the price level approximately doubled.The average annual rate of inflation over this 20-year period was about:

As applied to the price level,the "rule of 70" indicates that the number of years required for the price level to double can be found by:

A college graduate using the summer following graduation to search for a job would best be classified as:

The relationship between the size of the negative GDP gap and the unemployment rate is:

In which of the following cases would real income rise?

During the past ten years,the annual rate of inflation in the United States has averaged less than 1 percent.

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

If actual GDP is $340 billion and there is a positive GDP gap of $20 billion,potential GDP is:

If actual GDP is less than potential GDP:

Compared to other industrial nations,inflation rates in the United States are:

Cost-push inflation may be caused by:

During a period of hyperinflation:

If actual GDP is $500 billion and there is a negative GDP gap of $10 billion,potential GDP is:

The annual rate of inflation can be found by subtracting:

The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:

Who is least likely to be hurt by unanticipated inflation?

Which of the following formulas is correct? Percentage change in:

Recurring upswings and downswings in an economy's real GDP over time are called:

The phase of the business cycle in which real GDP declines is called:

Answer the question on the basis of the following information about the hypothetical economy of Scoob.All figures are in millions. Unemployed 7 Total Population 145 Employed 95 Discouraged Workers 3 Refer to the given information.The unemployment rate in Scoob is:

Between 1980 and 2000 the price level approximately doubled.The average annual rate of inflation over this 20-year period was about:

As applied to the price level,the "rule of 70" indicates that the number of years required for the price level to double can be found by:

A college graduate using the summer following graduation to search for a job would best be classified as:

The relationship between the size of the negative GDP gap and the unemployment rate is:

In which of the following cases would real income rise?

During the past ten years,the annual rate of inflation in the United States has averaged less than 1 percent.

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