Question 1

What is the business cycle? How "cyclical" is it? What causes the business cycle?

Accepted Answer

The business cycle refers to the ups and

Question 2

-In the table shown above, the total cost of the market basket in 2018 was

Accepted Answer

A)  $6.00. 
B)  $8.50. 
C)  $60.00. 
D)  $85.00. 
A)  $6.00. 
B)  $8.50. 
C)  $60.00. 
D)  $85.00.

Question 3

The number of people that are laid off in a month is

Accepted Answer

A)  a stock. 
B)  a flow. 
C)  both a stock and a flow. 
D)  neither a stock nor a flow. 
A)  a stock. 
B)  a flow. 
C)  both a stock and a flow. 
D)  neither a stock nor a flow.

Question 4

All of the following are considered to be unemployed EXCEPT

Accepted Answer

A)  job leavers. 
B)  discouraged workers. 
C)  job reentrants. 
D)  new job entrants. 
A)  job leavers. 
B)  discouraged workers. 
C)  job reentrants. 
D)  new job entrants.

Question 5

If there is unemployment and all businesses are operating at less than full capacity, then

Accepted Answer

A)  there are too many workers, and some people ought to leave the labor force. 
B)  we are not experiencing a net social cost to unemployment because it is offset by the capacity levels of the factories. 
C)  society is producing inside its production possibilities curve. 
D)  society is at the wrong point on the production possibilities curve. 
A)  there are too many workers, and some people ought to leave the labor force. 
B)  we are not experiencing a net social cost to unemployment because it is offset by the capacity levels of the factories. 
C)  society is producing inside its production possibilities curve. 
D)  society is at the wrong point on the production possibilities curve.

Question 6

One criticism of the unemployment rate is that it

Accepted Answer

A)  does not include the number of discouraged workers as unemployed. 
B)  does not include people who are not working and are not looking for work. 
C)  counts a new entrant that is actively seeking work as unemployed. 
D)  is a stock measure. 
A)  does not include the number of discouraged workers as unemployed. 
B)  does not include people who are not working and are not looking for work. 
C)  counts a new entrant that is actively seeking work as unemployed. 
D)  is a stock measure.

Question 7

All of the following are examples of a flow EXCEPT

Accepted Answer

A)  a new entrant into the labor force. 
B)  an individual who voluntarily leaves the labor force. 
C)  a person who is fired from a job. 
D)  the current unemployment rate. 
A)  a new entrant into the labor force. 
B)  an individual who voluntarily leaves the labor force. 
C)  a person who is fired from a job. 
D)  the current unemployment rate.

Question 8

The unemployment rate will rise when

Accepted Answer

A)  people get discouraged and quit looking for a job. 
B)  the average work week falls from 40 hours to 39 hours. 
C)  the duration of unemployment increases. 
D)  the size of the labor force increases without an increase in employment. 
A)  people get discouraged and quit looking for a job. 
B)  the average work week falls from 40 hours to 39 hours. 
C)  the duration of unemployment increases. 
D)  the size of the labor force increases without an increase in employment.

Question 9

Unanticipated inflation occurs when

Accepted Answer

A)  everyone knows perfectly the true rate of inflation. 
B)  the actual inflation rate differs from the anticipated inflation rate. 
C)  the inflation rate is zero. 
D)  there is no change in the purchasing power of money. 
A)  everyone knows perfectly the true rate of inflation. 
B)  the actual inflation rate differs from the anticipated inflation rate. 
C)  the inflation rate is zero. 
D)  there is no change in the purchasing power of money.

Question 10

In 2018, the price for a market basket of consumer goods is $800. In the base year, the cost of the identical market basket was $1,000. The price index in this case is

Accepted Answer

A)  80.0. 
B)  130.0. 
C)  800.0. 
D)  180.0. 
A)  80.0. 
B)  130.0. 
C)  800.0. 
D)  180.0.

Question 11

-Refer the above figure. Stage "1" of the economy is called

Accepted Answer

A)  the top. 
B)  the peak. 
C)  the trend. 
D)  the climax. 
A)  the top. 
B)  the peak. 
C)  the trend. 
D)  the climax.

Question 12

By the legal definition of unemployment, a person who has quit his job to take care of his children full time is

Accepted Answer

A)  unemployed. 
B)  employed. 
C)  in the labor force. 
D)  not in the labor force. 
A)  unemployed. 
B)  employed. 
C)  in the labor force. 
D)  not in the labor force.

Question 13

The rate of unemployment is found by

Accepted Answer

A)  dividing the number unemployed by the number of people in the labor force. 
B)  dividing the number unemployed by the number employed. 
C)  dividing the number employed by the number of people in the labor force. 
D)  dividing the number employed by the number unemployed. 
A)  dividing the number unemployed by the number of people in the labor force. 
B)  dividing the number unemployed by the number employed. 
C)  dividing the number employed by the number of people in the labor force. 
D)  dividing the number employed by the number unemployed.

