Question 1

Susie has lost her job in a Vermont textile plant because of import competition. She intends to take a short course in electronics and move to Oregon, where she anticipates that a new job will be
Available. We can say that Susie is faced with

Accepted Answer

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

Question 2

Full-employment output is also called

Accepted Answer

A)  zero-unemployment output. 
B)  equilibrium output. 
C)  potential output. 
D)  zero-savings output.

Question 3

At the economy's natural rate of unemployment,

Accepted Answer

A)  the economy achieves its potential output. 
B)  there is only a relatively small amount of cyclical unemployment. 
C)  only frictional unemployment exists. 
D)  only structural unemployment exists.

Question 4

The higher the rate of unemployment,

Accepted Answer

A)  the larger is the GDP gap. 
B)  the smaller is the GDP gap. 
C)  the higher is the level of actual GDP. 
D)  the lower is the level of potential GDP.

Question 5

Cost-push inﬂation tends to be characterized by all of the following, except

Accepted Answer

A)  rising general price level. 
B)  falling real output. 
C)  rising unemployment. 
D)  falling unemployment.

Question 6

The percentage change in real income can be approximated by subtracting the percentage change
in the price level from the percentage change in nominal income.

Accepted Answer

A) True 
 B)False

Question 7

The unemployment rate in an economy is 7.5 percent. The total population of the economy is 250 million and the size of the civilian labor force is 180 million. The number of employed workers in this
Economy is

Accepted Answer

A)  13.5 million. 
B)  15.7 million. 
C)  166.5 million. 
D)  174.6 million.

Question 8

Which of the following statistics can turn negative?

Accepted Answer

A)  inﬂation rate 
B)  GDP 
C)  CPI 
D)  unemployment rate

Question 9

Which of the following formulas is correct? Percentage change in

Accepted Answer

A)  price level approximates percentage change in real income minus percentage change in nominal income. 
B)  real income approximates percentage change in nominal income minus percentage change in price level. 
C)  nominal income approximates percentage change in price level minus percentage change in real income. 
D)  real income approximates percentage change in price level minus percentage change in nominal income.

Question 10

If the rate of inﬂation is 12 percent per year, the price level will double in about

Accepted Answer

A)  4.1 years. 
B)  5.8 years. 
C)  10.2 years. 
D)  12.4 years.

Question 11

The industries or sectors of the economy in which business cycle ﬂuctuations tend to affect output most are

Accepted Answer

A)  military goods and capital goods. 
B)  services and nondurable consumer goods. 
C)  clothing and education. 
D)  capital goods and durable consumer goods.

Question 12

Explain the differences among the frictional, structural, and cyclical forms of unemployment.

Accepted Answer

The answer of Explain the differences among the frictional, structural,...

Question 13

$$\begin{array} { | l | c | } 
\hline \text { Potential Real GDP } & \$ 200 \text { Billion } \
\hline \text { Natural Rate of Unemployment } & 6 \% \
\hline \text { Actual Rate of Unemployment } & 12 \% \
\hline
\end{array}$$ Refer to the accompanying data, which is for a speci?c year in a hypothetical economy for which Okun's law is applicable. The size of the negative GDP gap as a percentage of potential GDP for the
Economy is

Accepted Answer

A)  6 percent. 
B)  9 percent. 
C)  12 percent. 
D)  15 percent.

Question 14

(Last Word) Like previous generations, the current generation of Americans are willing to move at
least once or twice from one part of the country to another for employment opportunities.

Accepted Answer

A) True 
 B)False

Question 15

Real income will rise from one year to the next if nominal income

Accepted Answer

A)  falls and the price level falls faster. 
B)  rises and the price level rises faster. 
C)  falls and the price level rises. 
D)  falls faster than the price level.

Question 16

The rate of unemployment tends to be lowest for

Accepted Answer

A)  black teenagers. 
B)  white teenagers. 
C)  black adult males. 
D)  white adult males.

Question 17

In the accompanying diagram, the phases of the business cycle from points A to D are

Accepted Answer

A)  peak, recession, expansion, trough, respectively. 
B)  trough, recovery, expansion, peak, respectively. 
C)  expansion, recession, trough, peak, respectively. 
D)  peak, recession, trough, expansion, respectively.

Question 18

Inﬂation caused by an increase in total spending is referred to as

Accepted Answer

A)  cost-push inﬂation. 
B)  anticipated inﬂation. 
C)  demand-pull inﬂation. 
D)  hyperinﬂation.

Question 19

Inﬂation that occurs when total spending is greater than the economy's ability to produce output at the existing price level is

Accepted Answer

A)  anticipated inﬂation. 
B)  demand-pull inﬂation. 
C)  cost-push inﬂation. 
D)  unanticipated inﬂation.

Question 20

When total input costs rise slower than the total units of output produced, then the per-unit production costs

Accepted Answer

A)  will decrease. 
B)  will increase. 
C)  will be unaffected. 
D)  may either increase or decrease.

Exam 9: Business Cycles, Unemployment, and Inflation

Susie has lost her job in a Vermont textile plant because of import competition. She intends to take a short course in electronics and move to Oregon, where she anticipates that a new job will be Available. We can say that Susie is faced with