Question 1

The labor force includes

Accepted Answer

A)  employed workers and persons who are officially unemployed.
B)  employed workers but excludes persons who are officially unemployed.
C)  full-time workers but excludes part-time workers.
D)  permanent employees but excludes temporary employees.E) A) and C)
F) A) and B)

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Frictional unemployment is the result of friction between labor and management over how best to perform work.
B)  Structural unemployment is unemployment resulting from changes in the structure of consumer demand or technology.
C)  Cyclical unemployment is also called wait unemployment because this unemployment depends on the timing of the business cycle.
D)  Search unemployment is the broadest unemployment category because it covers all other types of unemployment.E) B) and C)
F) None of the above

Question 3

Inflation rates in the United States reached double-digit rates in the

Accepted Answer

A)  1960s.
B)  1970s.
C)  1990s.
D)  2000s.E) A) and C)
F) A) and B)

Question 4

If the economy's actual GDP is greater than its potential GDP, then there is high unemployment in that economy.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is correct?

Accepted Answer

A)  During the Great Recession, unemployment rates for men rose above those of women.
B)  Unemployment rates for African-American and white workers are approximately the same.
C)  Teenagers experience approximately the same unemployment rates as do adults.
D)  Laborers are less vulnerable to unemployment than are professional workers.E) None of the above
F) A) and D)

Question 6

In the United States, the rate of unemployment is highest for

Accepted Answer

A)  white teenagers.
B)  African-American teenagers.
C)  married women.
D)  unmarried women.E) B) and C)
F) A) and B)

Question 7

Assume the natural rate of unemployment in the U.S.economy is 5 percent and the actual rate of unemployment is 9 percent.According to Okun's law, the negative GDP gap as a percentage of potential GDP is

Accepted Answer

A)  4 percent.
B)  8 percent.
C)  10 percent.
D)  2 percent.E) A) and C)
F) None of the above

Question 8

If both the real interest rate and the nominal interest rate are 3 percent, then the

Accepted Answer

A)  inflation premium is zero.
B)  real GDP must exceed the nominal GDP.
C)  nominal GDP must exceed the real GDP.
D)  inflation premium also is 3 percent.E) B) and C)
F) A) and C)

Question 9

Unanticipated inflation benefits creditors and savers.

Accepted Answer

A) True 
 B)False

Question 10

Unemployment that occurs when there is deficient demand for the goods and services of an economy is called

Accepted Answer

A)  frictional unemployment.
B)  cyclical unemployment.
C)  structural unemployment.
D)  natural unemployment.E) B) and C)
F) C) and D)

Question 11

Potential Real GDP = $200 Billion Natural Rate of Unemployment = 6 Percent Actual Rate of Unemployment = 12 Percent Refer to the accompanying data, which is for a specific 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.E) All of the above
F) C) and D)

Question 12

What are the primary effects of cost-push inflation?

Accepted Answer

A)  It raises real output and redistributes an increased level of real income.
B)  It reduces real output and redistributes a decreased level of real income.
C)  It raises real output but redistributes a decreased level of real income.
D)  It reduces real output but redistributes an increased level of real income.E) None of the above
F) A) and C)

Question 13

When there is demand-pull inflation, people's total spending in the economy will be falling.

Accepted Answer

A) True 
 B)False

Question 14

General sources of shocks that can cause business cycles include the following, except

Accepted Answer

A)  irregular occurrence of innovations and productivity changes.
B)  monetary factors and financial instability.
C)  unemployment jumps and production drops.
D)  political events, either domestic or global.E) A) and C)
F) None of the above

Question 15

Who is least likely to be hurt by unanticipated inflation?

