Question 1

Several firms in an industry laid off their workers.Assuming all else equal,this will lead to a ________.

Accepted Answer

A)  higher rate of capacity utilization in the industry 
B)  higher real wage in the industry 
C)  higher rate of output in the industry 
D)  lower rate of capacity utilization in the industry

Question 2

When did the Great Depression occur?

Accepted Answer

A)  The early 1930s 
B)  The late 1930s 
C)  The early 1940s 
D)  The late 1940s

Question 3

The most severe economic contraction of the twentieth century was ________.

Accepted Answer

A)  the recession of 2007-2009 
B)  the Great Depression 
C)  World War I 
D)  World War II

Question 4

How many major deviations from trend GDP has the United States experienced between 1929 and 2017?

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  four

Question 5

If the central bank of Techland pursues an expansionary monetary policy,________.

Accepted Answer

A)  the interest rate in Techland will rise 
B)  the demand for labor in Techland will increase 
C)  the labor supply in Techland will fall 
D)  the price level in Techland will fall

Question 6

Agriculture is the primary occupation in Agraria,and agricultural products account for two-thirds of Agraria's GDP.How will a sharp fall in the price of agricultural products affect Agraria's economy if the demand for such products is unaffected by changes in their prices?

Accepted Answer

The answer of Agriculture is the primary occupation in Agraria,and...

Question 7

What effect did the declines in housing prices in the United States in the late 2000s have on the banking sector?

Accepted Answer

A)  Most banks made a lot of money by betting against housing prices, leading to a general increase in bank profits. 
B)  Banks became increasingly willing to lend money to borrowers. 
C)  The resulting consumer mortgage defaults resulted in large profits for banks. 
D)  The resulting consumer mortgage defaults resulted in large losses for banks.

Question 8

Which of the following is true?

Accepted Answer

A)  Investment growth tends to be high when GDP growth is low. 
B)  Investment growth tends to be high when consumption growth is high. 
C)  Consumption growth tends to be high when GDP growth is low. 
D)  Unemployment growth tends to be high when GDP growth is high.

Question 9

An economy's ________ will fall if its real interest rate rises.

Accepted Answer

A)  labor supply 
B)  real output 
C)  real wage rate 
D)  supply of credit

Question 10

According to Okun's Law,if the annual growth rate of real GDP is 2.5 percent,the unemployment rate is likely to ________.

Accepted Answer

A)  increase by 0.25 percent 
B)  decrease by 0.25 percent 
C)  increase by 0.5 percent 
D)  decrease by 0.5 percent

Question 11

What event is associated with the start of the Great Depression?

Accepted Answer

A)  The beginning of World War I 
B)  The beginning of World War II 
C)  A stock market crash 
D)  A government coup

Question 12

How does a contractionary monetary policy affect the labor demand curve in an economy?

Accepted Answer

The answer of How does a contractionary monetary policy affect...

Question 13

A firm's inventory piled up during a recession.How will its labor demand be affected when its excess inventory gets sold off eventually?

Accepted Answer

The answer of A firm's inventory piled up during a...

Question 14

Which of the following is likely to happen if investors in an economy become optimistic following the discovery of huge mineral reserves?

Accepted Answer

A)  Real wages will fall. 
B)  Prices will fall. 
C)  Consumption will increase. 
D)  Unemployment will increase.

Question 15

The economy of Techland is currently operating at full capacity.The country then experiences a sudden boom in economic activity.However,the unemployment rate increases soon after the boom.What is likely to have caused such a phenomenon?

Accepted Answer

The answer of The economy of Techland is currently operating...

Question 16

Since the Great Depression,how long have U.S.recessions lasted,on average?

Accepted Answer

A)  About 6 months 
B)  About 12 months 
C)  About 18 months 
D)  About 24 months

Question 17

According to Okun's Law,the year-to-year change in the rate of unemployment is ________ if the annual growth rate of real GDP is 4 percent.

Accepted Answer

A)  −2 percent 
B)  −1 percent 
C)  1 percent 
D)  2 percent

Exam 12: Short-Run Fluctuations