Question 1

Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in the assembly line. Kevin plans to go to technical school to learn how to repair
Microcomputers. The type of unemployment Kevin is faced with is

Accepted Answer

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

Question 2

Demand-pull inﬂation

Accepted Answer

A)   occurs when total spending in the economy is excessive.
B)   is measured differently than cost-push inﬂation.
C)   can be present even during an economic depression.
D)   is also called "hyperinﬂation."E) None of the above
F) B) and C)

Question 3

Cost-push inﬂation may be caused by

Accepted Answer

A)   a decline in per-unit production costs.
B)   a decrease in wage rates.
C)   a negative supply shock.
D)   an increase in resource availability.E) All of the above
F) C) and D)

Question 4

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inﬂation premium is

Accepted Answer

A)   8 percent.
B)   5 percent.
C)   3 percent.
D)   2 percent.E) B) and C)
F) None of the above

Question 5

Which of the following groups has traditionally beneﬁted from unanticipated inﬂation?

Accepted Answer

A)   consumers
B)   business ﬁrms
C)   the federal government
D)   the foreign sectorE) B) and C)
F) All of the above

Question 6

Inﬂation means that the prices of all items in the economy are increasing.

Accepted Answer

A) True 
 B)False

Question 7

In the expansion phase of a business cycle,

Accepted Answer

A)   the inﬂation rate decreases, but productive capacity increases.
B)   the inﬂation rate and productive capacity decrease.
C)   employment increases, but output decreases.
D)   employment and output increase.E) None of the above
F) B) and C)

Question 8

If the unemployment rate for the U.S. economy rises from 7 to 11 percent during a year, we can conclude that

Accepted Answer

A)   actual GDP exceeds potential GDP.
B)   actual GDP is less than potential GDP.
C)   the economy is experiencing only frictional unemployment.
D)   the natural rate of unemployment for the U.S. economy has risen.E) B) and C)
F) B) and D)

Question 9

The total population of an economy is 175 million, the labor force is 125 million, and the number of employed workers is 117 million. The unemployment rate for this economy is

Accepted Answer

A)   3.3 percent.
B)   5.8 percent.
C)   6.4 percent.
D)   7.8 percent.E) B) and C)
F) A) and D)

Question 10

Real income is found by

Accepted Answer

A)   dividing nominal income by 70.
B)   multiplying nominal income by 1.03.
C)   dividing the price index (in hundredths)  by nominal income.
D)   dividing nominal income by the price index (in hundredths) .E) B) and C)
F) C) and D)

Question 11

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 12

Potential Real GDP $200 Billion  Natural Rate of Unemployment 6% Actual Rate of Unemployment 12%\begin{array} { | l | c | } \hline 	ext { Potential Real GDP } & \$ 200 	ext { Billion } \\hline 	ext { Natural Rate of Unemployment } & 6 \% \\hline 	ext { Actual Rate of Unemployment } & 12 \% \\hline\end{array} Potential Real GDP  Natural Rate of Unemployment  Actual Rate of Unemployment ​$200 Billion 6%12%​​  Refer to the accompanying data, which is for a speci?c year in a hypothetical economy for which Okun's law is applicable. If the unemployment rate in the economy fell to 6 percent, we could
Conclude that

Accepted Answer

A)   only structural unemployment remained.
B)   the economy's production possibilities curve shifted outward.
C)   the economy had moved from a point inside its production possibilities curve to a point on or very near the curve.
D)   nominal GDP would rise, but real GDP would fall. E) A) and B)
F) C) and D)

Question 13

According to the Bureau of Labor Statistics, to be oﬃcially unemployed a person must

Accepted Answer

A)   be in the labor force.
B)   be 21 years of age or older.
C)   have lost a job.
D)   be waiting to be called back from a layoff.E) B) and C)
F) A) and D)

Question 14

Unemployment that is the result of deregulation, corporate downsizing, and the closure of military
bases is best categorized as frictional unemployment.

Accepted Answer

A) True 
 B)False

Question 15

If you knew that the per-unit production cost was $8 and that the total cost of inputs was $1,000, then the number of units of output would be

Accepted Answer

A)   75.
B)   100.
C)   125.
D)   150.E) A) and B)
F) A) and C)

Question 16

The natural rate of unemployment is the

Accepted Answer

A)   unemployment rate experienced at the depth of a depression.
B)   full-employment unemployment rate.
C)   unemployment rate experienced by the least-skilled workers in the economy.
D)   unemployment rate experienced by the most-skilled workers in the economy.E) None of the above
F) A) and B)

Question 17

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) B) and D)
F) A) and C)

Question 18

The full-employment unemployment rate for the United States economy is now generally considered to be

