Question 1

Which of the following will be considered a lagging indicator of the business cycle?

Accepted Answer

A) Money supply 
B) New building permits 
C) Unemployment duration 
D) Unemployment claims 
E) New plant and equipment orders 
A) Money supply 
B) New building permits 
C) Unemployment duration 
D) Unemployment claims 
E) New plant and equipment orders

Question 2

During periods of inflation:

Accepted Answer

A) everyone's real income rises. 
B) those people who have fixed incomes benefit. 
C) those people whose nominal income rises faster than the general price level benefit. 
D) those people who enter long-term wage agreements benefit. 
E) those people who hold a lot of cash benefit. 
A) everyone's real income rises. 
B) those people who have fixed incomes benefit. 
C) those people whose nominal income rises faster than the general price level benefit. 
D) those people who enter long-term wage agreements benefit. 
E) those people who hold a lot of cash benefit.

Question 3

A worker who loses his or her job as a consequence of a decline in aggregate demand in the economy is experiencing:

Accepted Answer

A) disguised unemployment. 
B) underemployment. 
C) cyclical unemployment. 
D) frictional unemployment. 
E) seasonal unemployment. 
A) disguised unemployment. 
B) underemployment. 
C) cyclical unemployment. 
D) frictional unemployment. 
E) seasonal unemployment.

Question 4

Which if the following is most likely to result if the Congress passes the living wage law?

Accepted Answer

A) Cost-push inflation 
B) Demand-pull inflation 
C) Deflation 
D) Recession 
E) Stagnation 
A) Cost-push inflation 
B) Demand-pull inflation 
C) Deflation 
D) Recession 
E) Stagnation

Question 5

Structural unemployment will decline if:

Accepted Answer

A) more seasonal work becomes available. 
B) the government increases taxes to support more welfare programs. 
C) consumer spending on new technology decreases. 
D) computerized job-search systems are improved. 
E) retrained workers can move to areas where new jobs are available. 
A) more seasonal work becomes available. 
B) the government increases taxes to support more welfare programs. 
C) consumer spending on new technology decreases. 
D) computerized job-search systems are improved. 
E) retrained workers can move to areas where new jobs are available.

Question 6

The Great Depression was the most severe recession experienced by the U.S.economy, during which national output had declined by 25 percent.

Accepted Answer

A) True 
 B)False

Question 7

Indonesia experienced hyperinflation in the 1990s.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements regarding the unemployment rates in the U.S.between 1971 and 2002 is true?

Accepted Answer

A) The unemployment among the whites were much lower compared to the non-whites. 
B) The unemployment rate for all workers reached a low of 2.9 percent in 1982. 
C) The unemployment rate of both male and female workers have consistently increased from 1971 to 1998. 
D) The whites had much higher unemployment rates than the nonwhites. 
E) Teenagers reported the lowest unemployment rates in the country. 
A) The unemployment among the whites were much lower compared to the non-whites. 
B) The unemployment rate for all workers reached a low of 2.9 percent in 1982. 
C) The unemployment rate of both male and female workers have consistently increased from 1971 to 1998. 
D) The whites had much higher unemployment rates than the nonwhites. 
E) Teenagers reported the lowest unemployment rates in the country.

Question 9

Assume that for a given year, the nominal interest rate is 9 percent while inflation rises to 11 percent indicating a 4 percent higher rate than anticipated.Which group of people is made better off by the inflation?

Accepted Answer

A) Those who lend at fixed interest rates 
B) Those who borrow at fixed interest rates 
C) Those who borrow at variable interest rates 
D) Those who receive fixed incomes 
E) Those who save at variable interest rates 
A) Those who lend at fixed interest rates 
B) Those who borrow at fixed interest rates 
C) Those who borrow at variable interest rates 
D) Those who receive fixed incomes 
E) Those who save at variable interest rates

Question 10

A leading indicator:

Accepted Answer

A) changes in either direction before a recession starts. 
B) usually declines before a recession starts. 
C) generally changes after real GDP changes. 
D) remains unaffected by changes in real GDP. 
E) does not change with fluctuations in economic activity. 
A) changes in either direction before a recession starts. 
B) usually declines before a recession starts. 
C) generally changes after real GDP changes. 
D) remains unaffected by changes in real GDP. 
E) does not change with fluctuations in economic activity.

Question 11

In a business cycle, a peak marks the end of an expansion and the beginning of a recession.

Accepted Answer

A) True 
 B)False

Question 12

Suppose Jess resigns from her low paying job.After looking for a new job for two weeks she is highly frustrated and gives up looking for a better-paying job.According to the U.S.Bureau of Labor Statistics, Jess would:

Accepted Answer

A) be considered unemployed. 
B) be considered employed. 
C) be considered temporarily unemployed. 
D) not be considered as a part of the labor force. 
E) be considered as seasonally unemployed. 
A) be considered unemployed. 
B) be considered employed. 
C) be considered temporarily unemployed. 
D) not be considered as a part of the labor force. 
E) be considered as seasonally unemployed.

Question 13

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 number officially in the labor force is:

Accepted Answer

A) 1, 053. 
B) 1, 350. 
C) 1, 032. 
D) 1, 045. 
E) 1, 011. 
A) 1, 053. 
B) 1, 350. 
C) 1, 032. 
D) 1, 045. 
E) 1, 011.

