Question 1

In an economic expansion, people used their charge cards to purchase many goods. Now the economy is in a recession and people must use much of their reduced incomes to pay back debts. If employees manufacturing the goods people used to buy are laid off, they will suffer from:

Accepted Answer

A)  cyclical unemployment. 
B)  structural unemployment. 
C)  permanent unemployment. 
D)  frictional unemployment. 
E)  underemployment.

Question 2

Suppose u = those adults who are unemployed and seeking work; e = those adults who are employed; and NLF = those adults not in the labor force. Which expression would equal the BLS definition of the unemployment rate?

Accepted Answer

A)  u / (e + NLF) 
B)  u / e 
C)  u / (u + e) 
D)  u / (e + NLF). 
E)  u / (u + e − NLF)

Question 3

Unemployment caused by people voluntarily quitting work in order to seek more attractive employment is called:

Accepted Answer

A)  the natural rate of unemployment. 
B)  full employment. 
C)  cyclical unemployment. 
D)  frictional unemployment. 
E)  structural unemployment.

Question 4

Cyclical unemployment is the result of the business cycle.

Accepted Answer

A) True 
 B)False

Question 5

Full employment occurs when the rate of unemployment consists of:

Accepted Answer

A)  structural plus frictional unemployment. 
B)  cyclical plus frictional unemployment. 
C)  structural, frictional, and cyclical unemployment. 
D)  none of the above.

Question 6

The phase in the business cycle in which real GDP declines is called a:

Accepted Answer

A)  trendline. 
B)  peak. 
C)  recession. 
D)  recovery. 
E)  trough.

Question 7

The government's chief forecasting gauge for business cycles is the:

Accepted Answer

A)  unemployment rate. 
B)  real GDP. 
C)  personal income index. 
D)  index of leading indicators.

Question 8

Which of the following is true of the business cycle record of the United States?

Accepted Answer

A)  Recessions have been lengthier during the last two decades than was true prior to 1980. 
B)  Real GDP contracted throughout most of the 1950s. 
C)  Real GDP in 2000 was approximately the same as 1950. 
D)  Since 1950, the fluctuations in GDP have been less severe than before 1950.

Question 9

A business cycle is the period of time in which:

Accepted Answer

A)  a business is established and ceases operations. 
B)  there are four phases: peak, recession, trough and expansion. 
C)  the price level varies with real GDP. 
D)  expansion and contraction of economic activity are equal. 
E)  none of the above are true.

Question 10

Frictional unemployment refers to:

Accepted Answer

A)  unemployment related to the ups and downs of the business cycle. 
B)  workers who are between jobs. 
C)  people who spend relatively long periods out of work. 
D)  people who are out of work and have no job skills.

Question 11

Structural unemployment is frequently caused by:

Accepted Answer

A)  technological changes that make certain job skills obsolete. 
B)  temporary layoffs in industries such as construction. 
C)  the impact of recessions on employment. 
D)  none of the above.

Question 12

It is difficult for cyclically unemployed individuals to find jobs because:

Accepted Answer

A)  they do not meet the qualifications required for the available jobs. 
B)  the economy is in a recession. 
C)  they quit their last job and employers view them with suspicion. 
D)  they have not looked long enough to find a job.

Question 13

The economic cost of unemployment is the loss of potential output which can never be realized.

Accepted Answer

A) True 
 B)False

Question 14

Andrea Burris lost her job in a company layoff 5 months ago. She would take a job if one was offered, but she has given up looking for work until the economy improves. She is:

Accepted Answer

A)  a member of the civilian labor force who is employed. 
B)  a member of the civilian labor force who is unemployed. 
C)  a member of the civilian labor force who is underemployed. 
D)  a discouraged worker who is not a member of the labor force. 
E)  now structurally unemployable.

Question 15

Economic growth is measured by the annual percentage increase in a nation's level of:

Accepted Answer

A)  nominal GDP. 
B)  real GDP. 
C)  real GDP deflator. 
D)  economic indicators.

Question 16

How do we measure economic growth?

Accepted Answer

A)  Increases in the price level, as indicated by the GDP chain price index. 
B)  Increases in nominal GDP. 
C)  Increases in real GDP. 
D)  Increases in the labor force.

Question 17

What is full employment? What are the different kinds of unemployment? What constitutes the natural (normal) rate of unemployment?

Accepted Answer

The answer of What is full employment? What are the...

Question 18

The unemployment rate is the percentage of the civilian labor force that is unemployed but actively seeking work.

Accepted Answer

A) True 
 B)False

Question 19

The prime rate is a lagging indicator.

Accepted Answer

A) True 
 B)False

Question 20

An example of cyclical unemployment is a(n):

Accepted Answer

A)  textile worker permanently laid off due to job lost to imports. 
B)  autoworker who is temporarily laid off due to a decline in demand for cars. 
C)  engineer permanently laid off due to advances in technology. 
D)  computer programmer who leaves one job and accepts a new job.

Exam 12: Business Cycles and Unemployment

In an economic expansion, people used their charge cards to purchase many goods. Now the economy is in a recession and people must use much of their reduced incomes to pay back debts. If employees manufacturing the goods people used to buy are laid off, they will suffer from:

Suppose u = those adults who are unemployed and seeking work; e = those adults who are employed; and NLF = those adults not in the labor force. Which expression would equal the BLS definition of the unemployment rate?

Unemployment caused by people voluntarily quitting work in order to seek more attractive employment is called:

Cyclical unemployment is the result of the business cycle.

Full employment occurs when the rate of unemployment consists of:

The phase in the business cycle in which real GDP declines is called a:

The government's chief forecasting gauge for business cycles is the:

Which of the following is true of the business cycle record of the United States?

A business cycle is the period of time in which:

Frictional unemployment refers to:

Structural unemployment is frequently caused by:

It is difficult for cyclically unemployed individuals to find jobs because:

The economic cost of unemployment is the loss of potential output which can never be realized.

Andrea Burris lost her job in a company layoff 5 months ago. She would take a job if one was offered, but she has given up looking for work until the economy improves. She is:

Economic growth is measured by the annual percentage increase in a nation's level of:

How do we measure economic growth?

What is full employment? What are the different kinds of unemployment? What constitutes the natural (normal) rate of unemployment?

The unemployment rate is the percentage of the civilian labor force that is unemployed but actively seeking work.

The prime rate is a lagging indicator.

An example of cyclical unemployment is a(n) :