Accepted Answer

A)   2 percent of the labor force.
B)   6 percent of the labor force.
C)   4 to 5 percent of the labor force.
D)   8 to 9 percent of the labor force.E) B) and C)
F) None of the above

Question 19

The natural rate of unemployment is

Accepted Answer

A)   higher than the full-employment rate of unemployment.
B)   lower than the full-employment rate of unemployment.
C)   that rate of unemployment occurring when the economy is at its potential output.
D)   found by dividing total unemployment by the size of the labor force.E) A) and C)
F) B) and D)

Question 20

Unemployment rates for men and women normally are very similar. In the Great Recession of 2007- 09, the unemployment rate for men

Accepted Answer

A)   remained roughly similar to that for women.
B)   was slightly lower than that for women.
C)   was much lower than that for women.
D)   signiﬁcantly exceeded that for women.E) C) and D)
F) None of the above

Exam 9: Business Cycles, Unemployment, and Inflation

Unemployment that is the result of deregulation, corporate downsizing, and the closure of military bases is best categorized as frictional unemployment.

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

Cost-push inﬂation may be caused by

Correct Answer
verified

The total population of an economy is 175 million, the labor force is 125 million, and the number of employed workers is 117 million. The unemployment rate for this economy is

Correct Answer
verified

In the expansion phase of a business cycle,

Correct Answer
verified

Inﬂation means that the prices of all items in the economy are increasing.

Correct Answer
verified

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inﬂation premium is

Correct Answer
verified

The full-employment unemployment rate for the United States economy is now generally considered to be

Correct Answer
verified

If the unemployment rate for the U.S. economy rises from 7 to 11 percent during a year, we can conclude that

Correct Answer
verified

Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in the assembly line. Kevin plans to go to technical school to learn how to repair Microcomputers. The type of unemployment Kevin is faced with is

Correct Answer
verified

Which of the following groups has traditionally beneﬁted from unanticipated inﬂation?

Correct Answer
verified

The natural rate of unemployment is

Correct Answer
verified

Who is least likely to be hurt by unanticipated inﬂation?

Correct Answer
verified

According to the Bureau of Labor Statistics, to be oﬃcially unemployed a person must

Correct Answer
verified

If you knew that the per-unit production cost was $8 and that the total cost of inputs was $1,000, then the number of units of output would be

Correct Answer
verified

Correct Answer
verified

Real income is found by

Correct Answer
verified

The natural rate of unemployment is the

Correct Answer
verified

Unemployment rates for men and women normally are very similar. In the Great Recession of 2007- 09, the unemployment rate for men

Correct Answer
verified

Demand-pull inﬂation

Correct Answer
verified

Exam 9: Business Cycles, Unemployment, and Inflation

Unemployment that is the result of deregulation, corporate downsizing, and the closure of military bases is best categorized as frictional unemployment.

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

Cost-push inﬂation may be caused by

Correct AnswerverifiedShow Answer

The total population of an economy is 175 million, the labor force is 125 million, and the number of employed workers is 117 million. The unemployment rate for this economy is

Correct AnswerverifiedShow Answer

In the expansion phase of a business cycle,

Correct AnswerverifiedShow Answer

Inﬂation means that the prices of all items in the economy are increasing.

Correct AnswerverifiedShow Answer

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inﬂation premium is

Correct AnswerverifiedShow Answer

The full-employment unemployment rate for the United States economy is now generally considered to be

Correct AnswerverifiedShow Answer

If the unemployment rate for the U.S. economy rises from 7 to 11 percent during a year, we can conclude that

Correct AnswerverifiedShow Answer

Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in the assembly line. Kevin plans to go to technical school to learn how to repair Microcomputers. The type of unemployment Kevin is faced with is

Correct AnswerverifiedShow Answer

Which of the following groups has traditionally beneﬁted from unanticipated inﬂation?

Correct AnswerverifiedShow Answer

The natural rate of unemployment is

Correct AnswerverifiedShow Answer

Who is least likely to be hurt by unanticipated inﬂation?

Correct AnswerverifiedShow Answer

According to the Bureau of Labor Statistics, to be oﬃcially unemployed a person must

Correct AnswerverifiedShow Answer

If you knew that the per-unit production cost was $8 and that the total cost of inputs was $1,000, then the number of units of output would be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Real income is found by

Correct AnswerverifiedShow Answer

The natural rate of unemployment is the

Correct AnswerverifiedShow Answer

Unemployment rates for men and women normally are very similar. In the Great Recession of 2007- 09, the unemployment rate for men

Correct AnswerverifiedShow Answer

Demand-pull inﬂation

Correct AnswerverifiedShow Answer

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