Question 1

Which of the following is true of hyperinflation?

Accepted Answer

A) It causes the value of a currency to deteriorate so quickly that people become reluctant to hold that currency. 
B) It is a situation in which people hoard currency expecting its value to increase in recent future. 
C) It is a simultaneous increase in inflation and decrease in the quality of products. 
D) It occurred in the United States in the 1970s. 
E) It is a synonym for cost-push inflation. 
A) It causes the value of a currency to deteriorate so quickly that people become reluctant to hold that currency. 
B) It is a situation in which people hoard currency expecting its value to increase in recent future. 
C) It is a simultaneous increase in inflation and decrease in the quality of products. 
D) It occurred in the United States in the 1970s. 
E) It is a synonym for cost-push inflation.

Question 2

The figure given below represents the business cycle of an economy. Figure 7.1   Refer to Figure 7.1.The movement from point A to point B in the figure is most likely to be associated with _____.

Accepted Answer

A) negative inflation rates. 
B) an increase in the aggregate demand for goods and services. 
C) lagging economic productivity. 
D) an increase in cyclical unemployment. 
E) a downward trend in leading economic indicators. 
A) negative inflation rates. 
B) an increase in the aggregate demand for goods and services. 
C) lagging economic productivity. 
D) an increase in cyclical unemployment. 
E) a downward trend in leading economic indicators.

Question 3

Scenario 7.2 Suppose it has been recently predicted that in the year 2020, the total number of residents in the United States will be 315.5 million, the number of residents under 16 years of age will be 85 million, the number of institutionalized adults will be 17 million, the number of adults not actively looking for work will be 39 million, and the number of unemployed will be 21.5 million.
Refer to the data in Scenario 7.2.What is the predicted unemployment rate in the United States for the year 2020?

Accepted Answer

A) 6.8 percent 
B) 8.3 percent 
C) 11.5 percent 
D) 12.3 percent 
E) 16.5 percent 
A) 6.8 percent 
B) 8.3 percent 
C) 11.5 percent 
D) 12.3 percent 
E) 16.5 percent

Question 4

Other things equal, as the number of discouraged workers rises in an economy, the gap between potential and actual real GDP will widen.

Accepted Answer

A) True 
 B)False

Question 5

According to the labor statistics of the United States, the _____ reported the highest unemployment rate between 1960 and 2008.

Accepted Answer

A) Whites 
B) Asians 
C) African Americans 
D) Hispanics 
E) Latinos 
A) Whites 
B) Asians 
C) African Americans 
D) Hispanics 
E) Latinos

Question 6

Frictional and structural unemployment are always present in a dynamic economy.

Accepted Answer

A) True 
 B)False

Question 7

Including discouraged workers in the labor market statistics would raise the unemployment rate.

Accepted Answer

A) True 
 B)False

Question 8

A recent economics graduate is looking for a position as an industrial economist.During the period this individual starts looking for a job and ultimately finds one, he may be classified as:

Accepted Answer

A) seasonally unemployed. 
B) frictionally unemployed. 
C) cyclically unemployed. 
D) structurally unemployed. 
E) occasionally unemployed. 
A) seasonally unemployed. 
B) frictionally unemployed. 
C) cyclically unemployed. 
D) structurally unemployed. 
E) occasionally unemployed.

Question 9

Which of the following factors may lead to a decline in the real value of money?

Accepted Answer

A) Increase in the rate of interest 
B) Decline in aggregate demand in the economy 
C) Decrease in money supply 
D) Increase in the average price level 
E) Decrease in aggregate output 
A) Increase in the rate of interest 
B) Decline in aggregate demand in the economy 
C) Decrease in money supply 
D) Increase in the average price level 
E) Decrease in aggregate output

Question 10

Scenario 7.1 Of 1, 350 people surveyed, 318 are not working.
The status of those not working is as follows:
122 full-time students
29 discouraged workers
18 in long-term-care facilities
21 seeking employment and age 16 or older
50 retirees
63 under age 16
15 working in the underground economy and not looking for a "real" job
Eight of those working were under 16 years of age.
Refer to Scenario 7.1.According to the data provided, the official unemployment rate is:

Accepted Answer

A) 0.02 percent. 
B) 2.0 percent. 
C) 10 percent. 
D) 3.6 percent. 
E) 33.7 percent. 
A) 0.02 percent. 
B) 2.0 percent. 
C) 10 percent. 
D) 3.6 percent. 
E) 33.7 percent.

Question 11

Some economists say that "full employment" exists in an economy when:

Accepted Answer

A) cyclical unemployment is 2 percent. 
B) cyclical unemployment is 4 to 6 percent. 
C) frictional unemployment is zero. 
D) the unemployment rate is 4 to 7 percent. 
E) the natural unemployment rate is zero. 
A) cyclical unemployment is 2 percent. 
B) cyclical unemployment is 4 to 6 percent. 
C) frictional unemployment is zero. 
D) the unemployment rate is 4 to 7 percent. 
E) the natural unemployment rate is zero.