Question 14

The duration of unemployment tends to rise when

Accepted Answer

A)  people leave their jobs rather than lose their jobs. 
B)  the number of entrants exceeds the number of reentrants. 
C)  business activity starts back up after a long period of decline. 
D)  business activity goes into a downturn. 
A)  people leave their jobs rather than lose their jobs. 
B)  the number of entrants exceeds the number of reentrants. 
C)  business activity starts back up after a long period of decline. 
D)  business activity goes into a downturn.

Question 15

Who is considered officially unemployed?

Accepted Answer

A)  Six months after failing to get a job, Abba quit looking. 
B)  Monica graduated from college last summer but is still unemployed despite her spirited search. 
C)  Maria is working part time but she wishes to work full time. 
D)  Chen is going to school full time. 
A)  Six months after failing to get a job, Abba quit looking. 
B)  Monica graduated from college last summer but is still unemployed despite her spirited search. 
C)  Maria is working part time but she wishes to work full time. 
D)  Chen is going to school full time.

Question 16

Unemployment that results from the seasonal pattern of work in specific industries is

Accepted Answer

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

Question 17

Last year you purchased 20 CDs at $12 a piece, 10 shirts at $15 each, and 5 sweaters at $30 each (total spending equals $540). This year you buy 18 CDs at $15 each, 10 shirts at $16 each, and 6 sweaters at $36 each (total spending equals $640). If last year's index was 100, this year's index

Accepted Answer

A)  is 119.6. 
B)  is 118.5. 
C)  is 83.6. 
D)  is 30. 
A)  is 119.6. 
B)  is 118.5. 
C)  is 83.6. 
D)  is 30.

Question 18

-In the table shown above, assuming that the market basket cost of light bulbs and volleyballs in the base year was $4500, what would the price index for this two-good market equal in the year 2017?

Accepted Answer

A)  104.86 
B)  100.00 
C)  112.52 
D)  122.22 
A)  104.86 
B)  100.00 
C)  112.52 
D)  122.22

Question 19

Assume you borrow funds to buy a new car at 3 percent interest and you think that the economy-wide rate of inflation over the life of the loan will be 2 percent. If you are correct in your assumption, your real rate of interest on the car loan will be

Accepted Answer

A)  1 percent. 
B)  2 percent. 
C)  3 percent. 
D)  5 percent. 
A)  1 percent. 
B)  2 percent. 
C)  3 percent. 
D)  5 percent.

Question 20

In a small country, the adult population equals 500. There are 400 people in the labor force and 300 people are employed. The labor force participation rate equals

Accepted Answer

A)  75 percent. 
B)  80 percent. 
C)  60 percent. 
D)  an undetermined amount given the lack of information. 
A)  75 percent. 
B)  80 percent. 
C)  60 percent. 
D)  an undetermined amount given the lack of information.

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

What is the business cycle? How "cyclical" is it? What causes the business cycle?

-In the table shown above, the total cost of the market basket in 2018 was

The number of people that are laid off in a month is

All of the following are considered to be unemployed EXCEPT

If there is unemployment and all businesses are operating at less than full capacity, then

One criticism of the unemployment rate is that it

All of the following are examples of a flow EXCEPT

The unemployment rate will rise when

Unanticipated inflation occurs when

In 2018, the price for a market basket of consumer goods is $800. In the base year, the cost of the identical market basket was $1,000. The price index in this case is

-Refer the above figure. Stage "1" of the economy is called

By the legal definition of unemployment, a person who has quit his job to take care of his children full time is

The rate of unemployment is found by

The duration of unemployment tends to rise when

Who is considered officially unemployed?

Unemployment that results from the seasonal pattern of work in specific industries is

Last year you purchased 20 CDs at $12 a piece, 10 shirts at $15 each, and 5 sweaters at $30 each (total spending equals $540). This year you buy 18 CDs at $15 each, 10 shirts at $16 each, and 6 sweaters at $36 each (total spending equals $640). If last year's index was 100, this year's index

-In the table shown above, assuming that the market basket cost of light bulbs and volleyballs in the base year was $4500, what would the price index for this two-good market equal in the year 2017?

Assume you borrow funds to buy a new car at 3 percent interest and you think that the economy-wide rate of inflation over the life of the loan will be 2 percent. If you are correct in your assumption, your real rate of interest on the car loan will be

In a small country, the adult population equals 500. There are 400 people in the labor force and 300 people are employed. The labor force participation rate equals

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

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