Question 1

As a result of the hyperflation in Zimbabwe,GDP fell by 50%.

Accepted Answer

A) True 
 B)False

Question 2

A decrease in a person's real wage necessarily means

Accepted Answer

A) lower purchasing power 
B) a lower nominal wage 
C) a lower nominal wage after payment of taxes 
D) a higher nominal wage 
E) a higher nominal wage after payment of taxes 
A) lower purchasing power 
B) a lower nominal wage 
C) a lower nominal wage after payment of taxes 
D) a higher nominal wage 
E) a higher nominal wage after payment of taxes

Question 3

Which of the following is true about labor force participation?

Accepted Answer

A) When workers become unemployed,the labor force participation rate declines. 
B) When the unemployed become "discouraged workers," the labor force participation rate declines. 
C) When workers are not fully using their skills,the labor force participation rate decreases. 
D) Since the 1950s the labor force participation rate of women has decreased in the United States. 
E) The trend toward earlier retirement has increased the labor force participation rate in the United States. 
A) When workers become unemployed,the labor force participation rate declines. 
B) When the unemployed become "discouraged workers," the labor force participation rate declines. 
C) When workers are not fully using their skills,the labor force participation rate decreases. 
D) Since the 1950s the labor force participation rate of women has decreased in the United States. 
E) The trend toward earlier retirement has increased the labor force participation rate in the United States.

Question 4

Exhibit 7-3  
-The inflation illustrated in Exhibit 7-3 would be considered:

Accepted Answer

A) cost-pull inflation 
B) cost-push inflation 
C) demand-push inflation 
D) demand-pull inflation 
E) induced inflation 
A) cost-pull inflation 
B) cost-push inflation 
C) demand-push inflation 
D) demand-pull inflation 
E) induced inflation

Question 5

During periods of inflation,all prices increase.

Accepted Answer

A) True 
 B)False

Question 6

What was the result of increased oil prices during the 1970s?

Accepted Answer

A) Aggregate demand decreased,causing cost-push inflation. 
B) Aggregate demand increased,causing demand-pull inflation. 
C) Aggregate supply increased,causing demand-pull inflation. 
D) Aggregate supply increased,causing cost-push inflation. 
E) Aggregate supply decreased,causing cost-push inflation. 
A) Aggregate demand decreased,causing cost-push inflation. 
B) Aggregate demand increased,causing demand-pull inflation. 
C) Aggregate supply increased,causing demand-pull inflation. 
D) Aggregate supply increased,causing cost-push inflation. 
E) Aggregate supply decreased,causing cost-push inflation.

Question 7

If the aggregate supply curve shifts leftward,

Accepted Answer

A) the price level increases and output increases 
B) the resulting increase in the price level is usually called cost-push inflation 
C) the resulting increase in the price level is usually called demand-pull inflation 
D) the price level increases only if there is also a rightward shift of the aggregate demand curve 
E) the price level decreases and output increases 
A) the price level increases and output increases 
B) the resulting increase in the price level is usually called cost-push inflation 
C) the resulting increase in the price level is usually called demand-pull inflation 
D) the price level increases only if there is also a rightward shift of the aggregate demand curve 
E) the price level decreases and output increases

Question 8

Which of the following is true about U.S.history prior to 1945?

Accepted Answer

A) The inflation rate remained constant during this period. 
B) Cost-push inflation led to depressions,followed by slowly-rising price levels. 
C) The price level remained constant during this period. 
D) Major wars resulted in high inflation rates,after which the inflation rate tapered off. 
E) Major wars resulted in high inflation rates that were usually followed by deflation. 
A) The inflation rate remained constant during this period. 
B) Cost-push inflation led to depressions,followed by slowly-rising price levels. 
C) The price level remained constant during this period. 
D) Major wars resulted in high inflation rates,after which the inflation rate tapered off. 
E) Major wars resulted in high inflation rates that were usually followed by deflation.

Question 9

If the inflation rate is 5 percent and you receive a wage increase of 5 percent,

Accepted Answer

A) your nominal income declines but your real income increases 
B) both your nominal income and your real income increase by 5 percent 
C) your nominal income increases but your real income declines 
D) both your nominal income and your real income decrease by 5 percent 
E) your nominal income increases by 5 percent but your real income is unchanged 
A) your nominal income declines but your real income increases 
B) both your nominal income and your real income increase by 5 percent 
C) your nominal income increases but your real income declines 
D) both your nominal income and your real income decrease by 5 percent 
E) your nominal income increases by 5 percent but your real income is unchanged

Question 10

Most of the unemployment experienced in the United States during the Great Depression was

Accepted Answer

A) cyclical 
B) structural 
C) seasonal 
D) frictional 
E) voluntary 
A) cyclical 
B) structural 
C) seasonal 
D) frictional 
E) voluntary

Question 11

Since World War II,labor force participation rates have

Accepted Answer

A) increased for males and females 
B) remained nearly constant for males and increased for females 
C) decreased for males and decreased for females 
D) increased for males and decreased for females 
E) decreased for males and increased for females 
A) increased for males and females 
B) remained nearly constant for males and increased for females 
C) decreased for males and decreased for females 
D) increased for males and decreased for females 
E) decreased for males and increased for females

Question 12

Workers who are temporarily unemployed but who normally find jobs quickly are called

Accepted Answer

A) frictionally unemployed 
B) cyclically unemployed 
C) seasonally unemployed 
D) structurally unemployed 
E) discouraged workers 
A) frictionally unemployed 
B) cyclically unemployed 
C) seasonally unemployed 
D) structurally unemployed 
E) discouraged workers