Question 12

The effect of _____ is to produce an unemployment rate that understates actual unemployment.

Accepted Answer

A) the underground economy 
B) discouraged workers and underemployment 
C) the growth in real GDP 
D) institutionalized and retired labor force 
E) seasonally unemployed workers 
A) the underground economy 
B) discouraged workers and underemployment 
C) the growth in real GDP 
D) institutionalized and retired labor force 
E) seasonally unemployed workers

Question 13

Which of the following is true about workers who experience structural unemployment?

Accepted Answer

A) They quickly accept a much lower salary in a different industry. 
B) They do not adjust their expectations to the realities of the job market. 
C) They sometimes enter the pool of discouraged workers. 
D) They tend to quit their job search very easily. 
E) They usually have the necessary skills to maintain their level of income in another industry. 
A) They quickly accept a much lower salary in a different industry. 
B) They do not adjust their expectations to the realities of the job market. 
C) They sometimes enter the pool of discouraged workers. 
D) They tend to quit their job search very easily. 
E) They usually have the necessary skills to maintain their level of income in another industry.

Question 14

Leading and lagging indicators show the effects of economic fluctuations but coincident indicators do not.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following refers to business cycles?

Accepted Answer

A) Variations in the economy that are all equal in intensity 
B) Seasonal variations in the economy that occur every year 
C) Fluctuations in economic output that show a declining growth pattern over time 
D) Periodic but irregular variations in economic activity 
E) Period movements from one economic peak to another 
A) Variations in the economy that are all equal in intensity 
B) Seasonal variations in the economy that occur every year 
C) Fluctuations in economic output that show a declining growth pattern over time 
D) Periodic but irregular variations in economic activity 
E) Period movements from one economic peak to another

Question 16

Which of the following would be considered a leading indicator?

Accepted Answer

A) Prime interest rate 
B) Personal income 
C) Money supply 
D) Inventories to sales ratio 
E) Unemployment duration 
A) Prime interest rate 
B) Personal income 
C) Money supply 
D) Inventories to sales ratio 
E) Unemployment duration

Question 17

The purchasing power of one dollar is equal to _____.

Accepted Answer

A) real GDP divided by nominal GDP 
B) nominal GDP divided by real GDP 
C) 1 minus the average price level 
D) the reciprocal of the average price level 
E) the implicit GDP deflator divided by the CPI 
A) real GDP divided by nominal GDP 
B) nominal GDP divided by real GDP 
C) 1 minus the average price level 
D) the reciprocal of the average price level 
E) the implicit GDP deflator divided by the CPI

Question 18

To be considered employed, a person must have a full-time job.

Accepted Answer

A) True 
 B)False

Question 19

Unemployment data in the U.S.are published by the:

Accepted Answer

A) Bureau of Economic Analysis. 
B) Bureau of Labor Statistics. 
C) Department of Commerce. 
D) Bureau of Federal Intelligence. 
E) Internal Revenue Service. 
A) Bureau of Economic Analysis. 
B) Bureau of Labor Statistics. 
C) Department of Commerce. 
D) Bureau of Federal Intelligence. 
E) Internal Revenue Service.

Question 20

In the 1990s, the Danish government passed laws tightening eligibility requirements for receiving unemployment benefits.What happened to Danish unemployment rates as a result of this policy change?

Accepted Answer

A) The size of the labor force declined 
B) The unemployment rate decreased 
C) More teenagers entered the labor force 
D) The wage rate increased 
E) The natural rate of unemployment increased 
A) The size of the labor force declined 
B) The unemployment rate decreased 
C) More teenagers entered the labor force 
D) The wage rate increased 
E) The natural rate of unemployment increased

Exam 10: Unemployment and Inflation

Which of the following is true of hyperinflation?

The figure given below represents the business cycle of an economy. Figure 7.1 Refer to Figure 7.1.The movement from point A to point B in the figure is most likely to be associated with _____.

Other things equal, as the number of discouraged workers rises in an economy, the gap between potential and actual real GDP will widen.

According to the labor statistics of the United States, the _____ reported the highest unemployment rate between 1960 and 2008.

Frictional and structural unemployment are always present in a dynamic economy.

Including discouraged workers in the labor market statistics would raise the unemployment rate.

A recent economics graduate is looking for a position as an industrial economist.During the period this individual starts looking for a job and ultimately finds one, he may be classified as:

Which of the following factors may lead to a decline in the real value of money?

Some economists say that "full employment" exists in an economy when:

The effect of _____ is to produce an unemployment rate that understates actual unemployment.

Which of the following is true about workers who experience structural unemployment?

Leading and lagging indicators show the effects of economic fluctuations but coincident indicators do not.

Which of the following refers to business cycles?

Which of the following would be considered a leading indicator?

The purchasing power of one dollar is equal to _____.

To be considered employed, a person must have a full-time job.

Unemployment data in the U.S.are published by the:

In the 1990s, the Danish government passed laws tightening eligibility requirements for receiving unemployment benefits.What happened to Danish unemployment rates as a result of this policy change?

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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