Question 1

Which of the following statements is correct?

Accepted Answer

A)  The depth and the length of all business cycles are identical. 
B)  The depth and the length of all business cycles are different. 
C)  Business cycles are caused by seasonal unemployment changes. 
D)  Business cycles are caused by unanticipated inflation. 
A)  The depth and the length of all business cycles are identical. 
B)  The depth and the length of all business cycles are different. 
C)  Business cycles are caused by seasonal unemployment changes. 
D)  Business cycles are caused by unanticipated inflation.

Question 2

The government agency which has been given the task of calculating the Consumer Price Index (CPI) is

Accepted Answer

A)  the Bureau of Economic Research. 
B)  the Department of State. 
C)  the Council of Economic Advisors. 
D)  the Bureau of Labor Statistics. 
A)  the Bureau of Economic Research. 
B)  the Department of State. 
C)  the Council of Economic Advisors. 
D)  the Bureau of Labor Statistics.

Question 3

An unexpected reduction in inflation would tend to benefit which of the following?

Accepted Answer

A)  creditors 
B)  debtors 
C)  creditors and debtors 
D)  neither creditors nor debtors 
A)  creditors 
B)  debtors 
C)  creditors and debtors 
D)  neither creditors nor debtors

Question 4

Which one of the following individuals is NOT counted as unemployed?

Accepted Answer

A)  a recent college graduate currently without any employment and looking for her first full-time job 
B)  a 35-year-old woman fired from her prior work because of poor performance and looking for another job 
C)  a 50-year-old woman laid off from her former job because of a downturn in the company's sales and looking for another job 
D)  a 22-year-old aspiring actress currently without any show business employment, but working temporarily as a waitress while she auditions for acting jobs 
A)  a recent college graduate currently without any employment and looking for her first full-time job 
B)  a 35-year-old woman fired from her prior work because of poor performance and looking for another job 
C)  a 50-year-old woman laid off from her former job because of a downturn in the company's sales and looking for another job 
D)  a 22-year-old aspiring actress currently without any show business employment, but working temporarily as a waitress while she auditions for acting jobs

Question 5

Suppose the actual inflation rate is less than the anticipated inflation rate. Given this information, we know with certainty that the real rate of interest

Accepted Answer

A)  is negative. 
B)  is more than the nominal rate of interest. 
C)  equals the nominal rate of interest. 
D)  none of the above (i.e., more information is needed to answer this question). 
A)  is negative. 
B)  is more than the nominal rate of interest. 
C)  equals the nominal rate of interest. 
D)  none of the above (i.e., more information is needed to answer this question).

Question 6

New entrants to the labor force usually account for around ________ percent of the unemployed.

Accepted Answer

A)  10 
B)  20 
C)  25 
D)  30 
A)  10 
B)  20 
C)  25 
D)  30

Question 7

The official unemployment rate may understate the true rate of unemployment because of

Accepted Answer

A)  workers who hold two jobs. 
B)  increases in worker productivity. 
C)  changes in wage rates. 
D)  discouraged workers who no longer are actively seeking work and are excluded from the statistics. 
A)  workers who hold two jobs. 
B)  increases in worker productivity. 
C)  changes in wage rates. 
D)  discouraged workers who no longer are actively seeking work and are excluded from the statistics.

Question 8

A person who has taken medical leave is

Accepted Answer

A)  in the labor force. 
B)  not in the labor force. 
C)  unemployed. 
D)  a job leaver. 
A)  in the labor force. 
B)  not in the labor force. 
C)  unemployed. 
D)  a job leaver.

Question 9

Which of the following can cause official unemployment figures to underestimate the true unemployment rate?

Accepted Answer

A)  Some people get discouraged and quit looking for a job. 
B)  Some people engage in illegal activities. 
C)  Some people work "off the books." 
D)  Some people work overtime. 
A)  Some people get discouraged and quit looking for a job. 
B)  Some people engage in illegal activities. 
C)  Some people work "off the books." 
D)  Some people work overtime.

Question 10

A person who previously had a full-time job has been paroled from prison and has applied for a job is considered

Accepted Answer

A)  a reentrant. 
B)  a job loser. 
C)  a new entrant. 
D)  not in the labor force. 
A)  a reentrant. 
B)  a job loser. 
C)  a new entrant. 
D)  not in the labor force.

Question 11

Inflation refers to the situation when

Accepted Answer

A)  the prices of necessities increase. 
B)  the average of all prices is increasing. 
C)  all prices rise by the same rate. 
D)  the rate at which prices are rising is rising. 
A)  the prices of necessities increase. 
B)  the average of all prices is increasing. 
C)  all prices rise by the same rate. 
D)  the rate at which prices are rising is rising.

Question 12

The long-run trend in business activity is

Accepted Answer

A)  downward. 
B)  constant. 
C)  upward. 
D)  such that it cannot be described as a trend. 
A)  downward. 
B)  constant. 
C)  upward. 
D)  such that it cannot be described as a trend.