Question 13

Cyclical unemployment results from

Accepted Answer

A) a mismatch of skills 
B) being in the wrong geographical location 
C) monetary cost and the time it takes to find the best job 
D) seasonal decreases in demand for labor 
E) prolonged declines in business activity 
A) a mismatch of skills 
B) being in the wrong geographical location 
C) monetary cost and the time it takes to find the best job 
D) seasonal decreases in demand for labor 
E) prolonged declines in business activity

Question 14

The unemployment rate will decrease whenever there is a(n)

Accepted Answer

A) increase in the number of persons classified as unemployed 
B) decrease in the number of unemployed relative to the size of the labor force 
C) decrease in the size of the population and there is no change in the number of persons classified as employed 
D) reduction in the size of the labor force 
E) decrease in the number of unemployed and the population does not change 
A) increase in the number of persons classified as unemployed 
B) decrease in the number of unemployed relative to the size of the labor force 
C) decrease in the size of the population and there is no change in the number of persons classified as employed 
D) reduction in the size of the labor force 
E) decrease in the number of unemployed and the population does not change

Question 15

As a result of hyperinflation,

Accepted Answer

A) real GDP rose faster in Zimbabwe than did nominal GDP 
B) foreigners rushed to invest in Zimbabwe 
C) Zimbabwans tried to spend money just as soon as they received it 
D) Zimbabwans spent more time speculating in currency than they spent producing goods and services 
E) the Zimbabwan economy collapsed 
A) real GDP rose faster in Zimbabwe than did nominal GDP 
B) foreigners rushed to invest in Zimbabwe 
C) Zimbabwans tried to spend money just as soon as they received it 
D) Zimbabwans spent more time speculating in currency than they spent producing goods and services 
E) the Zimbabwan economy collapsed

Question 16

Exhibit 7-2  
-The inflation illustrated in Exhibit 7-2 would be considered:

Accepted Answer

A) cost-pull inflation 
B) cost-push inflation 
C) demand-push inflation 
D) demand-pull inflation 
E) induced inflation 
A) cost-pull inflation 
B) cost-push inflation 
C) demand-push inflation 
D) demand-pull inflation 
E) induced inflation

Question 17

It is difficult to compare unemployment rates across countries because methods of measuring unemployment are not standardized.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following people would be counted among the unemployed?

Accepted Answer

A) a new college graduate selling newspaper advertising part-time while looking for other work 
B) a new college graduate selling newspaper advertising full-time while looking for other work 
C) a new college graduate selling newspaper advertising part-time and not looking for other work 
D) a new college graduate who gets tired of selling newspaper advertising and takes off on a motorcycle trip to Alaska 
E) a new college graduate not qualified for any of the jobs available in his small town 
A) a new college graduate selling newspaper advertising part-time while looking for other work 
B) a new college graduate selling newspaper advertising full-time while looking for other work 
C) a new college graduate selling newspaper advertising part-time and not looking for other work 
D) a new college graduate who gets tired of selling newspaper advertising and takes off on a motorcycle trip to Alaska 
E) a new college graduate not qualified for any of the jobs available in his small town

Question 19

If people suddenly become more willing to lend money,what happens to the equilibrium rate of interest?

Accepted Answer

A) An increase in demand for loanable funds will increase the interest rate. 
B) An increase in the supply of loanable funds will increase the interest rate. 
C) An increase in the supply of loanable funds will decrease the interest rate. 
D) An increase in demand for loanable funds will decrease the interest rate. 
E) A simultaneous increase in both the supply of and demand for loanable funds makes it impossible to predict what will happen to the rate of interest. 
A) An increase in demand for loanable funds will increase the interest rate. 
B) An increase in the supply of loanable funds will increase the interest rate. 
C) An increase in the supply of loanable funds will decrease the interest rate. 
D) An increase in demand for loanable funds will decrease the interest rate. 
E) A simultaneous increase in both the supply of and demand for loanable funds makes it impossible to predict what will happen to the rate of interest.

Question 20

An increase in unemployment benefits is likely to do which of the following?

Accepted Answer

A) reduce a person's incentive to look for work 
B) reduce the opportunity cost of being unemployed 
C) provide a better safety net for employed families 
D) make it more difficult for people to search longer for jobs appropriate to their skill levels 
E) increase the need to accept the first job available after becoming unemployed 
A) reduce a person's incentive to look for work 
B) reduce the opportunity cost of being unemployed 
C) provide a better safety net for employed families 
D) make it more difficult for people to search longer for jobs appropriate to their skill levels 
E) increase the need to accept the first job available after becoming unemployed

Exam 7: Unemployment and Inflation

As a result of the hyperflation in Zimbabwe,GDP fell by 50%.

A decrease in a person's real wage necessarily means

Which of the following is true about labor force participation?

Exhibit 7-3 -The inflation illustrated in Exhibit 7-3 would be considered:

During periods of inflation,all prices increase.

What was the result of increased oil prices during the 1970s?

If the aggregate supply curve shifts leftward,

Which of the following is true about U.S.history prior to 1945?

If the inflation rate is 5 percent and you receive a wage increase of 5 percent,

Most of the unemployment experienced in the United States during the Great Depression was

Since World War II,labor force participation rates have

Workers who are temporarily unemployed but who normally find jobs quickly are called

Cyclical unemployment results from

The unemployment rate will decrease whenever there is a(n)

As a result of hyperinflation,

Exhibit 7-2 -The inflation illustrated in Exhibit 7-2 would be considered:

It is difficult to compare unemployment rates across countries because methods of measuring unemployment are not standardized.

Which of the following people would be counted among the unemployed?

If people suddenly become more willing to lend money,what happens to the equilibrium rate of interest?

An increase in unemployment benefits is likely to do which of the following?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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