Accepted Answer

A)  a disabled laborer who is living off accumulated savings
B)  an owner of a small business
C)  a secretary
D)  a pensioned steelworkerE) None of the above
F) All of the above

Question 16

If a person's nominal income increases by 5 percent while the price level increases by 2 percent, then that person's real income

Accepted Answer

A)  increases by 3 percent.
B)  increases by 5 percent.
C)  decreases by 7 percent.
D)  decreases by 2 percent.E) None of the above
F) A) and B)

Question 17

A lender need not be penalized by inflation if the

Accepted Answer

A)  long-term rate of inflation is less than the short-term rate of inflation.
B)  short-term rate of inflation is less than the long-term rate of inflation.
C)  lender correctly anticipates inflation and increases the nominal interest rate accordingly.
D)  inflation is unanticipated by both borrower and lender.E) B) and C)
F) A) and B)

Question 18

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

Accepted Answer

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

Question 19

When inflation occurs,

Accepted Answer

A)  all prices are rising.
B)  each dollar of income will buy more output than before.
C)  the purchasing power of money increases.
D)  the purchasing power of money decreases.E) A) and C)
F) B) and C)

Question 20

The recurrent ups and downs in the level of economic activity extending over several years are referred to as

Accepted Answer

A)  economic phases.
B)  business startups.
C)  business cycles.
D)  noncyclical fluctuations.E) A) and D)
F) C) and D)

Exam 29: Business Cycles, Unemployment, and Inflation

General sources of shocks that can cause business cycles include the following, except

Correct Answer
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Inflation rates in the United States reached double-digit rates in the

Correct Answer
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Which of the following statements is correct?

Correct Answer
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If both the real interest rate and the nominal interest rate are 3 percent, then the

Correct Answer
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When there is demand-pull inflation, people's total spending in the economy will be falling.

Correct Answer
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Correct Answer
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What are the primary effects of cost-push inflation?

Correct Answer
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If a person's nominal income increases by 5 percent while the price level increases by 2 percent, then that person's real income

Correct Answer
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Which of the following is correct?

Correct Answer
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In the United States, the rate of unemployment is highest for

Correct Answer
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A lender need not be penalized by inflation if the

Correct Answer
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Unemployment that occurs when there is deficient demand for the goods and services of an economy is called

Correct Answer
verified

When inflation occurs,

Correct Answer
verified

If the economy's actual GDP is greater than its potential GDP, then there is high unemployment in that economy.

Correct Answer
verified

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

Correct Answer
verified

Unanticipated inflation benefits creditors and savers.

Correct Answer
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Who is least likely to be hurt by unanticipated inflation?

Correct Answer
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The labor force includes

Correct Answer
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The recurrent ups and downs in the level of economic activity extending over several years are referred to as

Correct Answer
verified

Assume the natural rate of unemployment in the U.S.economy is 5 percent and the actual rate of unemployment is 9 percent.According to Okun's law, the negative GDP gap as a percentage of potential GDP is

Correct Answer
verified

Exam 29: Business Cycles, Unemployment, and Inflation

General sources of shocks that can cause business cycles include the following, except

Correct AnswerverifiedShow Answer

Inflation rates in the United States reached double-digit rates in the

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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If both the real interest rate and the nominal interest rate are 3 percent, then the

Correct AnswerverifiedShow Answer

When there is demand-pull inflation, people's total spending in the economy will be falling.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What are the primary effects of cost-push inflation?

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If a person's nominal income increases by 5 percent while the price level increases by 2 percent, then that person's real income

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

In the United States, the rate of unemployment is highest for

Correct AnswerverifiedShow Answer

A lender need not be penalized by inflation if the

Correct AnswerverifiedShow Answer

Unemployment that occurs when there is deficient demand for the goods and services of an economy is called

Correct AnswerverifiedShow Answer

When inflation occurs,

Correct AnswerverifiedShow Answer

If the economy's actual GDP is greater than its potential GDP, then there is high unemployment in that economy.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Unanticipated inflation benefits creditors and savers.

Correct AnswerverifiedShow Answer

Who is least likely to be hurt by unanticipated inflation?

Correct AnswerverifiedShow Answer

The labor force includes

Correct AnswerverifiedShow Answer

The recurrent ups and downs in the level of economic activity extending over several years are referred to as

Correct AnswerverifiedShow Answer

Assume the natural rate of unemployment in the U.S.economy is 5 percent and the actual rate of unemployment is 9 percent.According to Okun's law, the negative GDP gap as a percentage of potential GDP is

Correct AnswerverifiedShow Answer

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