Question 13

The price level has been rising 5 percent a year for 10 years and is expected to continue to do so. The nominal rate of interest is 4 percent. The real rate of interest is

Accepted Answer

A)  5 percent. 
B)  1 percent. 
C)  9 percent. 
D)  -1 percent. 
A)  5 percent. 
B)  1 percent. 
C)  9 percent. 
D)  -1 percent.

Question 14

One major reason that economists are concerned about unemployment is that

Accepted Answer

A)  unemployment always leads to frictional unemployment. 
B)  unemployment reduces the size of the labor force. 
C)  unemployment shifts the production possibilities curve outward. 
D)  the economy is producing less output than if there were full employment. 
A)  unemployment always leads to frictional unemployment. 
B)  unemployment reduces the size of the labor force. 
C)  unemployment shifts the production possibilities curve outward. 
D)  the economy is producing less output than if there were full employment.

Question 15

The unemployment rate will decrease when

Accepted Answer

A)  the duration of unemployment increases. 
B)  the average workweek falls from 40 to 39 hours. 
C)  the age of the labor force increases. 
D)  people get discouraged and quit looking for work. 
A)  the duration of unemployment increases. 
B)  the average workweek falls from 40 to 39 hours. 
C)  the age of the labor force increases. 
D)  people get discouraged and quit looking for work.

Question 16

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is ________ and the new unemployment rate is ________.

Accepted Answer

A)  100.1 million; 5.8 percent 
B)  100 million; 6.1 percent 
C)  94.1 million; 5.9 percent 
D)  93.9 million; 6.1 percent 
A)  100.1 million; 5.8 percent 
B)  100 million; 6.1 percent 
C)  94.1 million; 5.9 percent 
D)  93.9 million; 6.1 percent

Question 17

Last year you purchased 20 shirts at $15 apiece, 30 CDs at $12 each, and 5 sweaters at $25 apiece. This year you buy 20 shirts at $20 apiece, 30 CDs at $12 apiece, and 5 sweaters at $20 apiece. If last year's index was 100, this year's index is

Accepted Answer

A)  91.3. 
B)  102.0. 
C)  109.5. 
D)  9.5. 
A)  91.3. 
B)  102.0. 
C)  109.5. 
D)  9.5.

Question 18

-Refer to the above figure. Stage "3" of the economy is called

Accepted Answer

A)  a development. 
B)  a pit. 
C)  a trough. 
D)  a hole. 
A)  a development. 
B)  a pit. 
C)  a trough. 
D)  a hole.

Question 19

The labor force participation rate is

Accepted Answer

A)  the percentage of the population who are in the labor force. 
B)  the percentage of the non-institutionalized working age population who is in the labor force. 
C)  the percentage of the non-institutionalized population who is in the labor force. 
D)  the percentage of the entire population who is in the labor force. 
A)  the percentage of the population who are in the labor force. 
B)  the percentage of the non-institutionalized working age population who is in the labor force. 
C)  the percentage of the non-institutionalized population who is in the labor force. 
D)  the percentage of the entire population who is in the labor force.

Question 20

Typically during a recession

Accepted Answer

A)  incomes fall, and unemployment falls. 
B)  incomes and unemployment rise. 
C)  incomes fall, and unemployment rises. 
D)  incomes increase, and unemployment falls. 
A)  incomes fall, and unemployment falls. 
B)  incomes and unemployment rise. 
C)  incomes fall, and unemployment rises. 
D)  incomes increase, and unemployment falls.

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

Which of the following statements is correct?

The government agency which has been given the task of calculating the Consumer Price Index (CPI) is

An unexpected reduction in inflation would tend to benefit which of the following?

Which one of the following individuals is NOT counted as unemployed?

Suppose the actual inflation rate is less than the anticipated inflation rate. Given this information, we know with certainty that the real rate of interest

New entrants to the labor force usually account for around ________ percent of the unemployed.

The official unemployment rate may understate the true rate of unemployment because of

A person who has taken medical leave is

Which of the following can cause official unemployment figures to underestimate the true unemployment rate?

A person who previously had a full-time job has been paroled from prison and has applied for a job is considered

Inflation refers to the situation when

The long-run trend in business activity is

The price level has been rising 5 percent a year for 10 years and is expected to continue to do so. The nominal rate of interest is 4 percent. The real rate of interest is

One major reason that economists are concerned about unemployment is that

The unemployment rate will decrease when

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is ________ and the new unemployment rate is ________.

Last year you purchased 20 shirts at $15 apiece, 30 CDs at $12 each, and 5 sweaters at $25 apiece. This year you buy 20 shirts at $20 apiece, 30 CDs at $12 apiece, and 5 sweaters at $20 apiece. If last year's index was 100, this year's index is

-Refer to the above figure. Stage "3" of the economy is called

The labor force participation rate is

Typically during a recession

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

Filters

Suppose there are 100 million in the labor force, and 6 million unemployed people. During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is and the new unemployment rate is .