Question 14

If the average price level in 2002 was 1.25 relative to the base year in 1992, then:

Accepted Answer

A) a dollar in 2002 bought just 80 percent of the goods and services that a dollar bought in 1992. 
B) average prices were 80 percent higher in 2002 than in 1992. 
C) a dollar in 2002 bought 25 percent more goods and services than a dollar bought in 1992. 
D) average prices were 125 percent higher in 2000 than in 1992. 
E) purchasing power rose 25 percent between 1992 and 2002. 
A) a dollar in 2002 bought just 80 percent of the goods and services that a dollar bought in 1992. 
B) average prices were 80 percent higher in 2002 than in 1992. 
C) a dollar in 2002 bought 25 percent more goods and services than a dollar bought in 1992. 
D) average prices were 125 percent higher in 2000 than in 1992. 
E) purchasing power rose 25 percent between 1992 and 2002.

Question 15

The more difficult it is for a firm to adjust its labor force in the face of economic fluctuation, the more likely the firm is to hire new workers.

Accepted Answer

A) True 
 B)False

Question 16

Underemployed workers include individuals who are employed in tasks that do not fully utilize their productive potential.

Accepted Answer

A) True 
 B)False

Question 17

The official unemployment rate is:

Accepted Answer

A) the number of unemployed people divided by the number of employed people. 
B) the number of unemployed people divided by the total size of the population. 
C) the number of unemployed people divided by the size of the non-institutionalized population. 
D) the number of unemployed people divided by the size of the labor force. 
E) the number of unemployed people divided by the size of the non-institutionalized population, age 16 or older. 
A) the number of unemployed people divided by the number of employed people. 
B) the number of unemployed people divided by the total size of the population. 
C) the number of unemployed people divided by the size of the non-institutionalized population. 
D) the number of unemployed people divided by the size of the labor force. 
E) the number of unemployed people divided by the size of the non-institutionalized population, age 16 or older.

Question 18

What does it mean if the purchasing power in 1950 was $4.15 relative to the 1982 base year?

Accepted Answer

A) It took $4.15 in 1950 to buy what $1 bought in 1982. 
B) The average price level in 1982 was five times as high as in 1950. 
C) $4.15 in 1950 had the same nominal money value as $1 in 1982. 
D) It took $4.15 in 1982 to buy what $1 bought in 1950. 
E) Nominal prices have increased by more than 400 percent between 1950 and 1982, but the real value of money has not changed. 
A) It took $4.15 in 1950 to buy what $1 bought in 1982. 
B) The average price level in 1982 was five times as high as in 1950. 
C) $4.15 in 1950 had the same nominal money value as $1 in 1982. 
D) It took $4.15 in 1982 to buy what $1 bought in 1950. 
E) Nominal prices have increased by more than 400 percent between 1950 and 1982, but the real value of money has not changed.

Question 19

The Bureau of Labor Statistics defines a person as unemployed if he or she does not:

Accepted Answer

A) work full time. 
B) have a job but is actively seeking one. 
C) earn a wage above the minimum wage rate. 
D) earn enough income to be above the poverty level. 
E) work as much as he or she desires. 
A) work full time. 
B) have a job but is actively seeking one. 
C) earn a wage above the minimum wage rate. 
D) earn enough income to be above the poverty level. 
E) work as much as he or she desires.

Question 20

When the U.S.economy is at its full-employment level, the unemployment rate is not equal to zero because:

Accepted Answer

A) cyclical unemployment is always present in a modern economy. 
B) of the statistical discrepancy. 
C) voluntary unemployment is always positive. 
D) frictional and structural unemployment are always present in a modern economy. 
E) there are always people who are too lazy to work. 
A) cyclical unemployment is always present in a modern economy. 
B) of the statistical discrepancy. 
C) voluntary unemployment is always positive. 
D) frictional and structural unemployment are always present in a modern economy. 
E) there are always people who are too lazy to work.

Exam 10: Unemployment and Inflation

Which of the following will be considered a lagging indicator of the business cycle?

During periods of inflation:

A worker who loses his or her job as a consequence of a decline in aggregate demand in the economy is experiencing:

Which if the following is most likely to result if the Congress passes the living wage law?

Structural unemployment will decline if:

The Great Depression was the most severe recession experienced by the U.S.economy, during which national output had declined by 25 percent.

Indonesia experienced hyperinflation in the 1990s.

Which of the following statements regarding the unemployment rates in the U.S.between 1971 and 2002 is true?

Assume that for a given year, the nominal interest rate is 9 percent while inflation rises to 11 percent indicating a 4 percent higher rate than anticipated.Which group of people is made better off by the inflation?

A leading indicator:

In a business cycle, a peak marks the end of an expansion and the beginning of a recession.

Suppose Jess resigns from her low paying job.After looking for a new job for two weeks she is highly frustrated and gives up looking for a better-paying job.According to the U.S.Bureau of Labor Statistics, Jess would:

If the average price level in 2002 was 1.25 relative to the base year in 1992, then:

The more difficult it is for a firm to adjust its labor force in the face of economic fluctuation, the more likely the firm is to hire new workers.

Underemployed workers include individuals who are employed in tasks that do not fully utilize their productive potential.

The official unemployment rate is:

What does it mean if the purchasing power in 1950 was $4.15 relative to the 1982 base year?

The Bureau of Labor Statistics defines a person as unemployed if he or she does not:

When the U.S.economy is at its full-employment level, the unemployment rate is not equal to zero because:

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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